Are you Thinking of Starting a Midwifery Practice but is Unsure which Business entity would be Best.
It is important to emphasize that I am not a certified accountant or professional. Please get a legal counsel before making any final decision regarding business entity. Every state has its own rules and requirements regarding entity laws. Learn about your local jurisdictions. Let’s start with the basics. What are the types of business entities you should choose from?
*Sole Proprietor: Business Entity that is best to start, doesn’t want anything work done with central or state, would be enclosed in personal tax forms, no legal defense from business on personal assets and no tax saving edges.
* Limited Liability Company. This business entity is used to midwifery practice. If the state rules square measure followed (no co-mingling personal funds and business funds), then liability protection on personal assets, tax savings for private financial gain, not more than S-corporation.
*S-Corporation: Liability protection from business assets to non-public, will sell stock to help get business started (no more than 100), requires more legal work than LLC and has a lot more tax advantages than LLC.
*C-Corporation: Indebtedness edges and unlimited stock sales to help get business started, tax deductible edge edges, double taxation (shareholder dividends, company income), lots of government oversight, rules to follow, and no deduction of company losses.
*Non-profit Organizations: To meet certain needs, the Internal Revenue Service can provide special tax treatment below Section 501 (c)(3). Donors fancy tax edges should apply for 510(3) standing prior to taking advantage of its edges. Federal financial gain taxes are exempted from the grant application process at state and federal levels. Board of administrators must be gift.
Each entity has its own pros and cons. Each state has its own rules about what an applicant can apply for. Michigan’s Certified Nurse Midwives cannot own a business supported by Licensing Department. This is in accordance with the nursing scope of state rules. Any other midwife in the state of Michigan can own a business, except for a CNM. CNMs are required to use a PLLC (Professional indebtedness Company), however, law doesn’t allow for a Nurse Midwife. I have actually seen many CNMs continue to run their own businesses in Michigan. However, I was able to spot legal loopholes that made it possible. Don’t give up if you run into a roadblock. That’s part of being a business owner!
Once an midwife says she wants to be solely proprietary, I get anxious. There is no protection for business liability. Medicine may be a high-procedural profession in the United States. However, no matter how wonderful or safe you are, a legal proceeding could occur from a sad shopper. This entity does not have any business tax edges. Operating for another person is the exact same thing as tax edges. You will need to deduct all your daily expenses that are used for business, such as mobile phone, internet, central office, supplies and mileage.
If you are looking for a community-run business, such as a birth center, or a service that serves a minority population, then a non-profit might be an option. It is extremely useful to have tax exemptions and start-up funds available from grants. It all depends on the population you want to serve and what kind of midwifery company you are trying to start. There is far less risk consulting than serving women at her birth.
Enroll to our COURSE: How to Run a Successful Midwifery Business