Hi Guys! Long time that I've been away. I have, over the last year, been working as a child/adolescent/adult psychiatrist and also have a private practice, where I am a solo member LLC.

However, I have a potential business opportunity that I want to pursue. I have several therapist colleagues, not MDs, who may be interested in working 'under' an entity and seeing patients. I would form the entity, cover the rent/marketing/logistics.

I would NOT be providing clinical services under this entity, myself (as far as I have it planned out for now) ... The reason is that I expect the therapists to take insurance, which I currently do not in my LLC, and do not wish to in the future - I don't know if I can be under the same entity as my therapist colleagues and NOT take insurance, so I'm just planning to not provide clinical services under that entity, and keeping it strictly psychotherapy with therapists!

I am debating keeping it 'simple' with an LLC, but wonder about a PC given the noticeable higher individual protection from the potential malpractice issues of the therapists (hopefully none!) ... The plan is to have just ONE member/owner of this entity (myself) - at least for now. The therapists would be either 1099s or W-2s, I'm hoping they can be 1099's legitimately. (I worked as a 'clinical associate' as a 1099 in a private practice somewhat akin to this, which was a PC, that had psychiatrists and therapists in the practice.)

Also, was wondering what tips you can give me to maximize tax savings if I have 3-4 therapists working with me and covering their cost by allowing the PC to withhold a percentage of their income. As I mentioned, I was working for an entity (briefly) in South Jersey (above). In this arrangment, I was keeping the majority of my income but they were deducting a percentage in lieu of charging me rent or charging me for marketing, etc. I intend to provide marketing and logistical support, and keeping a percentage for myself would cover the similar costs of the entire PC/LLC (and hopefully allow for a profit). Please let me know whatever feedback you could provide about how to best set this up. My understanding is that a PC is better than an LLC because it will provide my PC more protection from the potential malpractice issues of the individual therapists working under the umbrella, but are the highest tax costs worth it?

Thanks in advance!

Zip Code: 08831

In my practice, we have many clients who are therapists working in this type arrangement, which implies it is most likely a successful arrangement for all parties involved. For the therapist, they give up a percentage of their collections in exchange for office space, patients, marketing, and billing services.

The percentage you will charge needs to be sufficient to cover your real costs, the value of your time, and some profit. If the percentage is too high, however, the therapists will only stay with you long enough to build their own patient panel, and then they will leave to lease their own space and handle their own billing once it's cheaper to do so on their own.

From a legal perspective, you'd need to speak to a lawyer in your state as to whether an S-corp provides you more protection than an LLC. But from a practical point of view, it seems that most psychologists that we work with only pay between $200 and $500 per year for malpractice insurance. That implies to me that non-md mental health providers aren't getting sued very often and for very much money. Even so, it's important that you look into whether you have more than adequate protection in place between entity selection and insurance for the entity.

Please feel free to follow up this response with additional questions regarding this opportunity.

Zip Code: 01801

Thanks, Andrew!

Just wondering, given the fact that the call-ins would come to one centralized number and I would need to be aware of when the therapists are scheduling patients (and may, in fact, manage their schedules to some degree since I have to be certain of which patient is coming and when in order to ensure adequate insurance billing and a fair split of the cost, etc) ... I wonder whether they can be 1099 consultants (they will choose the hours they work, they will choose the disposition of patients, etc - just that they work under my entity and I need to have oversight of their hours) or would they have to be W-2's?

Would you happen to know lawyers in NJ who work with practices such as this one (since you have a few clients doing such a thing).

Thanks!

Zip Code: 08831