In certain circumstances, it can be a good tax idea to convert a medical practice operating as a C or S corporation into a limited liability company (LLC) or limited liability partnership (LLP). Here's why: Both LLCs and LLPs can be treated as partnerships for federal tax purposes. The tax rules for partnerships are far more flexible than the rules for corporations.
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Every year, studies show that many employees are injured while carrying out their duties. Some even die from job-related illnesses or injuries.
Medical and dental office staff members face many risks on the job, such as contracting bloodborne illnesses from needles or sharps; being injured by diagnostic equipment; and suffering allergic reactions from toxic chemicals used in labs.
Over time, doctors develop their own unique style of practicing medicine. The same is true of medical groups. They develop a style that involves creating a work culture and passing information about it on to staff members. A medical practice's approach to issues such as sick leave and overtime pay are defined and revised over time until they become ingrained in the office's culture.
Since physicians are the revenue producers of a busy medical practice, there can be a temptation to add doctors to ease patient loads and increase the bottom line. But while bringing on more practitioners can reduce workloads and create economies of scale, it shouldn't be a snap decision.
When patients walk into a medical group's office, the first people they meet are the staff members. Studies have shown that with today's managed care, patients spend most of their time in a medical practice interacting with non-physicians, from front desk staff to nurses.
While doctors sometime "fire" uncooperative or non-paying patients, the reverse can also happen. Patients can become dissatisfied with their current physicians and switch to new ones. Obviously, this might not be good for your pocketbook or reputation.
On a regular basis, most physicians have patients that refuse or forget to pay bills. Every business deals with this problem, but medical practices have their own unique set of problems with unpaid bills. First, you can't retrieve the service you provided.
The bane of every physician's practice is when payers deny claims. There are numerous reasons why payers deny claims, with the predominant reason being a paperwork error. Other reasons include misunderstanding on the part of the insurance company, the physician or the patient.
Like all service providers, doctors seek to offer their patients the best possible care while holding down costs. But how can physicians tell whether they're meeting this goal? A growing patient list and a healthy bottom line are strong indicators. However, the only sure way to tell if your patients are satisfied is to ask them.