How to Start a Medical Practice in 2026: A Complete Guide
Last Updated: November 2025 | Reading Time: 12 minutes
If you're a nurse practitioner, physician assistant or really any provider or non-provider, setting up your business entity is a crucial step to launching a compliant practice. But before you see your first patient, you need to set up the right business structure. For most NPs and PAs, that means forming a professional limited liability company (PLLC or PC).
This guide walks you through exactly how to do it, which states make it easy, which ones make it complicated, and what mistakes to avoid that could cost you thousands or put your license at risk.
Quick Navigation:
Why NPs and PAs Need an LLC
You've probably heard about keeping your personal and business finances separate. But as a healthcare provider, there's more at stake than just clean bookkeeping.
Liability protection is critical in healthcare. If your practice faces a lawsuit, an LLC shields your personal assets - your house, car, savings - from business debts and legal claims. Your malpractice insurance covers clinical errors, but an LLC protects you from slip-and-fall accidents, contract disputes, employee claims, and other business-related issues.
Tax advantages matter too. As an LLC, you can deduct business expenses that W-2 employees can't touch: your office rent, medical supplies, continuing education, professional memberships, even part of your home office if you do administrative work there. You can also elect S-Corp taxation once you're profitable, which can save you thousands in self-employment taxes.
Credibility with patients and payers improves when you have a formal business entity. Credentialing with insurance companies requires business documentation. Patients take you more seriously. And if you ever want to bring on partners or sell your practice, having proper corporate structure from day one makes everything cleaner.
But here's what matters most: Some states won't let you practice independently without the right business structure. Scope of practice laws, collaborative practice agreements, and corporate practice of medicine restrictions all intersect with how you structure your business.
Get this wrong and you could face board complaints, insurance denials, or worse.
Professional LLC vs Regular LLC: What's the Difference?
Most states require healthcare providers to form a Professional LLC (PLLC) or Professional Corporation (PC) instead of a regular LLC.
The key differences:
Ownership restrictions: Only licensed healthcare professionals can own shares in a PLLC. You can't have your non-licensed spouse or business partner as an owner (though some states allow exceptions).
Naming requirements: Your business name must include "Professional Limited Liability Company," "PLLC," or similar designation. Some states won't let you use terms like "clinic" or "medical" without specific licenses (like being a physician).
Additional licensing: You'll need your state medical/nursing board approval in addition to Secretary of State approval.
Liability limitations: PLLCs protect you from business liabilities but NOT from your own malpractice. That's what malpractice insurance is for.
States that require PLLC/PC for NPs and PAs: California, Florida, Texas, New York, Illinois, Pennsylvania, Ohio, Michigan, Georgia, North Carolina, Tennessee, Louisiana, Alabama, and most others.
States that allow regular LLCs: Very few. Check your state's medical board regulations before assuming you can use a standard LLC.
Pro tip: Even in states that technically allow regular LLCs, using a PLLC signals professionalism to credentialing committees and makes it clear you're running a medical practice, not a general business.
8 Steps to Form Your Medical Practice LLC
Step 1: Research Your State's Scope of Practice and Corporate Practice Requirements
Before you file anything, understand what you're legally allowed to do in your state.
Critical questions:
Does your state allow full practice authority for NPs? (28 states do as of 2025)
Do you need a collaborative practice agreement with a physician?
Can you own your practice outright, or do you need a physician partner?
What are the corporate practice of medicine restrictions?
Full practice authority states (easiest for independent NPs): Alaska, Arizona, Colorado, Connecticut, Delaware, Hawaii, Idaho, Iowa, Maine, Maryland, Massachusetts, Minnesota, Montana, Nebraska, Nevada, New Hampshire, New Mexico, North Dakota, Oregon, Rhode Island, South Dakota, Utah, Vermont, Washington, Wisconsin, Wyoming, plus Washington DC.
Restricted states (require physician collaboration or supervision): All others. Some require formal written agreements, some require on-site physician presence, some have specific ratio requirements.
For PAs: Most states require physician supervision in some form. Check your state's PA board for specific collaborative agreement requirements.
Corporate practice of medicine: Some states prohibit non-physicians from employing physicians. This matters if you plan to hire a collaborating MD or expand your practice. California, Texas, New York, Illinois, and New Jersey have strict rules. You may need an MSO (Management Services Organization) structure instead of a simple PLLC.
