Working for yourself is a wonderful idea in theory, but when it comes time to start your own business, the process is often daunting. This is especially true if you plan to get the business up and running on your own. For physical therapists, in particular, there’s more red tape than normal due to health insurance, patient privacy laws and more.
Colorado could be the ideal location for a PT practice — we’re one of the fittest and most active states in the country, which could be attractive for those PTs with an interest in sports medicine, for example. However, you’ll need to know a few things before trying to start your own PT practice here. To help you, I’ve developed a list of two important questions you should ask yourself before getting started.
Is it really that complicated to set up a professional corporation or professional limited liability company for a small PT clinic?
Ideally, this should not be the case, but the reality is quite different. While the Colorado Secretary of State offers basic forms to use when forming a corporation or limited liability company (LLC), these forms are for general business use only and are not sufficient to form a professional entity needed for health care practices, and so do not comply with the numerous requirements contained in the Colorado Physical Therapy Practice Act. Since the Practice Act applies to anyone providing PT services — regardless of the clinic’s size or methods of payment and insurance types accepted — using the Secretary of State’s fill-in-the blank forms for Articles of Organization (LLC) or Articles of Incorporation (corporation) could subject you to discipline against your PT license by the Colorado Physical Therapy Board (PT Board) for failure to comply with the Practice Act.
To form the required professional entity, you will need the assistance of an experienced health care lawyer with knowledge of both business matters and the Practice Act to draft the Articles for filing. In addition to the Articles, additional documents need to be prepared beyond the basic Articles, including an operating agreement (LLC), shareholders’ agreement (corporation), bylaws (corporation), subscription agreement and organizational and other minutes, application for employer identification number, tax election filings and others. These additional documents are not provided by the Colorado Secretary of State, and the adequate preparation of these documents often requires legal expertise. Without appropriate assistance, you may have issues with the PT Board, the Colorado Department of Revenue and even the Internal Revenue Service.
Do I need assistance with my annual minutes and filings, and what about appointing a registered agent?
It’s good that you’re aware of this because the Colorado laws that cover LLCs and corporations require all businesses to appoint a registered agent and to complete annual filings — preparation of annual minutes is also recommended and there is no small-business exemption for any of these tasks. While you may serve as your own registered agent, doing so can often lead to non-compliance issues and a suspension of your ability to conduct business in Colorado. Due to this risk, I recommend seeking legal counsel or a certified public accountant to serve as your registered agent. The fee for hiring someone to serve as your registered agent is reasonable, often less than $200 a year, plus the additional $10 due to the Secretary of State for the filing fee. Unless you have complex needs, annual minutes can be prepared and your annual report filed as well, often for less than $100 per year.
As you can see, starting even a small PT clinic can be complicated. While some steps can be done on your own, it’s always wise to seek legal counsel to ensure you’re filing the correct documents and conducting business properly. If anything, you’ll have peace of mind knowing you’re headed in the right direction.
If you have any questions about starting your own PT clinic, please contact Gregory James Smith, a health care law attorney, at 303-443-8010 email@example.com.