Should I Start an LLC for My Chiropractic Clinic?

Starting a limited liability company (LLC) for your chiropractic 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 a chiropractic clinic, lawsuits can arise from things like medical malpractice allegations (e.g., as a result of performing a non-conventional technique on a client, etc.) or personal injuries.

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

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

Do I Need an LLC for a Chiropractic 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 a Chiropractic Clinic

By starting an LLC for your chiropractic 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.

Chiropractic clinics will benefit from liability protection because of the risks relating to the medical treatment of patients. Additionally, there are general risks associated with patients being on the premises of your business location.

Example 1: When one of your chiropractors accidentally injures a client, a malpractice lawsuit is brought against your LLC. Since you didn’t personally act negligently, your business’s LLC classification will ensure that your personal assets are protected from the claimant, regardless of the validity of the lawsuit.

Example 2: After discovering that one of your chiropractors was using ineffective techniques that he had seen in a YouTube video, you fire him, letting him know that he has potentially opened your whole clinic up to a medical malpractice lawsuit. The employee, who is a licensed chiropractor, disagrees with your assessment and brings forth a wrongful termination lawsuit against your business. Here, the fact that your business is registered as an LLC will mean that you cannot be found personally liable for compensating the claimant, regardless of whether any liability arises in court.

Example 3: After a rather unsuccessful year, you decide that you want to redesign your clinic and end up applying for a small business loan of $20,000 in order to purchase new equipment and waiting-room furniture. Assuming that you do not personally guarantee the loan, your personal assets will remain safe from all lending parties involved regardless of whether your business fails to pay the loan back in the future.

Example 4: While a patient is walking through your clinic, they accidentally trip on an exposed wire which results in the patient breaking one of their arms. Covering the medical damages associated with the patient’s accident could be a significant financial burden for your clinic.

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 a Chiropractic 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 a chiropractic 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

Chiropractic 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 trusted 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?

The limited liability offered by an LLC entity protects its owners’ assets only. If you want to protect your clinic’s assets (e.g., equipment, office furniture, lease, etc.), your LLC will need to purchase business insurance.

Common Situations Business Insurance May Cover for a Chiropractic Clinic

Example 1: During a visit to your clinic, a patient trips over a pothole in your parking lot, breaks an arm in the resulting fall, and decides to sue your business for damages. General liability insurance would pay for your legal defense costs and any required settlement.

Example 2: A competing chiropractic clinic sues you for slander. While you’re uncertain why the clinic owner believes you slandered her business, you want to hire an attorney to protect your company. General liability insurance would cover your legal defense costs and any required settlement.

Example 3: As an employee brings supplies into your clinic, she accidentally knocks a patient over as she rounds a corner. The patient breaks her tailbone in the resulting fall and asks your business to pay for her medical treatment. General liability insurance would cover the injured patient’s medical bills.

Other Types of Coverage Chiropractic 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 chiropractic clinics should obtain:

Professional Liability Insurance

While you strive to provide the best possible care for your patients, there’s always a chance someone might claim your professional services caused them harm. If a client sues your business based on a negligence claim, professional liability insurance would cover your legal fees and any required settlement.

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.

Commercial Property Insurance

You made a major investment in the chiropractic equipment, office furniture, computers, supplies, and real estate needed to start your business. 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, workers’ compensation insurance, and commercial property insurance.

Read our Business Insurance for Chiropractic Clinics article for more info.

Starting a chiropractic clinic can be quite expensive and can easily exceed $100,000 in the first year. This is because you will need to purchase equipment, office furniture, rent out a large enough office space, and (potentially) hire additional chiropractors to help you work.

You will also need to factor in the costs of getting a business website, renewing your license, and purchasing business insurance.

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

Ongoing costs will include licensing, continued education, insurance, salaries, and rent.

Learn more about running a chiropractic clinic.

Chiropractors charge their clients fees for related services provided in context to adjustments and mobility work.

Learn more about starting a chiropractic clinic.

Chiropractors aim to improve spinal mobility, which usually involves the adjustment of the spine for neck, lower, middle, and upper back problems. Chiropractic clinics offer supplemental treatments for individuals dissatisfied with previous medical treatments looking for pain relief.

The average chiropractic clinic will have profit margins between 30%and 35%.

Learn more about starting a chiropractic clinic.