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Any guide on the legal requirements for starting a nurse staffing agency?

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by jjdd jjdd (Member) Member

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This might be a hail marry pass.

Anyone here been through it? Asking about CA specifically. 

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Travel nursing agency? No laws specific to California - I've done a lot of work there. A couple of states require registration with the state BON. Rhode Island requires a physical presence in the state - I assume local law firms handle most of that using their address as the agency state presence. 

Any facility is going to require you have insurance up to their standards, both professional liability and general, and workman's comp. Some will ask you for a copy of your W-9 just in case.

There are some technical details that you may have to meet if you get too large, but I've always flown below the radar successfully.

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Wow! Caught! 

That's Ned! Any pointers where I should start? What would be the first step? 

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You could read my blog. Google my screen name and faq. 

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21 hours ago, NedRN said:

You could read my blog. Google my screen name and faq. 

Just did. The information is from 2002(?). Does it still apply. 

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Yup basics still the same. Industry has changed in that vendor managers are much more dominant now. Those are much harder to staff for a new agency without prior industry experience. No change for new agencies staffing hospitals with no VM. 

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On 10/12/2019 at 7:56 PM, NedRN said:

Yup basics still the same. Industry has changed in that vendor managers are much more dominant now. Those are much harder to staff for a new agency without prior industry experience. No change for new agencies staffing hospitals with no VM. 

I must have read the "business type" part 10 times. I'm still confused, unfortunately. 

Could you please shed some light on it if yiu don't mind. 

 

Talking about :

SOLE Proprietorship. 

C CORPORATION.

S CORPORATION.

LIMITED LIABILITY COMPANY (LLC). 

Partnerships. 

PROFESSIONAL SERVICE CORPORATION. 

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When I composed that blog in 2005, LLCs were not common and there was little case law settled (no travel companies, none, had thta form at the time). Thus the choices appeared to be simply a C or S corporation, otherwise known as regular or passthrough taxation entities. So I focused peripherally back then on differences between the two for some background. 

As then, I recommend that you read any startup business book (library) for a discussion of business entities. Hopefully those will be written with more clarity than my own writing, but they usually don't go into that much detail, and that is why I wrote as much as I did about this topic.

Almost all new businesses are LLCs. No downside, and you can even option regular taxation as opposed to passthrough if the benefits work better for you. No annual paperwork such as shareholder or director meetings required. Tax return of course.

Forget about partnerships. Recipe for disaster and you would need very good lawyer vetted contracts. They are going out of fashion as you can do the same thing with LLCs and much less hassle. PSC are also a no go (35% flat tax), although it may appear that a single traveler may be forced. I myself went out of my way to occasionally hire other travelers - so that PSC was no longer an issue.

Sole proprietor? Not much different from other passthrough entities. Liability is not a personal concern, you have no offices for someone to slip on ice, and that is what insurance is for anyway. I did it for a year, and not one single hospital noticed. But if they notice (and most VMs will ask), they will not contract with you. Incorporation in most states is only around $100.

 

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On 10/25/2019 at 4:59 AM, NedRN said:

When I composed that blog in 2005, LLCs were not common and there was little case law settled (no travel companies, none, had thta form at the time). Thus the choices appeared to be simply a C or S corporation, otherwise known as regular or passthrough taxation entities. So I focused peripherally back then on differences between the two for some background. 

As then, I recommend that you read any startup business book (library) for a discussion of business entities. Hopefully those will be written with more clarity than my own writing, but they usually don't go into that much detail, and that is why I wrote as much as I did about this topic.

Almost all new businesses are LLCs. No downside, and you can even option regular taxation as opposed to passthrough if the benefits work better for you. No annual paperwork such as shareholder or director meetings required. Tax return of course.

Forget about partnerships. Recipe for disaster and you would need very good lawyer vetted contracts. They are going out of fashion as you can do the same thing with LLCs and much less hassle. PSC are also a no go (35% flat tax), although it may appear that a single traveler may be forced. I myself went out of my way to occasionally hire other travelers - so that PSC was no longer an issue.

Sole proprietor? Not much different from other passthrough entities. Liability is not a personal concern, you have no offices for someone to slip on ice, and that is what insurance is for anyway. I did it for a year, and not one single hospital noticed. But if they notice (and most VMs will ask), they will not contract with you. Incorporation in most states is only around $100.

 

Thanks for that!

I'm leaning toward S Corp, mainly because if I ever decide to go public or bring in partners, it would be easier...from what I'm reading. 

What would the advantage of an LLC be over S Corp? 

Edited by jjdd

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Less paperwork and rules. No difference in selling later. 

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On 10/28/2019 at 6:27 AM, NedRN said:

Less paperwork and rules. No difference in selling later. 

OK. So I'll take your advice and go LLC. I think it defaults to be taxed as a sole proprietor if I'm not mistaken. Question now is, which state should I file at? I'm thinking Nevada since I'm reading it (and Wyoming) is business friendly, plus no income tax. 

Another question is, if I get contracts with hospitals in another state (let's say Washington), and I hire nurses to send there, do I have to file as a foreign LLC there? Because if that's the case, then I see no point in choosing Nevada.

Thoughts?

Edited by jjdd

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S corp, sole proprietor, and LLCs that do not chose regular taxation are all taxed the same.

You are generally best off filing for a business entity in your home state. You can make your own business decisions, but it gets complicated when you start to worry about registering as a foreign corp in other states. State laws vary, but generally require you to have a physical presence in the state. Does sending an employee (or an independent contractor) to work in a state count as a physical presence the way an office would? I don't know, and don't want to know. Running a small business is largely about staying below the regulatory radar. Larger business do need to start worrying about such things as corp registration and local employee laws because they have more to lose. 

I've never come close to having an issue in 15 years of working in a number of states. I've avoided a few states with regulatory issues, either bad BONs (NY/NJ/TX) or those who require agency registration (WA/RI) - MA also appears to require such registration, but as that was an important state (high bill rates and personal fun) for me, I pursued an answer and was told it didn't apply to me as too small and out of state. I had a friend who started a real agency who ended up having to register with one CA agency (don't remember which one, perhaps WC) but didn't have to deal with the other agencies (you might think CA would information share, but apparently not) or even register his corp there. The only regulatory issue I've ever had was maintaining my CA license and having CA once send me a tax bill even though I hadn't worked there that year. They just assumed! A simple letter took care of that.

There are any number of interesting regulatory and tax questions I don't know the answer to. But I do know if I hired a lawyer to deal with them, I could not make money as a single (usually) worker business. If I wanted to become a larger agency, then yes, I would have to have a different strategy.

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