1. What your state requires
Most states require a PC or PLLC owned by licensees for entities that practice (why: CPOM). Some states are permissive, some strict (California, Texas, New York, each differently). Your attorney answers: which forms may practice, who may own shares, and whether your intended co-owners are permissible.2. Tax posture
Entity form and tax election are separate decisions. Most small practices land on PC/PLLC with an S corporation election (Form 2553), splitting owner pay between salary and distributions. Your CPA runs the numbers.3. File, then paper the inside
Formation is a state filing. The internal documents matter more: bylaws or operating agreement, and with any co-owner a buy-sell agreement covering death, disability, license loss, departure, and deadlock, with a valuation method. Practices without one negotiate it during a dispute, the most expensive possible time.4. Identifiers, in order
EIN: irs.gov. NPI: NPPES; keep the credentials, the same login world feeds PECOS. Accounts: banking setup.5. The expensive mistakes
- Re-formation. Payer contracts attach to the TIN. Dissolve and re-form and you re-credential for months.
- Commingling. From dollar one, entity money is not your money.
- The DBA gap. Operating under a brand name? Register the fictitious name. Banks won’t deposit checks payable to a name not on the account.
- Multi-state. Professional entities don’t simply “foreign qualify” like normal LLCs. Expansion across state lines is a structure conversation first (MSO-PC Wiki).