By default, all net profit from your LLC is taxed as self-employment income (15.3% SE tax + income tax). An S-Corp election splits that income: you pay yourself a reasonable W-2 salary as an employee of your own practice, and remaining profit is taken as a shareholder distribution — subject only to income tax, not the 15.3% SE tax.

• SE tax savings: Only your W-2 salary is subject to the 15.3% payroll tax — distributions bypass it entirely. This is the primary financial driver.
• Larger retirement contributions: As a W-2 employee of your own S-Corp, you can fund a Solo 401(k) based on your salary, increasing your pre-tax retirement contribution ceiling.
• Health insurance deduction: S-Corp owners holding more than 2% of shares can deduct 100% of health insurance premiums through payroll, reducing taxable income at the business level.
• Pass-through taxation: Like a standard LLC, profits and losses flow to your personal return — no corporate-level double taxation as with a C-Corp.
• Income documentation: W-2 income creates a verifiable salary history, useful for mortgages, practice financing, and payer audits.
• Scalability: As revenue grows, the portion taken as distributions can increase, compounding SE tax savings year over year.

• Must be a domestic (US) entity with no foreign members
• Maximum 100 shareholders — not a concern for solo practices
• Only one class of stock permitted
• All shareholders must be US citizens or permanent residents
• Your LLC must have an EIN before making the election
• Reasonable salary requirement: The IRS requires you to pay yourself a salary comparable to what you would pay another NP in your market — typically 40–60% of net profit. Paying yourself zero or a token salary to maximize distributions is an audit trigger.

File IRS Form 2553 (Election by a Small Business Corporation) with the IRS by March 15 of the tax year you want it to take effect, or within 75 days of forming your entity. Late elections are available through IRS relief provisions in most cases.

• ↗ IRS Form 2553 — S-Corp Election
• ↗ IRS — S Corporation Overview
• File by mail or fax to your IRS Service Center — no state filing needed in most states (CA and NY require additional recognition forms)
• IRS confirmation arrives by mail in 4–8 weeks — keep permanently with your corporate records

Recommended path: Form your LLC or PLLC now and operate as a default single-member LLC in year one while you focus on credentialing and revenue. Revisit the S-Corp election with a CPA once net profit consistently exceeds $50,000/year — that is the point where the numbers work in your favor.

Go to the IRS EIN Online Assistant at irs.gov/EIN. Select “LLC” as your entity type, then answer questions about your business structure, the responsible party (you, as the sole member), and your business purpose. The application takes 10–15 minutes. Your EIN is displayed on-screen immediately and emailed to you.

• ↗ IRS — Apply for EIN Online (Free)
• Available Monday–Friday, 7am–10pm ET only — sessions expire after 15 minutes of inactivity
• Print or save the confirmation page immediately — this is your IRS Form SS-4 equivalent
• IRS also mails a paper confirmation within 4–6 weeks — keep both the online confirmation and the mailed letter permanently
• You will need the EIN for: business bank account, Type 2 NPI application, CAQH, commercial payer enrollment, and tax filings

• Open your business bank account — bring your EIN confirmation, Articles of Organization, Operating Agreement, and photo ID (see Part D below)
• Apply for your Type 2 NPI — enter your EIN exactly as it appears in NPPES when applying for your organization NPI (Module 02)
• Update your CAQH profile — your EIN is required in the billing/tax section of your CAQH provider profile (Module 04)
• Use it for all payer enrollment — Medicare CMS-855I, Medicaid, and commercial payer applications all require your EIN
• File S-Corp election if applicable — IRS Form 2553 requires your EIN to be on file before the election is processed

Your business name must be unique in your state and must include “LLC” or “PLLC” in the name. Search your state’s business name database to confirm your desired name is available. For PLLCs, avoid medical specialty terms unless your state board specifically permits them. Common naming approach: [Your Name] NP PLLC, or [City/Region] Mental Health PLLC.

• Search your state’s business name database through your Secretary of State website
• Check federal trademark database if you plan to market under a brand name: ↗ USPTO Trademark Search

A registered agent is a person or service that receives legal documents on behalf of your business. All states require one. The registered agent must have a physical address in your state (a P.O. box is not acceptable). You can serve as your own registered agent using your practice address, or hire a registered agent service ($50–$150/year) if you want privacy or plan to be mobile.

• ↗ Registered Agent Overview — Nolo
• Popular services: Northwest Registered Agent, Incorp, ZenBusiness, Registered Agents Inc.

Go to your state’s Secretary of State website and file Articles of Organization (for LLC) or Articles of Organization for PLLC. You will provide: business name, registered agent info, your name and address as organizer, business purpose (use “healthcare services” or “professional nursing services”), and management structure (member-managed as a solo NP). Pay the filing fee online.

An operating agreement defines how your LLC is governed — even as a single-member LLC, most states require or strongly recommend one. It establishes: your ownership percentage (100%), decision-making authority, how the business will be dissolved if needed, and the separation between personal and business finances. Templates are available through your state bar association or platforms like Rocket Lawyer and LegalZoom. For a solo NP PLLC, a standard single-member LLC operating agreement is sufficient.

• ↗ Rocket Lawyer — Operating Agreement Template
• ↗ LegalZoom — Operating Agreement

• EIN confirmation letter (IRS Form SS-4)
• Articles of Organization or Certificate of Organization (state filing confirmation)
• Operating Agreement
• Your government-issued photo ID
• Initial deposit (varies by bank — typically $0–$100)

Occurrence policy: covers claims for incidents that happened during the policy period, even if you no longer have the policy when the claim is filed. More expensive but provides permanent protection. Claims-made policy: only covers claims filed while the policy is active. Cheaper, but requires you to purchase “tail coverage” if you ever cancel or switch the policy — tail coverage typically costs 200–300% of your annual premium.

For solo NP practices starting out, a claims-made policy with the intent to purchase tail coverage later is common. Many carriers offer “nose coverage” on your new policy that covers prior acts, eliminating the need for tail.