Should I Start an LLC for My Acupuncture Clinic?

Starting a limited liability company (LLC) for your acupuncture clinic can provide several benefits.

Most importantly, an LLC structure offers limited liability to its owners, which can protect their personal assets from lawsuits and creditors.

For an acupuncture clinic, lawsuits can arise from things like medical malpractice, injuries, and contract disputes.

LLCs are also affordable, highly flexible (from a tax point-of-view), and can make your acupuncture clinic seem more credible.

Recommended: Use Northwest to form an LLC for $29 (plus state fees).

Do I Need an LLC for an Acupuncture Clinic?

LLCs are a simple and inexpensive way to protect your personal assets and save money on taxes.

You should form an LLC when there's any risk involved in your business and/or when your business could benefit from tax options and increased credibility.

LLC Benefits for an Acupuncture Clinic

By starting an LLC for your acupuncture clinic, you can:

Protect your savings, car, and house with limited liability protection
Have more tax benefits and options
Increase your business’s credibility

Limited Liability Protection

LLCs provide limited liability protection. This means your personal assets (e.g., car, house, bank account) are protected in the event your business is sued or if it defaults on a debt.

Acupuncture clinics will benefit from liability protection because of the risks inherent to the treatment process as well as other general business risks like workplace injuries, data breaches, and trademark infringement claims.

Example 1: While performing a standard acupuncture procedure, your employee ends up accidentally hurting one of your clients, who then sues you for malpractice. Assuming you took all reasonable steps necessary to ensure your employee was trained properly, you will not be held legally liable for any liability that arises as a result of the dispute.

Example 2: Following an unsatisfactory acupuncture session, a client experiences severe back pain. After alleging that this is a direct result of your acupuncture session, they threaten to sue your company. Here, you will not be held personally liable, regardless of the outcome of the lawsuit, (unless the back pain is a direct result of your negligence).

Example 3: After promising to purchase acupuncture equipment from your friend’s business, you see a dip in your revenue and realize you will not be in a position to do so. Your friend — who believes you have a valid verbal contract — decides to sue you for breach of contract. Regardless of the validity of the claim, an LLC’s limited liability would protect you from having to personally reimburse your friend.

Example 4: After an acupuncture session, your patient claims that the treatment made their condition worse and sues your business.

An LLC will also protect your personal assets in the event of commercial bankruptcy or loan default.

To maintain your LLC's limited liability protection, you must maintain your LLC's corporate veil.

LLC Tax Benefits and Options for an Acupuncture Clinic

LLCs, by default, are taxed as a pass-through entity, just like a sole proprietorship or partnership. This means that the business's net income passes through to the owner's individual tax return.

The business’s net income is then subject to income taxes (based on the owner's tax bracket) and self-employment taxes.

Sole proprietorships and partnerships are taxed in a similar way to LLCs, but they do not offer limited liability protection or other tax options.

S Corp Option for LLCs

An S corporation (S corp) is an IRS tax status that an LLC can elect. S corp status allows business owners to be treated as employees of the business (for tax purposes).

S corp tax status can reduce self-employment taxes and will allow business owners to contribute pre-tax dollars to 401k or health insurance premiums.

The S corp status requires that the business pay the employee-owner(s) a reasonable salary for the work they perform.

In addition, the business might need to spend more on accounting, bookkeeping, and payroll services. To offset these costs, you'd need to be saving about $2,000 a year on taxes.

We estimate that if an acupuncture clinic owner can pay themselves a reasonable salary and at least $10,000 in distributions each year, they could benefit from S corp status.

You can start an S corp when you form your LLC. Our How to Start an S Corp guide will lead you through the process.

Credibility and Consumer Trust

Acupuncture clinics rely on consumer trust. Credibility plays a key role in creating and maintaining any business.

Businesses gain consumer trust simply by forming an LLC.

A growing business can also benefit from the credibility of an LLC when applying for small business loans, grants, and credit.

Northwest will start an LLC for you for just $29 (plus state fees).

Get Started

How to Form an LLC

Forming an LLC is easy. There are two options for forming your LLC:

You can hire a professional LLC formation service to set up your LLC for a small fee
Or, you can choose your state from the list below to start an LLC yourself

Select Your State

For most new business owners, the best state to form an LLC in is the state where you live and where you plan to conduct your business.

Do LLCs Need Insurance?

Business insurance is beneficial to all LLCs because it ensures that all business assets are adequately protected. The limited liability offered by LLCs then protects the assets of the actual owners.

Acupuncture clinics in particular may find that insurance is crucial due to the medical nature of their business operations.

Common Situations Business Insurance May Cover for an Acupuncture Clinic

Example 1: While walking into your clinic’s restroom, a patient slips on a wet floor, injures herself, and decides to sue your business. General liability insurance would pay for your legal defense costs.

Example 2: When your receptionist accidentally knocks a patient to the ground in a hallway, the patient breaks his tailbone and asks you to pay for his medical care. General liability insurance would cover his medical treatment.

Example 3: One of your employees accidentally steps on a patient’s high-end laptop. General liability insurance would cover the cost of repairing or replacing the patient’s damaged property.

Other Types Of Coverage Acupuncture Clinics Need

While general liability is the most important type of insurance to have, there are several other forms of coverage you should be aware of. Below are some other types of insurance all acupuncture clinics should obtain:

Workers’ Compensation Insurance

Most states require businesses to carry workers’ compensation insurance for their part-time and full-time employees. This coverage protects your employees if they become injured at work or fall ill after a work-related accident. It not only covers an employee’s medical bills and lost wages if they need time to recover, but also any disability or death benefits stemming from a work-related accident.

Professional Liability Insurance

While you strive to heal your patients and deliver the highest level of service, there’s always a chance a patient might sue you for mistakes they claim you made. In the event of a lawsuit, professional liability insurance would cover your legal fees and any required settlement.

Commercial Property Insurance

You made a major investment to start your clinic. In the event of a fire, theft, or natural disaster, commercial property insurance would cover the cost of repairing or replacing your business-related property. This includes structural damage to your building as well as the business equipment and supplies you store there.

Commercial Umbrella Insurance

While your general liability insurance policy covers most claims, some accidents or lawsuits may be so catastrophic that they threaten to exhaust the limits of your primary coverage. Commercial umbrella insurance protects you from paying out-of-pocket for any legal fees and awarded damages that exceed your primary policy.

Should I Start an LLC FAQ

Choosing the right business structure depends on your business’s unique circumstances and needs. However, unless your business is very low risk (like a hobby), an LLC is likely the better option.

Visit our LLC vs. Sole Proprietorship guide to learn more.

At a minimum, you’ll need general liability insurance and commercial property insurance.

Read our Acupuncture Clinic Business Insurance article for more info.

You will need to purchase acupuncture equipment (e.g., portable massage table, needles, etc.), which can be done for under $500. Similarly, you may need to purchase sheets, chairs, a CD player, and a dresser, which can be done for as little as $300.

When it comes to maintenance, you should expect to pay a small amount on utilities and rent, as well as on replenishing the medical supplies that you may need.

Visit our How to Start an Acupuncture Clinic guide to learn more about the costs of starting and maintaining this business.

Ongoing expenses will include things like building costs, utilities, and medical supplies. As you select your clinic location and size, you will need to consider how much ongoing expenses you want to take on. You could also look for partnerships with local massage therapy studios or chiropractic practices.

Learn more about running an acupuncture clinic.

A clinic makes money by charging clients for visits or a treatment plan. The amount you can change for the visits or the treatment plans will vary based on the need of the client and the location where you do business. Finding the clients that are in need of your services will ensure your clinic is able to make a profit.

Learn more about starting an acupuncture clinic.

Acupuncture clinics advise patients on a variety of matters that are alternatives to medicine and general health maintenance approaches.

The average charge for services at an acupuncture clinic is between $75 and $100. The profits of your clinic will depend on your overhead costs, the number of clients you are able to see, and other expenses related to the business.

Learn more about starting an acupuncture clinic.