Medical license for FOP or LLC: which is better?

Obtaining a medical license is a mandatory condition for medical practice in Ukraine. However, before starting the licensing process, it is important to decide on the organizational and legal form of doing business: FOP (individual entrepreneur) or LLC (limited liability company).

Obtaining a medical license for FOP

Advantages:

• Simple registration and licensing process. Registration of an FOP and obtaining a medical license for it usually takes less time and requires fewer documents, compared to an LLC.
• Lower tax rates. Sole proprietorships pay a flat personal income tax, which is generally lower than taxes for LLCs.
• No need to have authorized capital. In contrast to an LLC, registration of a sole proprietorship does not require contributions to the authorized capital.
• Simple accounting and reporting. Accounting for sole proprietorships, as a rule, is simpler and requires less expenses, compared to LLCs.

Disadvantages:

• The owner of the FOP bears personal responsibility for all business obligations. This means that in case of non-payment of debts or other problems with the business, creditors can collect from the personal property of the owner of the FOP.
• Limited opportunities for business development. FOPs face certain limitations regarding the size of the business, access to credit and opportunities for cooperation with other companies.
• Inability to conduct some types of medical activities. FPOs do not have the right to certain types of medical activities, such as, for example, organ transplantation or issuing sick leave for more than 3 days.

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Obtaining a medical license for an LLC

Advantages:

• Limited liability. LLC participants are responsible for the company's obligations only within the limits of their contributions to the authorized capital. Their personal property cannot be charged against the company's debts.
• Greater opportunities for business development. LLC has greater opportunities for business expansion, investment attraction and cooperation with other companies.
• Ability to conduct all types of medical activities. LLCs have the right to any type of medical activity permitted by the legislation of Ukraine.
• Improving the image and trust of the business. The presence of an LLC can be perceived as a sign of greater reliability and stability of a business, which can positively affect its image and trust from customers and partners.

Disadvantages:

• A more complex registration and licensing process. Registration of an LLC and obtaining a medical license usually requires more time, documents and costs, compared to an FOP.
• Higher tax rates: LLCs pay income taxes that are generally higher than those for sole proprietorships.
• The need to have authorized capital. Registration of an LLC requires contributions to the authorized capital, the amount of which is determined by the founders of the company.
• Accounting and reporting is more complicated. Accounting for LLCs is usually more complicated and requires more expenses, compared to sole proprietorships.

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Recommendations regarding the choice of organizational and legal form

The choice between an FOP and an LLC for obtaining a medical license depends on a number of factors, including:

1. Scales of your medical activity. If you plan to open a small medical office, where you will work independently, then the FOP may be the best option. However, if you intend to create a larger clinic with several specialists and hired staff, it is better to choose an LLC.
2. Business development plans. If you plan to expand, attract investments or cooperate with other medical institutions, the LLC will provide more opportunities for this.
3. Financial opportunities. Registering and conducting business of an LLC requires higher financial costs than a sole proprietorship. Assess your financial capabilities before making a decision.
4. Degree of risk. If you plan to provide high-risk medical services, then an LLC with limited liability of members may be a better choice.

Get a qualified consultation

The legal company "Prykhodko and partners" is ready to provide you with both point-of-care consultations and full support: we will analyze your business plan, assess risks and provide recommendations on choosing a form of registration; we will fill out and submit documents for medical activity licensing. We are with you until you get the license.

To make an appointment for a consultation or to calculate the cost of legal assistance, fill out the form below.