Helpful Information For Occupational Therapy Professionals About General Business Corporations, Professional Service Corporations (PCs) And Professional Service Limited Liability Companies (LLCs)Introduction
Some occupational therapy professionals practice their profession as individual licensed practitioners. Others practice in some sort of corporate or other business entity structure. Not all such structures may legally provide professional occupational therapy services. The following brief descriptions are based in law 1 and address different corporate practice venues as they apply to occupational therapy. These descriptions provide basic information on acceptable organizational structures for occupational therapy professionals. This general information is no substitute for consulting the law and/or an attorney directly for guidance before deciding to practice in a specific corporate arrangement. There are many factors, including tax consequences, and personal and professional liability, to consider when deciding which form a professional practice should take.
1 The following statutes are applicable:
Education Law, Title 8, Article 130, Section 6509
Education Law, Title 8, Article 156, Section 7900
Business Corporations Law, Articles 4 and 14
- Licensed professionals may set up a professional service corporation (PC), a professional service limited liability company (LLC) or a registered limited liability partnership (LLP) if they want to be incorporated. Licensed professionals may not set up a general business corporation (GBC) to provide professional services.
- Except where specifically authorized by law, a general business
corporation may not:
- provide professional services to the public
- exercise any judgment over the delivery of professional services
- have employees who offer professional services to the public
- hold itself out as offering professional services
- share profits or split fees with licensed professionals
- A GBC may employ licensed professionals to provide in-house services to its own employees. For example, General Motors may employ an occupational therapist or an acupuncturist to provide services to the employees of General Motors. However, General Motors may not set up a business to provide these services to the public.
- A GBC may be a referral service agency, a management services
corporation, or an employment agency. For example, a GBC may:
- refer occupational therapists to work as employees of a health care facility
- find jobs for licensed professionals
- find licensed professionals for potential employers
- manage the services of licensed professionals, including providing services to the professional for a fee, eg., scheduling or billing.
Example: A GBC has an arrangement with Hospital A to do its payroll, and the same GBC also finds licensees to work on contract at that facility. Even though the GBC is providing payroll services, Hospital A must be the payer of the check. There must be a clear distinction between who is providing the services (Hospital A) and who is providing the management services (the GBC).
- A professional corporation may not serve as a management services corporation. A PC may only provide services in its field. For example, a hypothetical PC named "OTs For Everyone, PC" may only provide occupational therapy services. It cannot offer physical therapy services, speech services or any other professional services. Also, because it is allowed only to provide professional services, it can only manage the services that it provides. That is, it cannot provide management services to other OTs.
- A professional service limited liability company may provide professional services in more than one profession* provided that the company includes an "owner" (i.e., member) licensed in each of the professions in which the company will offer services. For example, the hypothetical LLC, Health Professionals, has seven members: an acupuncturist, an audiologist, a nurse, an occupational therapist, a physical therapist, a psychologist, and a speech-language pathologist. This LLC may provide services in all of these professions. It may not, however, provide respiratory therapy or chiropractic services, because none of its "owners" are licensed in those two professions. Additionally, only professionals licensed in one of the areas that the PLLC is authorized to practice may become a member or owner of that entity.
*Note that this does not apply in the professions of medicine, dentistry, veterinary medicine, professional engineering, architecture, land surveying and landscape architecture.