Welcome back to our series on starting, launching, and growing your pelvic health virtual physical therapy practice. During a previous post, we explored the readiness factor for starting your own virtual practice. Today, we’re diving deeper into the legal aspects and set up that are important to consider when starting a business.
And if you’re still on the fence about offering virtual services as a pelvic health practice, check out my blog post here.
Choosing a Business Structure
As we talked about in the previous blog post, linked here, you should have been able to take some time to do research on the different types of business structure available to you, as well as if your state requires a certain business structure when starting a pelvic virtual physical therapy practice.
Some of the different business structures you may have found in your search include sole proprietorships, limited liability corporations, and corporations. You should have also noticed the difference in cost to start each one of these options, as well as the protection each structure provides you as the business owner. To make it simple, here’s a breakdown:
Sole-proprietorship: This is the cheapest business structure to start, but offers the least protection for you. This type of business structure does not separate your personal and business assets from one another, meaning if you were to be sued, your personal assets would be fair game, not just your business assets.
Limited liability corporation: LLCs cost more than a sole-proprietorship to file for but offer an increased amount of protection for you. They help to separate your business and personal assets from one another, protecting your personal assets should a lawsuit arise.
Corporations: With this type of business structure, there are both S-corps & B-corps. Corporations are the most expensive business structure to function under, but offer you the most amount of protection when it comes to separating your personal and business assets.
Although I am not a legal professional, my advice when starting your practice would be to file under an LLC business structure, giving you protection by separating your personal and business assets. In the end, I encourage you to do your own research and if you are still unsure, consult with a legal professional for proper guidance.
Applying for Business Licenses
Once you’ve decided on your business structure, the next step is to file for a business license. Depending on your state of practice, you may need to file for both a local and state business license. For a state business license, most states have resources that allow you to file for a license through their Secretary of State’s office.
In that same token, local business licenses may have different requirements so it is important that you reach out to your city or county offices to receive guidance on the steps you need to take.
Getting your Employer Identification Number
An employer identification number or EIN, is essential for your practice to function legally in the eyes of the IRS. To apply, head to the IRS’s website and search “EIN'' if there isn’t a prompt immediately available and you should be able to identify the steps to take. Once applying, you should receive your EIN and a digital copy of your approval within a few days of applying.
You may also be required to obtain an EIN for your state for state tax purposes. Check on your state’s website for more information about filing for a state EIN and if it is required.
Opening Business Bank Accounts
At the point that you have obtained your federal EIN, you now have the ability to open a bank account (or multiple) for your business. Most often, you will be required to provide your practice’s EIN and possibly other legal business documents depending on the bank of your choosing.
When choosing the bank you want to go with, consider the convenience of use, customer service, and what you feel most comfortable with. Many people have all of their finances within the online banking world, and if that’s what you are used to or prefer, that is a possibility for your business
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Some examples would include Chase or Capital One. Personally, I have my bank accounts through a local bank where I do my personal banking, but have the accounts for my business completely separated. I like the fact that I can access my bank in-person at any time and that their online banking portal is quite user friendly.
Final note on business bank accounts, it is important that once you start receiving money for your practice’s services, you begin separating your business finances from your personal ones. The sooner you do this, the easier it will be for accounting and tax reporting at the end of the year, as well as protects your personal assets if you were to come into contact with a lawsuit.
Deciding on a Payment Processor
Now that you have your business bank accounts set up, you’re ready to start receiving money. Decide what is going to be the easiest form of receiving payment for you, including what business processor you want to use. Most people are very familiar with making digital payments, so asking your patients to pay via a payment processor shouldn’t be an issue.
Some payment processor options include Stripe, Square, PayPal, Zelle, and Venmo (select the business account type). Once again, you will need your EIN to get set up to receive payments and don’t focus on the payment processing fees that each processor has. They are usually quite minimal and can be used as a business expense tax write-off at the end of the year.
National Provider Identifier for Your Business
If you’ve worked in the clinic setting before, you may remember your employer applying for a national provider identification (NPI) number on your behalf. This is what typically lets your clinic bill insurance for the care you provide.
In that same token, it is necessary for you to obtain an NPI number when starting your own practice. The difference is that when applying, it is important to apply for a Type 2 Organization NPI number that represents your practice and you practicing out of it. This is a number that you will need even if you don’t accept insurance for your services.
Conclusion
Despite the initial fear you may feel when it comes to the legal setup for your practice, this step by step checklist should help make it more straightforward. I would also mention that if you’re an action taker, it would be easy to take care of this checklist within a week or less. By understanding the steps you have to take, you’ll be able to open the doors to your practice confident that you are in good standing.
Once your practice is open, I’m sure you’re wondering how to get patients lined up and ready to work with you. If this sounds like you, check out my blog post here!
I hope this information has been helpful and if you have questions about starting your practice or need help with the legal setup, get in touch with me!