<aside> 🤓 This document is to be used for informational purposes only and does not constitute legal, business, or tax advice. Each person should consult their own attorney, business advisor, or tax advisor with respect to matters referenced in this document
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As we all know, there is a lot that goes into running a successful private practice! Taxes are no different - the way you organize your business can make a big difference in how much you pay in taxes and how profitable your business is 💸
You automatically become a sole proprietor when you start your private practice. As a sole proprietor, you and your business are considered one and the same when it comes to taxes. Sole proprietors will pay self-employment taxes on all taxable income earned from their business. Self-employment taxes include Social Security tax and Medicare tax and amount to ~15%.
Instead of operating as a sole proprietor, many dietitians choose to form an LLC. An LLC is a limited liability company, which is a type of legal entity that can be used when forming a business. LLCs are popular amongst small businesses because they provide liability protection and tax benefits:
Forming an LLC provides liability protection, but you will not receive the tax benefits mentioned above unless you elect to be taxed as an S Corporation. An S corporation is a tax classification that ensures that all business profits are passed through to the business owner (yep, that’s you!). In other words, you will save money on the self-employment taxes we talked about earlier.
Absolutely! Fay’s recommended resources are below: