Usually, dentists structure their practices as an S corporation or in some unique cases a C corporation. It is important to note that while these options are routinely referred to as corporate forms – really, they are tax classifications. S-Corps are “disregarded entities,” and thus income is passed-through to the individual members or shareholders, while C-Corps elections require the corporation to pay the corporate tax rate, while its owners are taxed as employees of the corporation.
For several years now, most all dentists elect S-Corp status. In fact, I can squarely state that I have never formed advised a dental professional to operate under C-Corp status. However, if tax laws change with the incoming Trump Administration and the corporate tax rate adjusts to say – 15 or 20 percent – that could certainly change. It’s important for a dentist’s attorney to be and stay informed on the tax code and its effect on corporate form tax elections.
The actual corporate forms that a dentist may choose from are: Professional Associations (or P.A.s); Professional Limited Liability Companies (P.L.L.C.s). Form an asset protection standpoint, these entity types function very similarly. Historically, the P.A. has been used more frequently, while the emerging trend is to utilize the PLLC. P.A.s operate as a corporation (like and Inc.) with shareholders and stock, while PLLCs operate as a company (like their name sake limited liability company) with members and membership interests.
If the practice owns the building and/or expensive equipment, a separate (standard) LLC should be created to own the land and/or the equipment. In some cases, LLCs situated in other states that have advantageous laws or series LLC capability may prove preferable.
