What's the Best Business Model for Your Chiropractic Practice?
If you are about to open your clinic, this is one of the most important decisions you will make. Even if you already have a practice, understanding your business structure is key.
Starting or considering changes, selecting the right model can impact your taxes, liability, and ability to grow.
I know this choice can feel overwhelming. You might be asking yourself, “Do I need an LLC for private practice?” or wondering if an S Corp is a better fit.
I’ve compiled my insights from my years of experience working with chiropractors to help you understand your options and choose a structure that supports your clinic’s goals, no matter what stage you are at.
Understanding Business Models in Chiropractic Practice
Before we examine the various options, it is essential to understand what a business model truly means for your clinic when launching a chiropractic practice.
Your business model forms the foundation of how your clinic operates, from daily management to handling finances and protecting yourself legally.
This matters because the right structure impacts how easily you can grow, how much you pay in taxes, and how protected your personal assets are. The wrong choice can leave you exposed to risks or costly surprises.
Knowing your business model puts you in control of your clinic’s future. Now, let’s explore the common business structures chiropractors use.
Also read: How to Create a Marketing Strategy That Drives Growth for a Chiropractic Business
Common Business Models for Chiropractic Clinics
There are several ways to set up your clinic. Each has its advantages and challenges. Here are the most common options.
1. Sole Propriteorship
A sole proprietorship is the simplest and most straightforward way to start your clinic. Legally, you and your business are one entity. This means you don’t need to file complicated paperwork to get started, and managing your clinic’s finances can be straightforward.
However, the major downside is unlimited personal liability. If your clinic faces lawsuits or debts, your personal assets, including your home, car, and savings, could be at risk. This risk becomes more significant as your clinic grows and handles more patients or hires staff.
Many chiropractors start this way because of ease and low cost, but statistics show that approximately 70% of small business owners move to more protective structures like LLCs or corporations within the first five years as their exposure to risk grows.
For example, a chiropractor starts their solo chiropractic practice as a sole proprietor. After three years, they face a malpractice claim. Because they did not separate their personal and business assets, their savings are at risk to cover damages. This is a common pitfall many new practitioners encounter.
Here’s an interesting read: How to Train Your Chiropractic Staff to Ask for Referrals Confidently
2. Partenership
If you plan to open a clinic with one or more colleagues, a partnership allows you to share ownership, profits, and responsibilities. Partnerships can be either general or limited.
In a general partnership, all partners share personal liability for business debts.
A limited partnership offers liability protection for some partners but comes with stricter management rules.
Like sole proprietorships, partners in a general partnership remain personally liable for business debts. This means if one partner causes financial or legal trouble, the others can be held responsible.
Because partnerships involve shared decision-making, clear, detailed partnership agreements are vital to avoid disputes. These agreements should cover how profits and losses are split, roles and responsibilities, and exit strategies.
Example: Two chiropractors open a clinic as partners without a written agreement. Years later, disagreements over profit sharing and patient management led to a costly legal battle that could have been avoided with proper contracts.
Example: Two chiropractors open a clinic as partners without a written agreement. Years later, disagreements over profit sharing and patient management led to a costly legal battle that could have been avoided with proper contracts.
3. Limited Liability Company (LLC)
Many chiropractors ask me, “Do I need an LLC for private practice?” My answer is usually yes, and here is why.
An LLC offers personal liability protection, separating your personal assets from your clinic’s liabilities. This means if your clinic faces legal claims or debts, your home and savings are typically protected.
LLCs are flexible in taxation. By default, single-member LLCs are taxed like sole proprietors, and multi-member LLCs like partnerships. However, you can elect for the LLC to be taxed as an S Corporation, which may reduce self-employment taxes by splitting income into salary and distributions.
Example: You form an LLC to start your chiropractic clinic. When faced with a patient lawsuit, your personal assets remain protected. At tax time, you elect S Corp status, which reduces your self-employment tax liability.
You might also like: How to Prevent Burnout as a Chiropractor: 8 Simple Tips
4. Professional Corporation (PC) or S Corporation
In certain states, chiropractors are required to register as Professional Corporations (PCs) due to licensing laws. PCs and S Corporations offer similar liability protections to LLCs, but they come with additional regulatory requirements and administrative overhead.
An S Corporation allows owners to pay themselves a reasonable salary and take additional income as dividends. This can result in tax savings by lowering payroll taxes. However, S Corps require strict adherence to IRS rules and annual filings.
This business model suits practices with higher revenue, larger teams, or plans to bring in investors.
Example: Your clinic is expanding with several associates and an office manager. You convert your LLC into an S Corp to optimize tax savings and maintain liability protection, while complying with state requirements for PCs.
5. Franchise or Affiliate Model
Some chiropractors opt to join a franchise or affiliate network. This model offers brand recognition, proven business systems, and ongoing support in marketing and operations.
However, franchises limit your independence. You typically pay upfront fees and ongoing royalties, which can impact profitability. In exchange, you benefit from a turnkey business model and access to resources that help mitigate the risks associated with starting a new clinic.
According to reports, franchise businesses have a survival rate of 90% even after five years, compared to roughly 50% for independent startups.
A real-world example is the success of chiropractic franchise systems like The Joint Chiropractic. Founded in 1999, The Joint has expanded rapidly across the U.S., leveraging a consistent business model and strong marketing support that appeals to franchisees looking for stability and scalability in the competitive chiropractic market.
Now, let’s move on to discussing the factors you should consider while choosing the best business structure for business practice.
Factors to Consider When Choosing Your Business Model
Knowing your options is only part of the process. The next step is deciding what matters most for your clinic. Here are the key factors to think about.
Liability and Risk
Your personal assets should be protected from clinic-related risks. Sole proprietorships and general partnerships expose your personal finances to lawsuits or debts. This means creditors can target your home or savings if the clinic faces legal trouble.
Limited Liability Companies (LLCs) and corporations create a legal barrier between your personal assets and the business. This protection is essential if you want to reduce personal risk, especially as your clinic expands or hires staff.
Taxes
How you pay taxes depends on your structure. As a sole proprietor, you pay self-employment tax on all profits. That’s about 15.3% extra on top of income tax.
LLCs offer flexibility. You can be taxed as a sole proprietor by default or elect S Corporation status. S Corps lets you split your income into salary and distributions, potentially lowering your self-employment tax.
Corporations have stricter tax rules, but can save money if your clinic’s profits are substantial. Discuss these options with a tax professional to find the best fit for your expected income.
Financing
If you plan to borrow money or attract investors, corporations have distinct advantages. They can issue shares and have formal governance structures that lenders and investors prefer.
LLCs are flexible, but they can sometimes be less attractive for outside funding. Sole proprietorships and partnerships rely mainly on personal credit, which can limit borrowing options.
Your business model should align with your funding needs and growth ambitions.
Interesting read: Comprehensive Growth Plan for Chiropractic Practices: From Startup to Scalable Success
Administrative Burden
Simpler models, such as sole proprietorships, require minimal paperwork. LLCs and corporations need formal registration, regular filings, and compliance with state laws.
Corporations, especially, must hold meetings, keep minutes, and file annual reports. You should consider how much time and money you can spend on these tasks, or whether you’ll hire help.
Growth Plans
Think about where you want your clinic to go. If you expect to add staff, multiple locations, or services, your business model should be able to support these changes.
LLCs and corporations handle growth more effectively by providing clear ownership structures and ensuring regulatory compliance.
With your business model chosen, it’s time to set up your practice legally.
Useful read: Top Challenges Chiropractors Face When Managing a Business
How to Legally Set Up Your Chiropractic Practice
Once you have decided on a business model, here is how to set it up properly.
1. Register Your Business
You must register your clinic with your state government. The exact paperwork depends on your business structure:
- For an LLC, you file Articles of Organization.
- For a corporation, you file Articles of Incorporation.
This registration legally creates your business entity and sets it apart from you personally.
After registration, apply for an Employer Identification Number (EIN) from the IRS. The EIN functions like a Social Security number for your clinic, allowing you to open bank accounts, hire employees, and file taxes.
2. Obtain Nesccessary Licenses and Permits
After registering your business, it’s important to ensure your chiropractic license is current and meets all state requirements. Licenses often need regular renewal and may require continuing education.
Some states also require clinics to have additional permits, such as healthcare facility licenses or zoning approvals. If you plan to bill insurance companies or government programs like Medicare, you’ll need a National Provider Identifier (NPI) and may have to enroll as a provider with those programs.
Checking with your state chiropractic board and local authorities early on helps you avoid delays and ensures your clinic stays compliant.
You can check out this detailed guide on Chiropractic License & Certification for in-depth details.
3. Get Insurance
Insurance is critical for protecting your practice:
- Professional liability insurance (malpractice insurance) protects you if a patient files a claim alleging negligence or harm.
- General liability insurance covers injuries or damages occurring on your clinic’s premises.
- Property insurance protects your equipment and clinic space from damage or loss.
- If you hire staff, you’ll also need workers’ compensation insurance to cover workplace injuries.
Adequate insurance safeguards your clinic’s financial health and your personal assets.
