Do you actually need one?
For a 1099 locum physician with substantial net self-employment income, an S corporation election often pays for itself. At lower income the payroll and accounting overhead can exceed the saving. The decision is arithmetic, not identity — run it every year.
The savings come from one place only: distributions are not subject to the self-employment tax that applies to sole-proprietor profit. Income tax does not change.
Why "just form an LLC" is wrong advice for physicians
Most states have corporate practice of medicine (CPOM) statutes: a general LLC may not own or operate a medical practice, and in several states a non-physician may not hold an interest in the entity at all. Physicians in those states form a professional entity — a PC, PA, or PLLC — often with approval from the state medical board before the secretary of state will register it.
Generic incorporation services will happily sell you a plain LLC in a CPOM state. That entity may be invalid for billing, may void malpractice arrangements, and is a nuisance to unwind.
The steps
- Confirm your state's CPOM position and permitted entity type.
- Reserve the entity name, including any required designator.
- Obtain medical board approval or a certificate of registration if required.
- File articles of incorporation or organization.
- Get an EIN from the IRS.
- Adopt bylaws or an operating agreement.
- Open a dedicated business bank account. No commingling.
- File Form 2553 to elect S corporation treatment.
- Register for state payroll withholding and unemployment.
- Set a defensible reasonable salary, documented against specialty survey data.
- Run real payroll through a provider that files 941s and W-2s.
- Move your locum contracts and 1099s onto the entity's EIN.
Figures to check yourself
The Social Security wage base, QBI phase-in thresholds, and solo 401(k) contribution limits change from year to year. We do not publish those numbers here. Verify each against current IRS publications before you set salary — a salary chosen against a stale wage base is a common and expensive error.
Sources
No external source has been supplied for this guide. Figures are described in plain language rather than stated as numbers until a citable source is published here. Verify anything decision-critical against the primary authority named in the text.