Entity Types Compared
Sole Proprietorship
Taxes: Schedule C, full SE tax on all profit
Best for: Testing 1099 work short-term. Not recommended long-term for CRNAs.
Pros
- No formation paperwork
- No annual fees
- Simple tax filing
Cons
- Zero liability protection
- Full SE tax (15.3%)
- Looks unprofessional to facilities
- Personal assets at risk
Single-Member LLC
Taxes: Default: same as sole prop. Can elect S-Corp taxation.
Best for: Most 1099 CRNAs. Liability shield + flexibility to elect S-Corp later.
Pros
- Liability protection (personal assets shielded)
- Professional credibility with facilities
- Flexible tax treatment (can elect S-Corp)
- Simple to maintain
Cons
- Annual state fees ($50-$800/yr depending on state)
- Operating agreement recommended
- Must maintain separation of business/personal finances
PLLC (Professional LLC)
Taxes: Same as LLC. Can elect S-Corp.
Best for: States that require healthcare professionals to form a PLLC instead of a standard LLC.
Pros
- Required in some states for licensed professionals
- Same benefits as LLC
- May be required for certain contracts
Cons
- Not available in all states
- Slightly more complex formation
- Must maintain professional license to keep PLLC active
LLC + S-Corp Election
Taxes: Salary (FICA) + distributions (no SE tax). $15-25K/yr savings at CRNA income levels.
Best for: 1099 CRNAs grossing $150K+ net. The standard structure for experienced independent CRNAs.
Pros
- SE tax savings of $15-25K/yr
- Liability protection
- Professional credibility
- Retirement account options (Solo 401k)
Cons
- Payroll required (reasonable salary)
- Quarterly payroll taxes
- Annual cost ~$2-3K (payroll service + tax prep)
- IRS scrutiny on 'reasonable salary'
10-Step Formation Checklist
Choose your state of formation
Form in the state where you live and primarily work. Wyoming/Nevada/Delaware formation for a CRNA who works in Texas makes no sense — you'll still need to register as a foreign entity in TX and pay TX fees. Form where you work.
Check if your state requires PLLC
Some states (TX, CA, NY, and others) require licensed healthcare professionals to form a PLLC rather than a standard LLC. Check your state's Secretary of State website or a healthcare business attorney.
File with Secretary of State
File Articles of Organization (LLC) or Certificate of Formation. Most states allow online filing. You'll need: LLC name (must be unique in the state), registered agent (can be yourself), member names, and the filing fee.
Get your EIN
Apply for an Employer Identification Number from the IRS (free, instant at irs.gov). You need this for bank accounts, tax filings, and payroll.
Open a business bank account
Separate your business and personal finances completely. Use the EIN and Articles of Organization to open a business checking account. Never commingle funds — this is what 'pierces the corporate veil' and eliminates your liability protection.
Draft an operating agreement
Even for a single-member LLC, an operating agreement documents how the business operates. Many banks and facilities require one. Template is fine — no lawyer needed for a single-member LLC.
Elect S-Corp taxation (if applicable)
File IRS Form 2553 within 75 days of formation (or by March 15 for existing LLCs wanting to elect for the current year). This changes how you're TAXED, not how you're structured. You're still an LLC — you're just taxed as an S-Corp.
Set up payroll
S-Corp requires you to pay yourself a 'reasonable salary' via payroll with proper W2, FICA withholding, and quarterly deposits. Use Gusto, ADP, or a payroll service ($30-$50/mo). DIY payroll is possible but error-prone.
Get business insurance
Professional liability (malpractice) if not provided by your agency. General liability. Consider a business owner's policy (BOP). Workers' comp may be required in your state even for single-member LLCs.
Set up quarterly tax payments
Use our Quarterly Tax Estimator to calculate payments. Set up EFTPS (Electronic Federal Tax Payment System) for federal estimated taxes. File state estimated taxes where required.