Legal Entities in Optometry

In the following series of posts will write about the different types of legal entities that self-employed optometrists can choose for their practice, the advantages and disadvantages of each type of legal entity, as well as some other details like liabilities, expenses, and taxes.

The types of legal entities in Optometry include: the sole proprietorship, the general partnership, the corporation, the subchapter S corporation, and the limited liability company. In this post we will detail the sole proprietorship type of legal entity.

The sole proprietorship is defined as a natural person. The optometrist is the only person who owns 100% of the practice and is responsible for all the liabilities of the business. In the United States, a small percentage of private practice owners are sole proprietors. The sole proprietor can employ other optometrists or staff and he can include independent practitioners as independent contractors. There are two ways that sole proprietorship is possible either by starting a new practice or purchasing an existing one.

The advantages of a sole proprietorship include full control of all the strategic, planning, and operational decisions as well as for deciding on opening hours, products and services, and activities practiced. Moreover, the sole proprietor decides on who to hire who to fire, with full ownership of the practice income as well as assets.

The disadvantages of a sole proprietorship include no replacement available in case of illness, vacation, or absence for conferences and exhibitions. The sole proprietor will have to fully support all the practices’ financials. He should accept a low income at the beginning that may sometimes continue for a prolonged time in the case of a cold starting. He should also develop a good knowledge and education in law, finance, marketing, and strategy to be able to create a competitive advantage.

The duration or the lifetime of a sole proprietorship could be extended to as long as the optometrist is living or wants to stay in business and the practice can later be sold to another practitioner. In the case of a sole proprietorship, the owner is responsible for reporting business taxation and individual taxation. Even though he can write off some business expenses, other business legal types come with better tax advantages that we will write about in coming posts. So stay tuned…