In New York State, the only two (2) legal entities that are allowed for licensed healthcare professionals are professional service corporations (PC) or professional limited liability corporations, (PLLC). There can be some confusion on whether an “S-Corp” is a legal entity to be formed with the New York State Department of State.
Despite its name, an S-Corp is an IRS tax designation, not a legal entity. For newly formed entities, if eligible, the owner can elect to be treated as an S-Corp for taxes by filing the appropriate form within 75 days of the formation of a legal entity. It is important that any licensed professional who is looking to have their legal entity designated as an S-Corp for tax purposes speak to an accountant who is familiar with, and works closely with, healthcare practitioners. That is the only way to ascertain whether a PC or PLLC can even be treated as an S-Corp and to make the tax election within the appropriate timeline.
When forming legal entities, working closely with an accountant is beneficial in ensuring that the formation and tax designation are done timely and appropriately to provide both legal and financial protections. Working with an accountant who has knowledge in healthcare will confirm the type of legal entity best suited for your type of practice, but also:
- the best tax designation;
- making sure you and your partners are protected financially; and
- ensuring that any taxes owed are paid timely, efficiently and in the best interests of the legal entity.
Practitioners who work closely with both an accountant and attorney who concentrate in healthcare will ensure both the financial and legal protections afforded to them under the law throughout their career.
Stephanie J. Rodin, Esq.
Rodin Legal, P.C.
Tel: (917) 345-8972
Fax: (917) 591-4428