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Megan C
Megan C, Certified Public Accountant (CPA)
Category: Finance
Satisfied Customers: 12630
Experience:  Licensed CPA, CFE, CMA who teaches accounting courses at Master's Level
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I am a psychologist who is employed through a medical center,

Resolved Question:

I am a psychologist who is employed through a medical center, full time. I have recently begun doing outside consulting in a private practice for patients who pay out of pocket. I have a separate tax ID number for all payments received by these patients, and I have independent malpractice insurance.

However, I have not established any formal "LLC" or filed any paper work yet for tax purposes. Do I need to have some sort of formal business established and registered through the IRS before I start billing people?

thanks,
Scott
Submitted: 10 months ago.
Category: Finance
Expert:  Megan C replied 10 months ago.

Megan C :

Hello, and welcome to JustAnswer.com

Megan C :

How are you today?

Megan C :

You do not have to have any special business established before you file taxes. If you have no formal LLC or corporation, you will file the payments on your own return on schedule C.

Megan C :

Even if you had an LLC and you were the only member you would still report these payments on schedule C unless you elected to be taxed as a corp or s corp

Megan C :

But, forming a business is not necessary in order to start billing clients.

Megan C :

However, it would be wise from a liability perspective to get an LLC set up, to protect you personally from things that may happen within the business.

Megan C :

Do you have any further questions about this?

Megan C :

If you organize as a corporation, you will have a 7.5% tax on your net income imposed by the state of CT.

Megan C :

This tax is not imposed if you are a sole proprietorship or LLC that does not elect to be taxed as a corporation, or an S Corp. An S Corp pays tax at the shareholder level and therefore does not have to pay the 7.5% tax. You can read more about this, HERE.

Megan C :

I see you are not stepping into chat, so I'm going to switch to Q&A mode, maybe that will help you get your answer faster.

Expert:  Megan C replied 10 months ago.
Scott,

I see you were not joining our live chat. We can still respond to each other below, using the reply button. Please read over what I have answered, and let me know if you have further questions. If not, please rate as 'excellent' so that I may receive credit for assisting you today. Thanks again.
Customer: replied 10 months ago.

Hi Megan,


 


Sorry about not being able to join the chat; there was a problem with me being able to log into the account. Your answer was excellent. Thank you very much.


 


Scott

Expert:  Megan C replied 10 months ago.
Scott,

If you would, please take a moment to rate my response as "excellent" using the rating feature on your screen. 5 stars/smileys gives me full credit for assisting. Please let me know if I can be of any additional assistance.

Thanks again!
Megan C, Certified Public Accountant (CPA)
Category: Finance
Satisfied Customers: 12630
Experience: Licensed CPA, CFE, CMA who teaches accounting courses at Master's Level
Megan C and 2 other Finance Specialists are ready to help you

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