PLLC, PC or LLC for a DPC Practice? How to Choose Your Entity in 2027

Should a DPC practice be a PLLC, a PC or an LLC?

Where state law limits who can own a business that practices medicine, a physician-owned direct primary care practice may need to form a professional entity, such as a professional limited liability company (PLLC) or a professional corporation (PC). Whether a plain LLC can practice medicine varies by state, and in California it cannot. The right choice comes down to two questions, which entity types your state allows for physicians, and how you want the practice taxed, which is often settled separately by an S corporation election.

This guide walks through how the three entity types differ, how the corporate practice of medicine shapes the choice in four large DPC states, what an entity does and does not protect you from, and how each one is taxed. Every state rule below links to the statute or medical board page itself. It is general information, not legal advice, so bring your state's rules to a health care attorney before you file anything.

If you are earlier in the process, our guide on how to start a DPC practice in 2027 puts entity formation in the full launch timeline, and how to finance a DPC startup covers the money side that often depends on having the entity in place first.

What is the difference between a PLLC, a PC and an LLC?

All three give the practice a legal existence separate from you, which is what lets the practice sign a lease, hold a bank account, employ a medical assistant and carry its own debts. The difference is who may own them and which state law governs them.

Names vary by state. Texas reserves "professional corporation" for professions other than medicine and gives physicians the professional association instead, per Texas Business Organizations Code section 301.003. Florida's statute requires a physician corporation's name to carry "chartered," "professional association," "P.A." or "PA," and a PLLC's name to carry "chartered" or a designation such as "P.L.L.C." or "PLLC," under Florida Statutes section 621.12.

Where both are allowed, the decision is between a PLLC and a PC. Both keep ownership with licensed physicians, both protect you from the practice's ordinary business debts, and both can be taxed as an S corporation if that fits your income. A PLLC usually has lighter formalities, since an operating agreement takes the place of the bylaws, board and annual shareholder meetings a corporation typically keeps.

Who is allowed to own a medical practice? (the corporate practice of medicine)

The corporate practice of medicine doctrine is a set of state laws, rules and court decisions that limit who can own a business that practices medicine or employs physicians. Where it applies, the practice generally has to be owned and controlled by licensed physicians, and clinical decisions stay with them rather than with a company or an investor. Each state writes its own version, so the same DPC structure can be fine in one state and a problem across the border.

California

California has one of the strictest versions of the doctrine. Business and Professions Code section 2400, as quoted by the Medical Board of California, says that "corporations and other artificial entities shall have no professional rights, privileges, or powers." The Board's practice information page lists, among prohibited arrangements, non-physicians owning or operating a business that offers patient evaluation, diagnosis, care or treatment, and physicians operating a practice as a limited liability company, a limited liability partnership or a general corporation.

The LLC law says the same thing from the other side. Corporations Code section 17701.04(e) states that nothing in the LLC title permits an LLC "to render professional services" in California. That leaves the medical corporation, where section 13401.5 lets a listed group of other licensees, such as podiatrists, psychologists, registered nurses and physician assistants, hold shares as long as their combined shares stay at or under 49 percent and there are no more of them owning shares than there are physicians.

The Board also spells out decisions that only a California-licensed physician can make, including which diagnostic tests are appropriate, referrals, how many patients a physician sees or how many hours they work, the hiring and firing of clinical staff based on competency, coding and billing decisions, and ownership of medical records. It adds that these decisions cannot be delegated to unlicensed people, including management service organizations.

Texas

Texas does not use the professional corporation for physicians. Its Business Organizations Code defines the professional association as the entity for doctors of medicine and osteopathy, and physicians can also form a PLLC. Section 301.012 lets physicians jointly own a professional association or PLLC with podiatrists, chiropractors, optometrists or physician assistants, each practicing within their own scope.

The physician assistant rules are specific. A PA may not be an officer, the organizer must be a physician who ensures physicians control and manage the entity, and PAs together may hold only a minority interest, with no single PA owning as much as any individual physician owner. The Texas Medical Board says an entity in which a PA has an ownership interest must register with the Board every year, with reports due April 30.

For entities formed on or after June 17, 2011, the Board lists a yearly reporting fee of $18.

New York

New York lets physicians form a professional service limited liability company, and LLC Law section 1203 sets a firm rule for medicine. Every member of a PLLC formed to provide medical services must be licensed to practice medicine in New York. A New York founder who wants a non-physician partner needs a different structure and a careful attorney.

Florida

Florida's Professional Service Corporation and Limited Liability Company Act, chapter 621, lets physicians practice through a professional association or a PLLC. Section 621.09 says shares and memberships may only go to individuals or professional entities licensed to render the same professional service, and section 621.06 says the entity renders professional services only through licensed people, while still allowing it to employ clerks, technicians and other assistants.

Every other state

If your state is not on this list, start with three documents, your state's professional entity or professional corporation statute, the LLC statute's section on professional services, and your medical board's guidance on ownership and the corporate practice of medicine. Our state guides at /start-a-dpc and the DPC laws by state overview point you to your state's DPC statute, which you will want to read alongside the entity rules.

Does a PLLC protect you from malpractice claims?

Not for your own care, and this is the part most worth understanding before you file. Professional entity statutes keep each clinician personally responsible for their own work. New York LLC Law section 1205 says each member, manager or employee of a professional service LLC is "personally and fully liable and accountable" for negligent or wrongful acts committed by them or by anyone under their direct supervision and control.

