Best Business Entity for Orthopedic Surgeons: 5 Ways to Protect Your Practice and Build for the Future

If you’re an orthopedic surgeon launching your own practice, joining a surgical group, or investing in outpatient services like physical therapy or imaging, one of the most impactful decisions you’ll make is how to legally structure your business. Your business entity decision can affect everything from how you’re taxed and protected, to how you scale, bring on partners, or plan for exit.

This guide walks through 5 of the most common business entity types for orthopedic surgeons, along with strategies that support asset protection, tax planning, and exit readiness.

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The Importance of Legal Structuring for Orthopedic Surgery Practices

Orthopedic surgeons are often at the center of complex business ecosystems. Owning or partnering in ambulatory surgery centers (ASCs), therapy facilities, diagnostics labs, or even biotech ventures. You’re not just providing care, you’re building a business that requires strategic planning.

The legal entity you choose directly influences:

• How your income is taxed and distributed

• Whether your personal wealth is shielded from malpractice or business-related liability

• How smoothly you can bring on new partnerships or expand locations

• Compliance with state medical ownership laws and federal regulations

The right structure safeguards your long-term growth, exit plan, and estate planning strategy.

5 Business Entity Options for Orthopedic Surgeons

1. Professional Corporation (PC) or Professional Association (PA)
Often required in states where only licensed physicians can own medical practices. A PC creates a legal barrier between your personal assets and practice risk, while supporting medical board compliance. This is a go-to structure for group practices and surgeons planning to grow within a regulated environment.

• Meets physician ownership and licensing requirements

• Enables liability separation for malpractice or operational risk

• Compatible with S-Corporation election for tax efficiency

2. PLLC (Professional Limited Liability Company)
A modern, flexible entity type that works well for solo orthopedic surgeons or joint ventures with physical therapy or imaging partners. PLLCs offer strong legal protection and customizable ownership agreements, ideal for expanding practices with diversified service lines. This structure supports multi-physician partnerships, ancillary income streams, and gradual succession plans.

• Shields your personal assets from practice-related liabilities

• Simplifies joint ownership of ASCs or PT clinics

• Aligns well with business planning and partner agreements

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3. S-Corporation Election
A tax strategy applied to your PC or PLLC that allows you to split income between salary and profit distributions. This approach can significantly reduce your self-employment tax burden while remaining IRS compliant. It’s a smart option for orthopedic surgeons earning mid-to-high six figures and focused on tax planning.

• Reduces FICA taxes on income above your base salary

• Commonly paired with PC or PLLC structures

• Supports efficient compensation strategies in financial planning workflows

4. Multi-Entity Structures
Common for surgeons who co-own ASCs, imaging facilities, or rehab services alongside their primary practice. Creating separate legal entities for each service isolates risk, enhances operational clarity, and simplifies future buy-ins or exits. It’s a strategic structure for surgeons focused on exit planning, estate protection, and growth across multiple income channels.

• Example: PLLC for surgery, LLC for physical therapy, separate holding entity for real estate

• Supports layered income strategies across surgical and non-surgical services

• Enables clean valuation and transfer of ownership during succession

5. C-Corporation (Less Common)
Typically used in large orthopedic networks or investor-backed growth models.
While less tax-efficient for most, a C-Corp may support advanced compensation models and retained earnings strategies in larger organizations. Consider this if you’re building a regional brand or seeking capital for expansion.

• May offer planning flexibility with private banking and fringe benefits

• Subject to double taxation without proper exit coordination

• Suited for group structuring with layered compensation and benefit needs

Secure Your Business, Plan For Success With Intention

Design a legal and financial structure that aligns with your surgical focus, your business ambitions, and your future transitions. Through our trusted network of business attorneys, CPAs, and exit planners, we guide you through:

• Choosing the best legal entity for your orthopedic practice

• Structuring partnership agreements and multi-owner practices

• Integrating your business entity into your estate plan

• Preparing your practice for acquisition, retirement, or generational handoff

Whether you’re opening your first practice, expanding locations, or planning your next chapter, we’ll help you secure the structure to support it all.

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Frequently Asked Questions

What is the best entity for an orthopedic surgeon starting a solo practice?
A PLLC or PC with an S-Corp election is often the most efficient setup, offering liability protection and tax savings with room to grow.

Should I have a separate entity for my ASC or PT clinic?
Yes. Using separate entities limits liability, simplifies financial tracking, and makes it easier to bring in partners or sell off individual components later.

Can I change my structure later?
You can, but it’s easier and safer to get it right from the start. Restructuring can trigger taxes or require legal rewrites of contracts and agreements.

How does my business entity affect my estate planning?
The right entity allows for clean transfer of ownership, valuation for estate purposes, and integration with trusts or buy-sell agreements.

Do I need a lawyer to form a PLLC or PC?
We recommend it. State-specific rules for physician ownership, corporate governance, and compliance are best handled by a legal advisor who understands healthcare law.