How do I structure a practice for tax efficiency?

A typical multi-entity structure for a healthcare practice has four components. First, the clinical practice entity (PC, PLLC, or S corp depending on state corporate practice of medicine rules) earns clinical revenue. An S corp election lets shareholder-employees take part of their income as W-2 wages and the rest as distributions, which are not subject to employment taxes, provided the corporation pays reasonable compensation first; the IRS can reclassify distributions as wages if it does not. Second, a separate LLC owns the practice real estate and leases it to the practice at fair market value. That keeps the building out of the clinical liability pool and lets you sell one without the other, but it does not create QBI-eligible income when the same owners hold 50 percent or more of both: the part of a business that provides property or services to a commonly owned SSTB is treated as an SSTB, and the Treasury's own example is a dentist whose building entity leases to the dental practice. Third, a Management Services Organization (MSO) can provide non-clinical services (admin, IT, scheduling) to the practice. The same 50 percent rule applies, so a physician-owned MSO is a governance, financing or outside-investor tool rather than a QBI tool. Fourth, retirement plans (401(k) plus cash balance) produce the largest deductions; Fidus Actuarial's 2026 illustrations put a combined design at about $252,000 a year at age 50 and $382,000 at age 60 for an owner at the $360,000 compensation cap. Each layer requires legal substance, fair market value pricing, and Stark Law compliance for any inter-entity arrangements involving designated health services.