i agree that LLC's and PC's give you no protection against malpractice claims but can help in other ways. I would really talk to a lot of advisors and collegues before you purchase additional malpractice insurance. If 3 mil/5mil is the standard for most physicians in your state, you will make a nice target if you have more coverage than that. I would give this considerable thought....

Zip Code: 78132

Thanks for informative replies, Andrew and Eric. I just read several messages posted on this forum related to the LLC formation and discover that this business entity causes more cost and expense (comparing to individual taxpayer) for the owner(s), but offers little malpractice protection. So I wonder what really makes LLC attractive to recently graduated MD ? I mean we may pay a little higher fee and annual expense to setup a S-Corp which potentially better protect us against malpractice lawsuits. At least we pay for what it works. Perhaps I am missing something about LLC?

I'm not a lawyer, but my understanding of the rules is as follows. An S-Corp provides the exact same protection from malpractice liability as you get from an LLC.

Either of these entities make sense if you have partners, since the entity protects your personal assets from the malpractice of a business partner.

For tax purposes, I'm not sure why a new MD would want to incorporate, unless they were to open a practice which would be their sole source of income.

Zip Code: 01801

Another thing to keep in mind is that as an independent contractor you will be responsible for submitting both the employer and employee payroll taxes. This could be a substantial amount even though social security tax does stop near 100K of salary. Medicare taxes continue but at a smaller rate. You should talk to a good tax planner about this so that you will not be surprised in April.
Good luck with your new job.

Zip Code: 78132

Hi Eric and Andrew,

I learn a few more things about LLC:

-LLC can give protection if the doctor is not at fault.

-In some cases one is less likely to sue if the entity is an LLC or S Corporation.

So new MD may have a couple good reasons to incorporate, I guess.

Thanks for your helpful inputs