S-Corp Isn’t Enough: Legal Setup for IL Providers

Thinking an S-Corp is all you need for your Illinois healthcare practice? Think again — this crucial legal distinction could save you from a costly mistake!

Referenced Links:

How to Verify Your Practice Structure
How to Convert Your Practice

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Transcript:

Over the years, I’ve had hundreds of conversations with doctors about their legal entity structure, and what I have found is probably 90% of the doctors will tell me the same thing. They’ll say, Marc, I’m an S corporation or an S-corp. Interestingly, and today’s video is really going to focus on this, there is a distinct difference in your legal entity structure with the Secretary of State and your tax designation with the IRS and with the Illinois Department of Revenue.

First and foremost, an S corporation is actually a tax designation with the IRS and the Illinois Department of Revenue. With the IRS, you’re going to file Form 2553 in order to go through that taxation determination. That’s different than your legal entity structure in Illinois. Even those that would have had professional help structuring and setting up your entities, you want to make sure that that entity is actually set up correctly in order to render health care services in Illinois. There are s corporations, that’s a tax designation, right? There are S-corps that can actually be improperly structured with the Secretary of State in Illinois, and you want to make sure that you get that right.

So, here is the distinct difference. You want to make sure that you are a professional Limited Liability Company, a Medical Corporation, or a Professional Service Corporation. If you are not one of those three entities as a chiropractic physician in Illinois or a part of an organization that is structured in Illinois to render healthcare services, again, that’s Professional Limited Liability Companies, Medical Corporations, and Professional Service Corporations. If you’re not one of those three types of structures, then actually you need to restructure to be able to legally render healthcare services.

Now any of those three can be and can elect to be an S Corporation with the IRS. That’s a different designation, but your structure has to be one of those three. You can’t just be a standard corporation. You have to be one of those three types of entities. I’m going to include some information down below that’ll kind of guide you through the process to determine 1.) If you are set up correctly, and 2.) what steps to take if you find out that you’re not set up on a Medical Corporation, a Professional Service Corporation, or a Professional Limited Liability Company, in any of those cases, you want to make sure that you have that nailed down.

So I’m going to include information on how to determine if you’re set up correctly in Illinois with the Secretary of State. Again, we’re not talking about the S-corp tax designation. Once you figure out if you are, then you’re fine, right? If you are, you’re good. If you need to make a change and you need to make an adjustment, I’m also going to include some information on how to go through and make that adjustment. Of course, in any of those cases, you can seek some professional assistance to make sure that you get that done correctly. But I also want to make sure that you understand that there is a difference in those two designations. You can be an S corporation and not be legally able to render health care services in Illinois. You want to make sure you get that right. Again, check it, double-check the information I’ve given you below, and we’ll catch you next week.