Bonus read: The Chiropractor’s Guide to Managing Staff Schedules Without the Stress
4. Draft Agreements and Contracts
If your business model includes partners, investors, or multiple owners, it is essential to have clear, written agreements such as:
- Operating agreements (for LLCs) or
- Bylaws (for corporations).
These documents define ownership percentages, decision-making authority, profit distribution, and procedures for resolving disputes or exiting the business.
Even if you’re a sole proprietor, having clear contracts in place for employees, vendors, and service providers can help prevent legal issues.
Working with a healthcare attorney ensures these documents comply with state laws and industry regulations, reducing risk down the line.
You might also like: Chiropractor's Guide to Attracting More Clients: 12 Proven Strategies
How Noterro Supports Your Clinic’s Business Model
Choosing the right business model is only one piece of the puzzle. Running your clinic efficiently requires the right tools and resources.
Noterro, a clinic management software, works well with all business structures, from LLCs for therapists to S Corps.
Our platform helps you handle scheduling, patient records, insurance billing, and reporting all in one place. It supports multi-location clinics and teams, making management easier.
With Noterro, you spend less time on administrative tasks and more time focusing on your patients and growing your practice.
Also read: How to Elevate Your Chiropractic Clinic’s Perceived Value For Free
Final Thoughts and Next Steps
Picking the right business model lays a strong foundation for your clinic’s success. If you are opening your doors for the first time or considering changes to an existing practice, this decision impacts your legal protection and tax obligations.
For most chiropractors starting new clinics, an LLC offers a solid balance of simplicity and protection. If you already have a clinic, reviewing your current structure can uncover opportunities to improve or prepare for future growth.
I recommend working closely with your lawyer and accountant to choose the best fit for your unique situation. After that, using practice management tools like Noterro can help you maintain smooth operations and focus on patient care.
Remember, your business model is more than just paperwork; it is the foundation for building a clinic that lasts and thrives.
FAQs
What are the common mistakes new clinic owners make when choosing a business model?
Many start as sole proprietors without considering personal liability. Others neglect tax planning or skip formal agreements with partners.
How does my business model affect offering extra services or products?
Some structures limit the ability to bring on partners or investors, which can slow down expansion. LLCs and corporations generally offer more flexibility.
Are there state-specific rules that could limit my choice?
Yes. Some states require chiropractors to operate as Professional Corporations. Check local laws and licensing boards before making a decision.
Table of Contents
If you are about to open your clinic, this is one of the most important decisions you will make. Even if you already have a practice, understanding your business structure is key.
Starting or considering changes, selecting the right model can impact your taxes, liability, and ability to grow.
I know this choice can feel overwhelming. You might be asking yourself, “Do I need an LLC for private practice?” or wondering if an S Corp is a better fit.
I’ve compiled my insights from my years of experience working with chiropractors to help you understand your options and choose a structure that supports your clinic’s goals, no matter what stage you are at.
Understanding Business Models in Chiropractic Practice
Before we examine the various options, it is essential to understand what a business model truly means for your clinic when launching a chiropractic practice.
Your business model forms the foundation of how your clinic operates, from daily management to handling finances and protecting yourself legally.
This matters because the right structure impacts how easily you can grow, how much you pay in taxes, and how protected your personal assets are. The wrong choice can leave you exposed to risks or costly surprises.
Knowing your business model puts you in control of your clinic’s future. Now, let’s explore the common business structures chiropractors use.
Also read: How to Create a Marketing Strategy That Drives Growth for a Chiropractic Business
Common Business Models for Chiropractic Clinics
There are several ways to set up your clinic. Each has its advantages and challenges. Here are the most common options.
1. Sole Propriteorship
A sole proprietorship is the simplest and most straightforward way to start your clinic. Legally, you and your business are one entity. This means you don’t need to file complicated paperwork to get started, and managing your clinic’s finances can be straightforward.
However, the major downside is unlimited personal liability. If your clinic faces lawsuits or debts, your personal assets, including your home, car, and savings, could be at risk. This risk becomes more significant as your clinic grows and handles more patients or hires staff.
Many chiropractors start this way because of ease and low cost, but statistics show that approximately 70% of small business owners move to more protective structures like LLCs or corporations within the first five years as their exposure to risk grows.
For example, a chiropractor starts their solo chiropractic practice as a sole proprietor. After three years, they face a malpractice claim. Because they did not separate their personal and business assets, their savings are at risk to cover damages. This is a common pitfall many new practitioners encounter.
Here’s an interesting read: How to Train Your Chiropractic Staff to Ask for Referrals Confidently
2. Partenership
If you plan to open a clinic with one or more colleagues, a partnership allows you to share ownership, profits, and responsibilities. Partnerships can be either general or limited.
