Educational only. This is not legal, tax, or financial advice. Tax rules, contribution limits, state laws, and regulatory guidance change frequently. Consult your CPA, attorney, or financial advisor before acting on anything below. Last reviewed dates are shown at the bottom of each guide — numbers may be outdated.
Most radiologists end up in whatever structure their first employer or accountant suggested. For many that works fine; for others it leaves five-figures on the table every year or shifts liability the wrong way. Here is the mental model.
The four common options
| Structure | Liability | Federal tax treatment | Typical use |
|---|---|---|---|
| Sole proprietor | Personal | Schedule C on your 1040 | 1099 moonlighting, very low income |
| LLC / PLLC | Entity-level shield | Disregarded (single-member) or partnership (multi) by default; can elect S-corp | Most 1099 radiologists, solo practices |
| S-Corp (or LLC taxed as S-corp) | Entity-level shield | Pass-through; salary + distributions split | Higher-income 1099, owner of a practice |
| Professional Corporation (PC) | Entity-level shield | Can be C-corp or S-corp | Required in some states for professional practice |
PLLC vs LLC is a state-law issue. About 25 states require physicians to use a "Professional" variant (PLLC or PC) rather than a plain LLC. Your state bar or state medical board website will tell you.
Pass-through taxation, in one paragraph
An LLC (default) and an S-corp both "pass through" profit to your personal return — the entity itself does not pay federal income tax. The difference is how the profit moves: an LLC reports it all as self-employment income (subject to ~15.3% SE tax up to the Social Security wage base, then 2.9-3.8% above). An S-corp splits it: you pay yourself a "reasonable salary" subject to payroll tax, and the rest flows as distributions that skip SE tax.
For a radiologist clearing $400k in 1099 income, the S-corp election can save $8-15k/year in SE tax. Above $600k the savings shrink proportionally because the SSA wage base caps the biggest savings.
When the S-corp election is worth it
- You are 1099 or running a practice with profit above ~$200-250k
- You do not intend to scale into a C-corp for investor reasons
- You can tolerate the extra paperwork: separate payroll, W-2 to yourself, quarterly 941s, annual 1120-S, reasonable-salary documentation
When the S-corp election is not worth it
- W-2 employees with minimal side income — there is nothing to convert
- You already have complicated multi-state filings — the compliance cost can exceed the tax savings
- Your profit is below ~$150k and the payroll processing fee eats the savings
The "reasonable salary" trap
If you elect S-corp status and pay yourself $50k in salary on $500k of profit, the IRS will reclassify the distributions as wages, owe back payroll taxes, and add penalties. "Reasonable" is the amount you would pay another radiologist to do your job — usually 40-60% of net profit for a high-earning professional, though case law varies. Your CPA should document the comparable-compensation analysis annually.
Liability notes
The LLC/PC shield protects you from business debts — a vendor suing the practice cannot reach your house. It does not protect you from your own malpractice. Every radiologist still needs a malpractice policy appropriate to their practice (see Malpractice Insurance). The entity structure and the insurance policy are different layers.
Partnerships — a separate beast
If you and one or more physicians jointly own a practice, the LLC/PLLC is typically taxed as a partnership (Form 1065) unless you elect otherwise. This has its own K-1 mechanics, capital-account bookkeeping, and partnership-specific tax traps. Do not approach a partnership without a practice-management attorney and CPA.
Questions to ask your CPA
- Given my state and expected income, what structure minimizes total tax + compliance cost?
- If we elect S-corp, what is my reasonable salary basis this year, and how is it documented?
- How does my structure interact with any side activities (consulting, teleradiology, expert witness)?
- What is the cost to change later, and what triggers would make that worthwhile?
Common mistakes
- Forming an LLC without electing S-corp status when the math favors it — leaves $8-15k/year on the table.
- Electing S-corp on too-low income, where payroll cost exceeds the SE-tax savings.
- Paying yourself $0 salary from an S-corp to maximize distributions — near-automatic audit trigger.
- Using a cheap online formation service for a PLLC in a state that requires bar-member or CPA-verified professional filings.
Last reviewed: 2026-04. State rules vary significantly; always verify with your local CPA and state medical board.