When a practitioner is thinking of forming a new practice — or if they are purchasing a practice — forming a legal entity is often part of the process. In New York, their choices are a professional service corporation (PC) or a professional service limited liability company (PLLC). In order to form either type of entity, the practitioner must first apply to the New York State Department of Education (DOE) to get approval of the practice name and verification of their license before they can file any of the documents with the New York State Department of State.
Choosing a Business Name
When working with the DOE, it is important to understand that there are certain restrictions imposed as it relates to the name of the business. The DOE requires that the name of the practice have transparency so that the public understands the type of services that will be provided. For example, a physician or dentist may use the word “medical” or “dental” in the business name. If board-certified in a specialty, the practitioner will use the specialty in the business name. Some examples include dermatology, urology or psychiatry.
Practitioners should also be aware that there are certain words that the DOE will not allow in the business name. For instance, the word “institute” and “center” will not be approved by the DOE. If a practitioner is a single owner, he/she cannot use the word “group” or use any words that suggest there is more than one person operating the practice, such as “associates.”
Restrictions on Partners
If there is more than one owner, the DOE will verify the license of each owner of the business. In addition, the DOE will also not approve certain multi-specialties to be co-owners of a business. For example, physicians may only own with other physicians (except mental health specialists) and dentists may only own with other dentists. However, acupuncturists may own with a physical therapist or a physical therapist may own with an occupational therapist.
It is becoming much more difficult and time-consuming to form these types of entities in New York. Due to the demand and increase in the formation of legal entities, it may take three or four months to form a legal entity from start to finish. This is important to consider when a practitioner is looking to open up their practice by a certain date.
Overall, before completing any paperwork for a new legal entity in New York, it is important to understand the restrictions imposed in order to avoid any delay in the formation of your business.
Stephanie J. Rodin, Esq.
Rodin Legal, P.C.
Tel: (917) 345-8972
Fax: (917) 591-4428