We tell all young professionals just starting out that eventually, they should incorporate. However, the Illinois Veterinary Medicine and Surgery Practice Act of 2004 (“Vet Act”) specifically permits a veterinarian to practice as an individual (the IRS calls this a sole proprietorship). Because there is no registration requirement for a sole proprietor with the Secretary of State and accordingly no registration fees, as well as streamlined tax reporting to the IRS, it might be tempting to see this route as the easiest when one start’s a professional career. But it is not the path that most corporate lawyers or tax accountants would recommend.
As your practice grows, you will undoubtedly start to enter into a variety of standard business relationships: leasing your practice space and equipment, contracts for the purchase of equipment and supplies, and employment relationships with relief vets, veterinary technicians, and other employees. Although the law permits you to conduct your practice as a sole proprietor, one is strongly cautioned against doing so. For example, when practicing as an LLC (a hybrid between a partnership and a corporation), your liability for the debts of the LLC is limited to your investment in the LLC. As a sole proprietor, you are personally liable for all the debts incurred by the practice. A creditor could go after your home, your personal checking and savings accounts, and your car to satisfy a debt obligation. There can also be significant tax savings if an LLC or a corporation is structured properly.
Our strongest advice to any professional contemplating the start-up of a private practice is to seek out a corporate lawyer and a tax accountant with whom you are comfortable. Obtaining advice and assistance upfront can save you time, frustration and money over the course of your career.
But do Illinois veterinarians need to specifically incorporate as a Professional Services Corporation?
The quick answer is no. There is no benefit to incorporating a as a Professional Services Corporation (“P.C.”). Plus, it adds an extra layer of fees and an additional license at IDFPR for every practice location. The Veterinary Act states that it is optional, so incorporating as an Inc. or an LLC is the right way to go.
However, even though the Vet Act permits a veterinarian to practice as a corporation or an LLC, one cautionary note. The Vet Act is reasonably clear that all members (LLC) or all shareholders, officers and directors (corporation) must be licensed as veterinarians. In other professional health-related Acts, it is very clear that all members or shareholders must be licensed in the same or related professions. Likely, that is how IDFPR will enforce entity membership against veterinary group practices. The question of whether a Vet Tech would be considered a “related profession” is unclear. The Vet Act is silent on this question and there is little or no guidance in other professional Acts.
If a problem arises with your use of the PMP, Williams & Nickl is here to help you. Our firm focuses on professional license defense of veterinarians and vet technicians.