Start here: Check your state's Board of Nursing (for NPs) or Board of Medicine (for PAs) website. If the regulations are complex, consider consulting a healthcare attorney before filing. Spending $500-$1,000 on legal advice now can save you from $10,000+ in restructuring costs later.
Step 2: Choose Your Business Name
Your practice name must be available in your state and meet specific requirements for medical practices.
Naming rules for medical practices:
Must include "Professional Limited Liability Company" or "PLLC"
Cannot imply services you're not licensed to provide
Cannot use misleading terms
Must comply with your state's medical board advertising regulations
How to check availability:
Search your Secretary of State's business entity database
Search your state medical board's database (some states require separate approval)
Check domain availability for your website
Search the USPTO trademark database if you want to protect your name
Common naming mistakes:
Using "Medical Group" when you're a solo practitioner
Using terms like "Family Practice" if you're not a family NP
Using geographic terms that could confuse patients about your location
Choosing a name too similar to an existing practice
Example names:
Smith Family Health PLLC
Advanced Practice Medical Associates PLLC
Women's Wellness Nurse Practitioner Practice PLLC
Complete Care PA Services PLLC
Reserve your name: Most states let you reserve for 60-120 days for $10-$75. Do this while you gather your other documents.
Step 3: Obtain Required Board Approvals
This is the step that separates medical practices from regular businesses.
For NPs:
Contact your state Board of Nursing
Some states require pre-approval before filing LLC paperwork
Others require you to submit your Articles of Organization for review
You may need to submit your collaborative practice agreement (if required)
Processing time: 2-8 weeks depending on state
For PAs:
Contact your state Board of Medicine or PA regulatory board
Submit proof of your supervising physician relationship
Provide your collaborative practice agreement
Processing time: 2-6 weeks depending on state
Documents you'll typically need:
Copy of your professional license
Collaborative practice agreement (if required)
Resume or CV
Proof of malpractice insurance
Practice location address
Scope of services you'll provide
Cost: $0-$500 depending on state
Critical: Don't skip this step. Operating without proper board approval can result in license suspension, fines, or practice closure.
Step 4: File Your Articles of Organization/Certificate of Formation
This is the official document that creates your PLLC.
Where to file:
Secretary of State (for the business entity)
State Medical Board (for professional approval)
Some states require both simultaneously
What you'll include:
PLLC name
Registered agent name and address
Principal office address
Purpose: "To provide healthcare services within the scope of practice of a licensed [Nurse Practitioner/Physician Assistant]"
Management structure (member-managed or manager-managed)
Professional license numbers
Filing methods:
Online: Fastest, usually 5-7 business days
Mail: 2-4 weeks
In-person: Same day in some states
Cost by state (PLLC filing fees):
Texas: $300
California: $70 (but $800 annual franchise tax)
Florida: $125
New York: $200 (plus $1,000-2,000 publication requirement)
Pennsylvania: $125
Arizona: $50
Most others: $100-$200
Expedited processing: Most states offer rush processing for $25-$750 depending on speed.
Step 5: Create Your Operating Agreement
Your operating agreement is the internal document that governs your practice. While most states don't require you to file it, it's essential.
Why medical practices especially need one:
Defines who can make clinical decisions
Establishes protocols for bringing on partners
Protects against disputes if you add an NP or PA partner later
Required by most banks to open a business account
May be required for credentialing with insurance companies
What to include:
Ownership percentages
Capital contributions
Profit distribution (critical for tax planning)
Management roles and responsibilities
Decision-making procedures for clinical vs business matters
Buy-sell provisions (what happens if someone wants out)
Non-compete and non-solicitation clauses
Procedures for adding new providers
For solo practitioners: Yes, you still need one. Many credentialing applications ask for it. Banks require it. And if you ever bring on a partner, having the framework in place prevents disputes.
Cost:
DIY template: $0-$50
Online legal service: $100-$300
Healthcare attorney: $500-$2,000
Recommendation: For solo practices, a quality template is fine. For multi-provider practices, invest in legal help. Partnership disputes are expensive and can destroy practices.
