Considerations with Sole Proprietorships
The solo practitioner may choose to make the chiropractic practice a sole proprietorship, which many consider the simplest business structure for a practice.
Posted in Chiropractor on Thursday, October 11, 2018
The sole proprietor can make decisions without consulting partners or a board of directors and accepts sole responsibility for successes and failures. It is typically also the least expensive option when creating a business legal structure.
A doctor practicing as a sole proprietor declares all income from the practice and deducts all business expenses (including employee payroll and liabilities) on his/her personal income tax return.
Practice income and personal income are the same for this type of practitioner. All money that comes into the practice is considered income and must be recorded and deposited. If the doctor takes a personal draw, it should be issued in the form of a check, not taken from the cash drawer.
Payroll taxes are withheld from employees. The chiropractor, as a sole proprietor, pays no FICA tax because he/she is self-employed. A self-employed person is required to pay a self-employment tax.
An article in Entrepreneur explains that of all the choices you make when starting a practice, the type of legal structure you select is among the most important. This article shares many additional considerations with choosing a sole proprietorship or other practice structure.
Get Professional Advice
Since there are a myriad of legal and tax issues that go along with setting up your business legal structure seek the proper accounting and legal advice from your practice support team.