Do I Need to Set Up an LLC for My Oregon Business?

If you’re an entrepreneur in the wellness and medical space, you likely started your business to share your passion with the world. So unless that passion is for forming business entities (and whose isn’t?), setting up an LLC may be low on the list of things you want to do. But the reality is that for your Oregon business, you do need to set up an LLC for the best protection.

Running a company of any size takes enormous time and energy. But Doug Fir Billing is here to relieve some of that burden by handling your practice’s medical billing. Our team loves tackling this task so that you have time to help more people. Connect with us today to learn more.

Your Business Formation Matters

As soon as you start your company, you establish a business entity, no matter how informally. A sole proprietorship (sole prop) is the default formation, and there isn’t anything specific you need to do for this to be in effect.

While a sole prop is simple, it also doesn’t offer any protection. In the eyes of the law, you and your business are basically one and the same. If someone decided to sue your company when it’s a sole prop, that person could come after your personal assets. Your bank accounts, home, vehicles, and more would be at significant risk.

When you incorporate, however, the law sees you and your company as two separate things. If someone comes after your business in a lawsuit, they cannot also get at your personal assets.

Most business owners should consider establishing a limited liability corporation (LLC). And those in the wellness or medical profession absolutely should determine how an LLC or other entity could protect them in the case of a lawsuit. 

In addition to the legal protection an LLC may provide, incorporating your business can also offer tax advantages. Your CPA or tax advisor can help you understand how an LLC will impact your situation. 

Do I Need To Set Up an LLC for My Business?

For medical and wellness companies, incorporating right away has another benefit: it simplifies the medical billing process. As a sole proprietor, you generally use your Social Security Number (SSN) for tax identification purposes. But once you incorporate, you receive an Employer Identification Number (EIN). 

There are two challenges you’ll likely face if you set up your practice under your SSN instead of an EIN. The first is a security issue. As a provider, your SSN would end up in front of a lot of eyes at all of the insurance companies as claims go through. Yes, in theory, all employees have background checks and behave ethically. In reality, this practice puts your personal identifying information at risk. Data breaches happen all the time.

The second challenge is that if you start working with insurance companies under an SSN and later need to switch to an EIN, it’s a headache. To say the least. You will need to change this number with every insurance provider you accept. Each insurance company will likely change your tax ID with different effective dates. 

You or your biller will have to change all the claims manually so that the effective tax ID under contract is on the claims up through a specific date. If you have multiple insurance companies on different timelines, it's a massive workload to untangle everything. And when you’re paying someone to do it, it starts to add up.

Many business attorneys suggest that you incorporate immediately to avoid any potential complications. The legal and tax benefits are significant, and it’s almost always worth the effort. 

Can I Set Up an LLC By Myself?

First, let me be clear: I am not an attorney or tax advisor. (Please consult with a professional when needed.) But I am a business owner, and I know from personal experience that the process to set up your LLC is pretty straightforward in Oregon. Personally, it took me about 30 minutes, and it cost a $100 filing fee with the state. In Washington, it is very similar.

Sadly, there is a problem that many of my clients have faced recently, falling prey to some unscrupulous practices by outside experts. 

Many of my clients have experienced someone charging them a lot of money to handle the incorporation process. They drag it out for weeks or months at a significant cost when it should take less than an hour. 

Similarly, some of these people overcharge when the business owner is ready to file as an S Corp (generally recommended when earning about $100K in revenue). It’s hard not to feel that they’re being taken advantage of in these situations. 

Each business owner needs to decide which type of support and advice they need. And hiring out the work might be the right fit for your needs. But if you want to file your LLC on your own, you have the legal right to do that, despite what an “expert” might tell you. And if you do hire it out, it shouldn’t take them weeks or months to accomplish it.

Other Financial Considerations

When you’re an entrepreneur, especially in the medical, mental health, or other wellness fields, you put out a lot of energy to meet your clients’ needs. Sometimes it can be tricky to keep up with your own needs.

Another area that I’ve seen my clients struggle with is how to set up retirement accounts for themselves. As a fellow business owner, I understand the confusion around this topic. My advisor suggested a SEP-IRA, and I’m so glad I took her advice! This retirement savings plan is specifically for us self-employed individuals and might be a good fit for you. 

Not Sure Where To Start?

There are times when we entrepreneurs can do a lot on our own, and there are other times when it’s best to get expert help. If you’re in Washington or Oregon, I highly recommend Amy Kutzkey with Oak Hill Tax and Joni Carlisle for financial advice. Note: These are not affiliate links. I actually hire and trust these women!

And if keeping up with your medical billing is slowing you down, reach out to our team at Doug Fir. We specialize in behavioral health clinics and private practices and work hard to ensure you get all the payments you deserve. With us on your side, you can have more time pursuing your passion for helping people feel well and healthy.