Step 6: Get Your EIN and Register for Taxes
Your Employer Identification Number (EIN) is like a Social Security Number for your business.
You need it to:
Open a business bank account
Hire employees (front desk staff, medical assistants, etc.)
File business tax returns
Apply for business licenses
Credential with insurance companies
How to get it:
Go to IRS.gov and apply online (free, takes 15 minutes)
You'll receive your EIN immediately
Download and save your EIN confirmation letter
Never pay for this. Third-party services charge $50-$300 to file the free IRS form for you.
State tax registration:
After getting your EIN, register with your state:
Sales tax permit: Not usually needed for medical services (most are tax-exempt)
Employer withholding: If you'll have employees
Professional privilege tax: Some states charge this to licensed professionals
Unemployment insurance: If you'll have employees
Where to register: Visit your state's Department of Revenue website. Most states have an online business registration portal.
Step 7: Apply for Your NPI and Credential with Insurance
Your National Provider Identifier (NPI) is your unique ID number for billing Medicare, Medicaid, and private insurance.
Types of NPIs:
Type 1 (Individual): For you personally as a provider
Type 2 (Organizational): For your practice entity
You need both if you're billing under your practice name.
How to apply:
Go to NPPES.cms.hhs.gov
Apply online (free)
Takes 10-15 days to receive your NPI
Credentialing with insurance companies:
This is often the longest part of starting your practice. Start early.
Timeline: 90-180 days for most payers
What you'll need:
Professional licenses
DEA license (if prescribing controlled substances)
State controlled substance license
Malpractice insurance (minimum $1M/$3M coverage)
CAQH profile (central credentialing database)
Practice location information
Tax ID (your EIN)
W-9 form
Collaborative practice agreement (if required)
Major payers to credential with:
Medicare
Medicaid
Blue Cross Blue Shield
Aetna
United Healthcare
Cigna
Humana
Local/regional plans
Pro tip: Consider hiring a credentialing service for $500-$2,000. They know the paperwork, follow up on delays, and can cut your timeline in half.
Step 8: Obtain Required Business Licenses and Permits
Beyond your professional license, you'll need various business permits.
Federal:
DEA registration (if prescribing controlled substances): $888 for 3 years
CLIA waiver (if doing point-of-care testing): $150
State:
Controlled substance license: $50-$500 depending on state
Facility license (if applicable): Varies
X-ray license (if applicable): Varies
Local:
Business license from your city/county: $50-$500
Zoning approval (especially important for home-based practices)
Health department permits (if doing procedures, lab work, etc.)
Fire safety inspection (for commercial locations)
Building permits (if renovating space)
Don't forget:
Signage permits (if you're putting up a sign)
Parking permits (if applicable)
Waste disposal permits (for medical waste)
Where to check:
City clerk's office
County health department
State environmental agency
Fire marshal's office
Cost: Budget $500-$2,000 for all licenses and permits.
Easiest States for APP Practice Ownership
If you have flexibility in where you practice, some states make independent practice significantly easier than others.
Top 5 Easiest States for NP Practice Ownership
1. Arizona
Why it's easy: Full practice authority for NPs, simple LLC formation, no publication requirements
Formation cost: $50
Annual fees: $0
Scope of practice: Full practice authority, prescriptive authority after 3,600 hours
Notable: Very business-friendly, fast processing times
2. Idaho
Why it's easy: Full practice authority, low costs, minimal bureaucracy
Formation cost: $100
Annual fees: $0
Scope of practice: Full practice authority after 2,400 hours
Notable: Rural health friendly, telemedicine friendly
3. Montana
Why it's easy: Lowest LLC formation cost in the nation, full practice authority
Formation cost: $35
Annual fees: $20
Scope of practice: Full practice authority
Notable: Great for cash-pay or rural practices
4. Colorado
Why it's easy: Full practice authority, reasonable costs, clear regulations
Formation cost: $50
Annual fees: $10
Scope of practice: Full practice authority
Notable: Strong telemedicine laws, lots of direct primary care practices
5. Oregon
Why it's easy: Full practice authority, straightforward licensing
Formation cost: $100
Annual fees: $100
Scope of practice: Full practice authority
Notable: Good reimbursement rates, supportive NP community
Top 5 Easiest States for PA Practice Ownership
1. Arizona
Why it's easy: Reasonable supervision requirements, low formation costs
Formation cost: $50
Annual fees: $0
Supervision: Required but flexible (not necessarily on-site)
2. Texas
Why it's easy: Clear regulations, large PA community, good support
Formation cost: $300
Annual fees: $0 (under $1.23M revenue)
Supervision: Required but can be off-site
Notable: No state income tax
3. Florida
Why it's easy: Large market, clear regulations, good reimbursement
Formation cost: $125
Annual fees: $138.75
Supervision: Required but flexible protocols allowed
4. Wyoming
Why it's easy: Low costs, minimal regulations, small market means less competition
Formation cost: $100
Annual fees: $60
Supervision: Required
5. Utah
Why it's easy: Fast processing, low costs, growing healthcare market
Formation cost: $54
Annual fees: $18
Supervision: Required but reasonable
Most Difficult States (And Why)
Some states create significant barriers for APPs wanting to own their practices.