In a general partnership, all partners share personal liability for business debts.
A limited partnership offers liability protection for some partners but comes with stricter management rules.
Like sole proprietorships, partners in a general partnership remain personally liable for business debts. This means if one partner causes financial or legal trouble, the others can be held responsible.
Because partnerships involve shared decision-making, clear, detailed partnership agreements are vital to avoid disputes. These agreements should cover how profits and losses are split, roles and responsibilities, and exit strategies.
Example: Two chiropractors open a clinic as partners without a written agreement. Years later, disagreements over profit sharing and patient management led to a costly legal battle that could have been avoided with proper contracts.
Example: Two chiropractors open a clinic as partners without a written agreement. Years later, disagreements over profit sharing and patient management led to a costly legal battle that could have been avoided with proper contracts.
3. Limited Liability Company (LLC)
Many chiropractors ask me, “Do I need an LLC for private practice?” My answer is usually yes, and here is why.
An LLC offers personal liability protection, separating your personal assets from your clinic’s liabilities. This means if your clinic faces legal claims or debts, your home and savings are typically protected.
LLCs are flexible in taxation. By default, single-member LLCs are taxed like sole proprietors, and multi-member LLCs like partnerships. However, you can elect for the LLC to be taxed as an S Corporation, which may reduce self-employment taxes by splitting income into salary and distributions.
Example: You form an LLC to start your chiropractic clinic. When faced with a patient lawsuit, your personal assets remain protected. At tax time, you elect S Corp status, which reduces your self-employment tax liability.
You might also like: How to Prevent Burnout as a Chiropractor: 8 Simple Tips
4. Professional Corporation (PC) or S Corporation
In certain states, chiropractors are required to register as Professional Corporations (PCs) due to licensing laws. PCs and S Corporations offer similar liability protections to LLCs, but they come with additional regulatory requirements and administrative overhead.
An S Corporation allows owners to pay themselves a reasonable salary and take additional income as dividends. This can result in tax savings by lowering payroll taxes. However, S Corps require strict adherence to IRS rules and annual filings.
This business model suits practices with higher revenue, larger teams, or plans to bring in investors.
Example: Your clinic is expanding with several associates and an office manager. You convert your LLC into an S Corp to optimize tax savings and maintain liability protection, while complying with state requirements for PCs.
5. Franchise or Affiliate Model
Some chiropractors opt to join a franchise or affiliate network. This model offers brand recognition, proven business systems, and ongoing support in marketing and operations.
However, franchises limit your independence. You typically pay upfront fees and ongoing royalties, which can impact profitability. In exchange, you benefit from a turnkey business model and access to resources that help mitigate the risks associated with starting a new clinic.
According to reports, franchise businesses have a survival rate of 90% even after five years, compared to roughly 50% for independent startups.
A real-world example is the success of chiropractic franchise systems like The Joint Chiropractic. Founded in 1999, The Joint has expanded rapidly across the U.S., leveraging a consistent business model and strong marketing support that appeals to franchisees looking for stability and scalability in the competitive chiropractic market.
Now, let’s move on to discussing the factors you should consider while choosing the best business structure for business practice.
Factors to Consider When Choosing Your Business Model
Knowing your options is only part of the process. The next step is deciding what matters most for your clinic. Here are the key factors to think about.
Liability and Risk
Your personal assets should be protected from clinic-related risks. Sole proprietorships and general partnerships expose your personal finances to lawsuits or debts. This means creditors can target your home or savings if the clinic faces legal trouble.
Limited Liability Companies (LLCs) and corporations create a legal barrier between your personal assets and the business. This protection is essential if you want to reduce personal risk, especially as your clinic expands or hires staff.
Taxes
How you pay taxes depends on your structure. As a sole proprietor, you pay self-employment tax on all profits. That’s about 15.3% extra on top of income tax.
LLCs offer flexibility. You can be taxed as a sole proprietor by default or elect S Corporation status. S Corps lets you split your income into salary and distributions, potentially lowering your self-employment tax.
Corporations have stricter tax rules, but can save money if your clinic’s profits are substantial. Discuss these options with a tax professional to find the best fit for your expected income.
Financing
If you plan to borrow money or attract investors, corporations have distinct advantages. They can issue shares and have formal governance structures that lenders and investors prefer.
LLCs are flexible, but they can sometimes be less attractive for outside funding. Sole proprietorships and partnerships rely mainly on personal credit, which can limit borrowing options.
Your business model should align with your funding needs and growth ambitions.
