Another potential cost is the exposure to greater liability. Owners now not only have their corporate assets at risk in case a patient slips and falls, but also their personal wealth. Obviously, it is important to have plenty of insurance, but the choice of legal structure is critical as well. For example, ownership of real estate in a separate legal entity outside of the practice distances it from practice-related liabilities. Tax Concerns Owning real estate does have tax benefits, but it also poses traps for the unwary.
Real estate falls squarely in that category.
As among the flow-through entities mentioned, treatment may be slightly different as to state franchise and capital stock taxes. The pot at the end of the rainbow, equity, can become a very thorny matter as new physicians buy into a practice. Similarly, the payout of a senior physician's equity can be troublesome for a group. If these concerns are not addressed appropriately at the time of the purchase, the result may be tremendous equity on paper only. Expensive real estate may make the price tag for some too costly.