Most Challenging States for NP Practice Ownership
1. California
Why it's hard: Restricted practice (requires physician supervision), corporate practice of medicine restrictions, high costs
Formation cost: $70
Annual fees: $800 franchise tax (even with $0 revenue)
Scope of practice: Restricted - requires standardized procedure or physician supervision
Additional challenges: May need MSO structure if employing physicians, complex credentialing, high malpractice insurance costs
Workaround: Some NPs use collaborative models or work under physician-owned practices
2. New York
Why it's hard: Complex regulations, expensive publication requirement, collaboration requirements
Formation cost: $200 + $1,000-2,000 publication requirement
Annual fees: $9 biennial
Scope of practice: Collaboration required (improved as of 2022 but still restrictions)
Additional challenges: Publication in 2 newspapers for 6 weeks is expensive and time-consuming
3. Georgia
Why it's hard: Restricted practice, must have physician supervision in many settings
Formation cost: $100
Annual fees: $50
Scope of practice: Restricted - requires physician supervision
Additional challenges: Difficult to get full practice privileges even with supervision
4. Alabama
Why it's hard: Collaboration agreements required, limited prescriptive authority
Formation cost: $200
Annual fees: $100+
Scope of practice: Collaboration required
Additional challenges: Conservative medical board, changing regulations
5. Florida
Why it's hard: Restrictive scope of practice, physician supervision required in many settings
Formation cost: $125
Annual fees: $138.75
Scope of practice: Restricted - physician supervision required
Additional challenges: Complex credentialing, competitive market
Most Challenging States for PA Practice Ownership
1. California
Why it's hard: Corporate practice of medicine restrictions mean PAs often can't truly "own" their practices
Formation cost: $70
Annual fees: $800
Supervision: Required, strict
Structure needed: Often need MSO with physician owner
2. Illinois
Why it's hard: Restrictive supervision requirements, corporate practice of medicine rules
Formation cost: $150
Annual fees: $75
Supervision: Strict requirements
Additional challenges: Must have physician supervision agreement, limited flexibility
3. New York
Why it's hard: Publication requirements, supervision needed, complex regulations
Formation cost: $200 + $1,000-2,000 publication
Annual fees: $9 biennial
Supervision: Required
4. Massachusetts
Why it's hard: Highest LLC formation cost, complex regulations
Formation cost: $500
Annual fees: $500
Supervision: Required
Additional challenges: Very expensive to maintain
5. Michigan
Why it's hard: Strict supervision requirements, limited practice independence
Formation cost: $50
Annual fees: $25
Supervision: Must have physician on-site or readily available
Cost Breakdown by State
Here's what you'll actually pay over 5 years in popular states:
StateFormationYear 1 TotalAnnual Cost5-Year TotalBest ForArizona$50$50$0$50NPs with full practice authorityMontana$35$55$20$115Low-cost rural practiceTexas$300$300$0*$300PAs, large marketWyoming$100$160$60$340Solo practitionersColorado$50$60$10$90Full practice NPsFlorida$125$263.75$138.75$680Large patient baseCalifornia$70$870$820$3,350If you must practice thereNew York$200$1,450**$9$1,486If you must practice there*Texas: $0 if under $1.23M revenue
**New York: Includes $1,000-2,000 publication requirement
Don't forget additional costs:
Malpractice insurance: $3,000-$15,000/year depending on specialty and state
Business insurance: $500-$2,000/year
Credentialing services: $500-$2,000 one-time
Office space: $500-$5,000/month
EMR software: $200-$500/month
Medical supplies: $500-$2,000/month
Marketing: $500-$3,000/month
Download our complete state-by-state cost comparison spreadsheet to see exactly what you'll pay in your state.