Interesting read: Comprehensive Growth Plan for Chiropractic Practices: From Startup to Scalable Success
Administrative Burden
Simpler models, such as sole proprietorships, require minimal paperwork. LLCs and corporations need formal registration, regular filings, and compliance with state laws.
Corporations, especially, must hold meetings, keep minutes, and file annual reports. You should consider how much time and money you can spend on these tasks, or whether you’ll hire help.
Growth Plans
Think about where you want your clinic to go. If you expect to add staff, multiple locations, or services, your business model should be able to support these changes.
LLCs and corporations handle growth more effectively by providing clear ownership structures and ensuring regulatory compliance.
With your business model chosen, it’s time to set up your practice legally.
Useful read: Top Challenges Chiropractors Face When Managing a Business
How to Legally Set Up Your Chiropractic Practice
Once you have decided on a business model, here is how to set it up properly.
1. Register Your Business
You must register your clinic with your state government. The exact paperwork depends on your business structure:
- For an LLC, you file Articles of Organization.
- For a corporation, you file Articles of Incorporation.
This registration legally creates your business entity and sets it apart from you personally.
After registration, apply for an Employer Identification Number (EIN) from the IRS. The EIN functions like a Social Security number for your clinic, allowing you to open bank accounts, hire employees, and file taxes.
2. Obtain Nesccessary Licenses and Permits
After registering your business, it’s important to ensure your chiropractic license is current and meets all state requirements. Licenses often need regular renewal and may require continuing education.
Some states also require clinics to have additional permits, such as healthcare facility licenses or zoning approvals. If you plan to bill insurance companies or government programs like Medicare, you’ll need a National Provider Identifier (NPI) and may have to enroll as a provider with those programs.
Checking with your state chiropractic board and local authorities early on helps you avoid delays and ensures your clinic stays compliant.
You can check out this detailed guide on Chiropractic License & Certification for in-depth details.
3. Get Insurance
Insurance is critical for protecting your practice:
- Professional liability insurance (malpractice insurance) protects you if a patient files a claim alleging negligence or harm.
- General liability insurance covers injuries or damages occurring on your clinic’s premises.
- Property insurance protects your equipment and clinic space from damage or loss.
- If you hire staff, you’ll also need workers’ compensation insurance to cover workplace injuries.
Adequate insurance safeguards your clinic’s financial health and your personal assets.
Bonus read: The Chiropractor’s Guide to Managing Staff Schedules Without the Stress
4. Draft Agreements and Contracts
If your business model includes partners, investors, or multiple owners, it is essential to have clear, written agreements such as:
- Operating agreements (for LLCs) or
- Bylaws (for corporations).
These documents define ownership percentages, decision-making authority, profit distribution, and procedures for resolving disputes or exiting the business.
Even if you’re a sole proprietor, having clear contracts in place for employees, vendors, and service providers can help prevent legal issues.
Working with a healthcare attorney ensures these documents comply with state laws and industry regulations, reducing risk down the line.
You might also like: Chiropractor's Guide to Attracting More Clients: 12 Proven Strategies
How Noterro Supports Your Clinic’s Business Model
Choosing the right business model is only one piece of the puzzle. Running your clinic efficiently requires the right tools and resources.
Noterro, a clinic management software, works well with all business structures, from LLCs for therapists to S Corps.
Our platform helps you handle scheduling, patient records, insurance billing, and reporting all in one place. It supports multi-location clinics and teams, making management easier.
With Noterro, you spend less time on administrative tasks and more time focusing on your patients and growing your practice.
Also read: How to Elevate Your Chiropractic Clinic’s Perceived Value For Free
Final Thoughts and Next Steps
Picking the right business model lays a strong foundation for your clinic’s success. If you are opening your doors for the first time or considering changes to an existing practice, this decision impacts your legal protection and tax obligations.
For most chiropractors starting new clinics, an LLC offers a solid balance of simplicity and protection. If you already have a clinic, reviewing your current structure can uncover opportunities to improve or prepare for future growth.
I recommend working closely with your lawyer and accountant to choose the best fit for your unique situation. After that, using practice management tools like Noterro can help you maintain smooth operations and focus on patient care.
Remember, your business model is more than just paperwork; it is the foundation for building a clinic that lasts and thrives.
FAQs
What are the common mistakes new clinic owners make when choosing a business model?
Many start as sole proprietors without considering personal liability. Others neglect tax planning or skip formal agreements with partners.
How does my business model affect offering extra services or products?
Some structures limit the ability to bring on partners or investors, which can slow down expansion. LLCs and corporations generally offer more flexibility.
Are there state-specific rules that could limit my choice?
Yes. Some states require chiropractors to operate as Professional Corporations. Check local laws and licensing boards before making a decision.
