Infographic Text: Business Models for a Group Practice
A group private practice is essentially a group of mental health professionals who work together. Group practices can look quite different depending on their business model.
Hired professionals usually fall into one of two categories.
- More control over when or how they do their jobs.
- Typically paid per session.
- Taxes typically filed through a 1099 form.
- Responsible for their own retirement planning, health insurance, etc.
- Less independence regarding how therapy is provided.
- Typically paid through a salary.
- Taxes typically filed through a W-2 form.
- Managers provide employee benefits, vacation days, and so on.
Group practices are often structured in one of four ways:
- One owner gets all the profit, and they manage the practice all by themself.
- Owner is responsible for all the practice’s debts, liabilities, and employees.
- Practice income is reported on a personal tax return. Employee benefits cannot be written off.
- Multiple owners share the profit equally and make business decisions as a group.
- Owners share personal liability for the practice, partners, and employees.
- Each owner’s share of the income is reported on their personal tax return.
- Shareholders get profits and influence according to stock ownership.
- If the practice is sued or goes into debt, only the company’s assets are used to pay.
- The company files its own income taxes based on its assets.
Limited Liability Company (LLC):
- An LLC can't sell stock. Instead it has members who own a percentage of the company.
- Members have limited personal responsibility for the company's debts or legal issues.
- Income is reported on personal income tax returns, similar to a partnership.
- Brewer, G. (n.d.). Business models for private counseling practices. Retrieved from https://bit.ly/2KhKBtN
- Brewer, G. (n.d.). Starting a group private practice; Contractors or employees? Retrieved from https://bit.ly/2W0scUs
- Choosing the best legal structure for your practice. (n.d.) American Psychological Association Services, Inc. Retrieved from https://bit.ly/2HPSTYh
- Who owns an LLC? Everything you need to know. (n.d.). Retrieved from https://bit.ly/2IfjGMC