Common Mistakes That Delay Your Opening
Mistake #1: Not Getting Medical Board Approval First
Many NPs and PAs file their LLC paperwork and then discover they needed medical board pre-approval.
Result: You have to refile, pay fees again, or operate in legal limbo.
Fix: Contact your state's Board of Nursing or Board of Medicine BEFORE filing anything. Ask specifically: "Do I need board approval before filing my PLLC paperwork?"
Mistake #2: Choosing the Wrong Business Structure
Using a regular LLC instead of a PLLC in states that require it can invalidate your liability protection.
Result: Personal liability exposure, insurance denials, credentialing problems.
Fix: Check your state's requirements for healthcare businesses specifically. When in doubt, use a PLLC/PC.
Mistake #3: Not Understanding Corporate Practice of Medicine Laws
In states like California, Texas, New York, and Illinois, non-physicians can't employ physicians in many circumstances.
Result: If you try to hire a collaborating physician as an employee, you could face board complaints, fines, or practice closure.
Fix: Research CPOM laws in your state. If restricted, consider:
MSO (Management Services Organization) structure
Independent contractor agreements
Collaborative practice models that comply with state law
Mistake #4: Starting Credentialing Too Late
Insurance credentialing takes 90-180 days. Many NPs and PAs don't realize this until they're ready to see patients.
Result: Cash-pay only for 3-6 months, revenue loss of $30,000-$100,000.
Fix: Start credentialing applications as soon as your PLLC is approved. Don't wait until you have an office or patients.
Mistake #5: Inadequate Capitalization
Opening a medical practice costs more than most providers expect.
Real costs for year one:
Business formation and licenses: $1,000-$3,000
Malpractice insurance: $3,000-$15,000
Rent deposit and first month: $1,000-$10,000
EMR setup and subscription: $3,000-$10,000
Medical equipment and supplies: $5,000-$20,000
Marketing: $3,000-$10,000
Operating capital for 3-6 months: $20,000-$50,000
Total: $36,000-$118,000 before you see your first patient.
Fix: Have 6-12 months of operating expenses saved before you quit your job. Consider starting part-time while still employed.
Mistake #6: No Operating Agreement or Weak Agreement
Starting without an operating agreement (or using a generic template that doesn't address medical practice issues) creates problems later.
Result: Partnership disputes, unclear decision-making, tax problems, difficulty adding partners.
Fix: Invest in a healthcare-specific operating agreement that addresses:
Clinical decision-making authority
Collaborative practice requirements
Malpractice coverage requirements
Non-compete provisions
Buy-sell terms if someone leaves
Mistake #7: Mixing Personal and Business Finances
Using your personal bank account for business expenses is common but dangerous.
Result: Lose liability protection (piercing the corporate veil), IRS audit triggers, inability to track business performance, tax deduction problems.
Fix: Open a business bank account immediately after formation. Get a business credit card. Keep everything separate.
Mistake #8: Ignoring Ongoing Compliance
Filing your LLC is not a one-time event. You have ongoing requirements:
Annual reports (due dates vary by state)
License renewals (both business and professional)
Tax filings (federal and state)
Insurance renewals
Credentialing updates
Result: Administrative dissolution, fines, loss of insurance contracts, license suspension.
Fix: Create a compliance calendar with all deadlines. Set reminders 60 days in advance. Consider hiring a bookkeeper or practice manager.