Florida's section 621.07 reaches the same place, making each person personally liable only for their own negligent acts and those of people under their direct supervision, while the entity is liable up to the full value of its property. Texas section 301.010 makes the professional entity jointly and severally liable for errors by its owners and employees, while other owners who were not involved are not subject to that same liability.

So the entity does two real jobs. It keeps the practice's business debts, like the lease, a loan or a vendor dispute, with the practice, and it keeps you from being personally on the hook for a colleague's care that you did not supervise. Your own clinical liability is handled by malpractice insurance, which is why the entity and the policy are planned together. Our guide to insurance for a new DPC practice covers the policies most new practices carry, including entity coverage.

How is a PLLC or a PC taxed?

The entity's state label and its federal tax treatment are separate choices. The IRS treats an LLC with one member as disregarded from its owner and an LLC with at least two members as a partnership, unless it files Form 8832 to be treated as a corporation. A PLLC follows the same rules, so a solo DPC PLLC reports its profit on the owner's personal return by default.

A PC is a corporation from the start. If it does nothing else it is a C corporation, which pays its own federal income tax on profit. The rate is set by 26 U.S.C. section 11(b) at 21 percent of taxable income, and profit paid out to you as a dividend is taxed again on your personal return.

If your entity qualifies, you can choose S corporation treatment instead, for either a PLLC or a PC, so profit passes through to the owner's return and the owner is paid partly as salary. The Form 2553 instructions say an eligible entity like an LLC that makes the S election is treated as a corporation from the election's effective date and does not need to file Form 8832, and that the form is due no more than 2 months and 15 days after the start of the tax year the election should take effect. The IRS's S corporation page adds the core limits, no more than 100 shareholders, only allowable shareholders such as individuals, certain trusts and estates, and one class of stock.

Whether the S election saves you money depends on your profit, salary and state, so that is a conversation for a CPA who works with medical practices. Either way, choosing a PLLC or a PC does not lock you into a tax treatment.

Can a nurse practitioner, spouse or investor own part of a DPC?

This is where the corporate practice of medicine matters most for founders who plan to build with a nurse practitioner, a spouse who runs operations or an outside investor. The answer changes completely by state.

In New York, every member of a medical PLLC must be a New York physician. In Texas, a physician assistant can hold a minority stake in a professional association or PLLC, but a nurse practitioner is not on the section 301.012 list for joint ownership with physicians. In California, a medical corporation can include certain other licensees, including registered nurses, up to that 49 percent combined cap, but not unlicensed owners. Florida limits ownership to people licensed for the same professional service.

A spouse or investor who is not a licensed clinician usually cannot hold equity in the practice entity itself in these states. Some practices use a separate management company that owns non-clinical assets and provides services under a written agreement, but California's Board explicitly says clinical and certain business decisions cannot be handed to a management service organization. Have any management or investor agreement reviewed against your state's rules before you sign it, and if you are a nurse practitioner building your own practice, our guide on whether NPs can open a DPC covers the NP side state by state.

Does your entity change Medicare opt-out, HSAs or your DPC agreement?

The entity mostly sits underneath these decisions rather than changing them, but it touches each one.

• Medicare opt-out. Opting out is a decision each physician or practitioner makes for themselves, so forming a PLLC does not opt anyone out. See how to opt out of Medicare for DPC for the filing steps.
• Your membership agreement. The patient's contract should name the entity that actually provides care and collects the fee, so update agreements if you ever convert from one entity to another. Your state's DPC statute may set required terms, which the DPC laws by state guide summarizes.
• HSA-compatible memberships. Since 2026, DPC memberships under the federal fee cap can be paid from an HSA, and that depends on the arrangement, not the entity type. The DPC HSA rules for 2027 explain the cap and the excluded services.
• Referrals and investments. Ownership structure matters for federal anti-kickback and self-referral rules once labs, imaging or other physicians are involved. The anti-kickback and Stark basics for DPC guide covers what to watch.

How do you set up a DPC entity, step by step?

The order below keeps the decisions that depend on each other in sequence, so you do not file one entity type and discover later that your state wanted another.

1. Read your state's rules. Find the professional entity statute, the LLC law's section on professional services and the medical board's ownership guidance.
2. Choose the entity with a health care attorney. Pick PLLC or PC (or a plain LLC only if your state clearly allows it), and settle who will own it and in what shares.
3. File with the secretary of state. Use the name designation your state requires, such as "PLLC" or "P.A." in Florida, and register any trade name you plan to market under.
4. Draft the operating agreement or bylaws. Cover what happens if an owner loses their license, leaves or dies, since professional entity laws often require a disqualified owner to exit, as Florida section 621.10 does.
5. Get the entity's tax ID and decide on the S election with your CPA, watching the Form 2553 deadline.
6. Open the practice bank account and sign contracts in the entity's name, including the lease, your EHR and billing tools, and your credentialing and license paperwork.
7. Put the entity's name in your membership agreement, your website footer and your patient paperwork, so patients know exactly who they are contracting with.

Formation costs vary by state and attorney, so build them into your plan with the DPC startup cost calculator rather than guessing.

Keeping the practice organized once the paperwork is done

Once the entity exists, small recurring work hangs off it, like annual reports to the secretary of state, board ownership reports in states such as Texas, insurance and contract renewals in the entity's name, and tax deadlines. None of it is hard, but it slips easily when it lives in one person's calendar while seeing patients fills the day.

That is the kind of between-the-tools work Tabflows was built for. We are a dedicated tech team that connects the tools a DPC clinic already uses, like its EHR, billing and messaging, so follow-ups, tasks and patient context live in one shared place and the recurring items get done on time. When you are ready to see where your practice sits among others, the DPC Finder lists practices across the country.