The weather in New York is beginning to improve after a long winter and my staff is fielding the usual rash of telephone calls from vets hoping to open new practices. And, though I am going to be giving a day-long lecture on the topic of new practice formation at the Atlantic Coast Veterinary Conference later this year, I thought now would be a good time to provide some useful pointers to veterinarians planning to set up shop in the near future.

Selecting a business entity

While many veterinarians and other health professionals elect to organize their new business as a sole proprietorship or partnership, there are a number of other alternatives that may serve the practitioner better.

It is not particularly difficult or expensive to establish a corporate structure, a limited-liability company or a limited-liability partnership for your practice. In fact, the process frequently does not even require the services of an attorney. A veterinarian can do the paperwork. Also, there are a number of online companies that will help you set up one of these business entities for a fair price. These services, in many cases, even supply the business owner with such paperwork as draft LLC operating agreements and even stock certificates. You might even get a cool corporate impression seal at no extra charge.

The devil is in the details

You simply cannot do business as a practice owner until the business-entity question is decided. The primary reason for this is that the state and federal governments want to know who or what is ultimately liable for payroll-tax withholding, unemployment insurance and so on. If there is no business entity elected, the veterinarian as an individual is liable and all documents pass through the government guided by his Social Security number.

If the business entity is to be a corporation or LLC, either of these must be assigned a federal tax-identification number prior to transacting business in its own name. In the case of a single-member LLC, the IRS actually issues two such numbers; one for the LLC and another for the solo member.

When a veterinarian plans to open up shop, these various details can occupy much more time than might be expected. The IRS has a fax line for obtaining tax ID numbers, and the forms can be downloaded from http://www.IRS.gov/. The TIN application can be made by faxing the form SS-4 to (631) 447-8960. An agent will walk you through the process if you wish; for this call IRS at (800) 829-4933.

Other time-consuming minutia

There are a few other details that can end up taking your business organization project longer than expected. In some jurisdictions, professional practitioners, including lawyers, veterinarians and so on, cannot apply directly to their state to practice as a corporation or LLC without some additional preliminary steps.

As a general principle, corporations and LLCs begin to exist when their formation document (charter, articles of organization, etc.) have been filed with the Secretary of State. A number of secretaries of state will not accept an application for formation of a corporation or LLC for the purpose of practicing a profession until their office has received official notification that the applicant for the professional LLC or professional corporation is duly licensed to practice in that state. This certification process can take extra days or even weeks or months.

Additionally, LLCs and corporations have limitations on the names that may be used for the entity to be formed. For example, it may not be legal to include the word "Group" in the corporate name. Consequently, you may have to first satisfy the veterinary-licensing agency in your state that your proposed name is acceptable, then go online or pay a fee to the state to reserve the name with the Secretary of State.