Next Steps: Your Action Plan
Week 1: Research and Planning
Review your state's scope of practice laws
Check corporate practice of medicine restrictions
Determine if you need PLLC or if regular LLC is allowed
Research formation costs in your state
Contact your state medical/nursing board about requirements
Week 2-3: Name and Structure
Choose your business name
Check availability with Secretary of State
Reserve your name
Decide on member-managed vs manager-managed structure
Draft your business plan
Week 4-5: Board Approvals
Submit application to medical board if pre-approval required
Gather required documents (license, CV, collaborative agreement if needed)
Wait for approval (can take 2-8 weeks)
Week 6-7: Formation
File Articles of Organization with Secretary of State
File with medical board (if simultaneous filing required)
Create operating agreement
Apply for EIN from IRS
Open business bank account
Week 8-10: Licensing
Apply for NPI (individual and organizational)
Apply for DEA registration if prescribing controlled substances
Apply for state controlled substance license
Obtain local business licenses
Get zoning approval if needed
Week 10-16: Credentialing
Create CAQH profile
Submit credentialing applications to major payers
Follow up weekly on application status
Obtain malpractice insurance
Ongoing:
Set up your office space
Purchase equipment and supplies
Implement EMR system
Develop marketing plan
Hire staff (if needed)
Launch!
Need More Help?
Camino Strategy Group offers comprehensive practice formation services including:
State selection and regulatory analysis
PLLC/PC formation and filing
Corporate practice of medicine compliance structuring
MSO development for complex arrangements
Credentialing strategy and support
Multi-state expansion planning
Schedule a consultation to discuss your practice formation needs.
Frequently Asked Questions
Do I need an attorney to form my LLC?
Not necessarily. Simple formations in states with clear regulations can be done yourself. However, consider legal help if:
You're in a state with corporate practice of medicine restrictions (CA, TX, NY, IL, NJ)
You're bringing on partners from day one
You need complex collaborative practice agreements
You're unsure about regulatory compliance
Can I form my LLC before I have my collaborative practice agreement?
This depends on your state. Some states require you to submit your CPA with your formation paperwork. Others let you form first and then submit your CPA later. Check with your state Board of Nursing or Medicine.
Should I use my name or a practice name?
Both have pros and cons:
Your name ("Jane Smith NP PLLC"): Personal branding, easier marketing, but harder to sell practice later
Practice name ("Complete Care Family Medicine PLLC"): More professional, easier to scale and sell, but requires brand building
Most successful practices use descriptive practice names rather than personal names.
Can I change my LLC to a different structure later?
Yes, but it can be complicated and expensive. You may need to:
File dissolution papers for the old entity
Form a new entity
Transfer all assets, contracts, and licenses
Re-credential with insurance companies
Update all business accounts and contracts
It's better to get it right the first time.
What if I want to practice in multiple states?
You'll need to:
Form an LLC in your primary state
Register as a "foreign LLC" in each additional state ($50-$750 per state)
Obtain professional licenses in each state
Meet each state's scope of practice requirements
Credential separately in each state
Consider forming in your primary practice state to minimize complexity.
How long does the whole process take?
Realistic timeline:
Research and planning: 1-2 weeks
Board approvals: 2-8 weeks
LLC formation: 1-2 weeks
Business licensing: 2-4 weeks
Credentialing: 12-24 weeks
Total: 4-9 months from start to finish
Start the process well before you plan to see patients. Many NPs and PAs begin the formation process 6-12 months before they plan to quit their jobs.
Can I run my practice from home?
Maybe. It depends on:
Local zoning laws
State facility requirements
Whether you'll see patients there or do telehealth only
Homeowners insurance and liability coverage
Telehealth-only practices from home are easier to set up. In-person care from home requires:
Proper zoning approval
Health department inspection
Adequate parking
ADA compliance
Professional liability coverage for home-based care
Final Thoughts
Starting your own medical practice as an NP or PA is more achievable than ever. Full practice authority is expanding, reimbursement rates are improving, and patients increasingly seek accessible care from advanced practice providers.
The administrative setup - forming your LLC, getting licensed, and credentialing - is the barrier that stops many providers before they start. But it's not actually that complicated once you understand the steps.
Choose your state wisely. Understand the costs. Get the right structure from day one. Don't skip the legal requirements. And give yourself plenty of time for credentialing.
The freedom, income potential, and satisfaction of running your own practice are worth the effort.
Need help navigating the formation process? Camino Strategy Group specializes in healthcare business structuring, regulatory compliance, and practice setup for nurse practitioners and physician assistants. We handle the complex regulatory requirements so you can focus on patient care.
Ready to get started?
