Business Entity for Dermatologists: 5 Ways to Build a Practice That’s Protected, Scalable, and Medically Compliant

Whether you're launching your first clinic, expanding into med-spa services, or building a multi-location brand, the foundation of your dermatology business begins with one core decision: choosing the right business entity. This choice can impact how you're taxed, how you're protected, and most importantly - how confidently you can grow your practice without fear of legal or financial vulnerability.

Here we'll explore the best entity options for dermatologists and how the right legal setup secures your practice, protects your assets, and supports your long-term vision.

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Why Entity Structure Matters for Dermatologists

Dermatology is one of the most diverse and entrepreneurial medical specialties. You may operate a clinical dermatology practice, a surgical skin center, a med-spa, or all three under one roof. With multiple service lines come layers of liability, income streams, and ownership regulations.

Your business entity influences:

• How your revenue is taxed and distributed

• Whether your personal assets are shielded from lawsuits or audits

• Your ability to expand, bring on partners, or spin off cosmetic services

• Your compliance with state medical board rules and aesthetic supervision laws

The right entity doesn’t just protect your practice—it creates the freedom to build, scale, and evolve.

Common Business Entities for Dermatologists

1. Professional Corporation (PC) or Professional Association (PA)
A PC is often required for licensed physicians providing medical services.
This structure establishes legal separation between you and your practice, helping to shield your personal assets from professional risk. It’s ideal for dermatologists seeking a compliant and steady foundation, especially when planning to grow in the future or establish a partnership.

• Provides basic liability separation between business and personal assets

• Complies with state rules for medical ownership

• Can elect S-Corp status for tax savings

2. PLLC (Professional Limited Liability Company)
A modern, flexible structure frequently used by dermatologists combining clinical and aesthetic services. This setup offers liability protection and supports your ability to operate cosmetic, skincare, and other cash-pay revenue streams under one brand. It’s a strategic fit for entrepreneurial dermatologists building a hybrid practice.

• Strong liability protection and simple to form

• Supports med-spa services, product sales, and cosmetic revenue

• Allows for solo or multi-owner flexibility with a custom operating agreement

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3. S-Corporation Election
A tax classification that can be applied to a PC or PLLC to reduce self-employment taxes.
By balancing reasonable salary with profit distributions, it helps dermatologists retain more income while remaining compliant. It’s a smart move for growing practices looking to optimize take-home pay and tax efficiency.

• Reduces payroll tax burden on distributions above salary

• Must pay a “reasonable salary” to meet IRS requirements

• Often paired with PC or PLLC structures

• Speak with a tax advisor for you specific Dermatologist options

4. Multi-Entity Structures
Used to segment risk, separate income types, or comply with regulations surrounding med-spa ownership. This model protects your core dermatology practice while giving freedom to grow cosmetic or retail ventures independently. It’s an advanced but effective structure for dermatologists scaling into multiple services or locations.

• Example: one PLLC for dermatology, another for skincare products or aesthetic services

• Helps isolate liability, streamline compliance, and plan for estate transitions

5. C-Corporation (Less Common)
Sometimes used in large or investor-backed dermatology networks or franchise-style expansions. While less tax-efficient for solos, it can offer planning flexibility for retained earnings, benefits, or multi-owner structures. If you're building a high-growth dermatology brand, it may be worth evaluating.

• Offers corporate benefits and retirement plan options

• Subject to double taxation unless carefully managed

Secure Your Practice, Plan With Confidence.

Setting up the right entity for you starts with planning and exploring options based on your unique needs and vision. Our advisors can help:

• Choose and form the right entity with your specialty in mind

• Draft partnership, ownership, exit planning and succession documents

• Separate cosmetic and clinical services strategically

• Build an entity structure aligned with your estate plan and exit plan

We’re here to make sure your business is compliant and ready for success.

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Frequently Asked Questions

Do I need separate entities for my medical dermatology practice and med-spa?
Often, yes. In many states, cosmetic services must be kept separate from clinical dermatology to comply with medical board rules and reduce liability exposure.

Should I choose a PLLC or PC for my dermatology clinic?
It depends on your state and how you intend to grow. PLLCs offer flexibility and are ideal for combining clinical and cosmetic services, while PCs are often required for strictly medical practices.

Can I use S-Corp status with a dermatology practice?
Yes. Electing S-Corp can provide tax savings if your income exceeds your reasonable salary. Most dermatologists earning mid-to-high six figures benefit from this approach.

Can I change my structure later?
Yes, but it’s easier and cheaper to start with the right structure. Changing entities later may trigger tax events or require contract revisions.

Is my entity tied to my estate plan?
It should be. A well-structured business makes it easier to pass on, sell, or transition ownership, either to a partner or family member, with clear documentation and reduced tax impact.