By Michael Tetreault, Editor, The DPC Journal | Please note disclaimer near end of article (see below).
DPC EDITOR: Successful “Docpreneurs” Know These 6 Things
– A sole proprietorship is considered the simplest form of business organization. Only one person owns and is in charge of the business, and one person reaps all the profits or assumes all of the losses. There are many benefits and drawbacks to this form of business structure, and it is wise to weigh these aspects when opening a new Direct Primary Care (DPC) practice or other incantation of a mobile or membership medicine practice.
Benefits of Being a DPC Sole Proprietor
The following list is the main benefits of being the sole proprietor:
- You are your own boss. You are in charge of every aspect of the practice, including operations and marketing, so there is nobody to answer to but yourself.
- All the profits are yours to keep. Since you do not have partners, a franchisor or board of directors, any profits your DPC practice makes are yours to keep.
- Cheap and easy to form. You are considered a business if you plan to sell goods or services for profit. However, you will still need a business license, and if you will have employees, you will need to obtain an Employer Identification Number (EIN), too.
- Flexibility. Since you are the only person in charge of your practice, you can quickly change your service offering or marketing strategy to suit your patient-base.
Drawbacks of Being a DPC Sole Proprietor
With every business format, there are some drawbacks. The following are the main downsides to being organized as a DPC sole proprietor:
- Hard to secure startup funds. Unless you are individually wealthy or have rich relatives, getting enough funding to start your DPC practice may be difficult. Many banks see a sole proprietorship as a risky business venture. Plus, the lenders will look at your personal credit rating, so if you have a low credit score, it will be even harder to get a loan. And, what about all that student loan debt?
- You will provide 24/7 convenience … Being a one-person operation often means that you will be working nights and weekends to get your business up and running, at least until your staff are reliable enough to handle things on their own. Most DPC physician owner/operators have said to us over the years ‘this was the hardest thing I’ve ever done … medical school included. But, I’m so glad I did it. I love my patients and I love my new DPC practice!’
- Personal liability. As far as the law is concerned, there is no separation between the owner and DPC practice for sole proprietorships. This means that you are personally liable for all of the taxes, debts and lawsuits of the business. If someone sues your DPC practice, the courts can come after your personal assets (house, car, etc.) to cover the settlement costs.
- Self-employment taxes. Being your own boss means that there is nobody to take taxes out of your weekly paycheck. However, at the end of the year, you are still responsible for paying social security and Medicare taxes. You will have to remember to set enough money aside during the year to cover your anticipated self-employment tax amount.
Tax Information for the DPC Sole Proprietor
Though sole proprietorships are relatively easy to form, there are still taxes and paperwork involved. The IRS has an entire site dedicated to sole proprietorships. Visit the IRS site to download the necessary tax forms.
Is your DPC practice a sole proprietorship? Have any tips you can share with others who are interested in organizing their business this way, please share them in the comment section below.
Please note | DISCLAIMER: The Direct Primary Care Journal (The DPC Journal), Concierge Medicine Today, LLC., and/or any of its authorized representatives or its affiliated partners are in no way liabile regarding any statements made. Additionally, neither the author, organizations nor affiliated partners shall be liable at any time for any loss, damages, actions or claims arising from the statements made above, whether or not we or its affiliated partners have been advised of such loss, damages, actions or claims. Because the details of your situation are fact dependent, you should additionally seek the knowledge of a qualified attorney, accountant or other representative to assist you in these matters.