Prerequisites
- Confirmed that your state uses the PA form for your profession
- A licensed clinician owner, fully vetted
- A compliant name
- A registered agent
- Healthcare counsel licensed in the state
Texas: the main case
Texas physicians typically organize as a professional association under the Texas Business Organizations Code, or as a PLLC. The PA is the traditional form. Key Texas considerations:- Ownership is restricted to licensed physicians, with limited statutory exceptions
- Officers and directors must generally be licensed
- Texas also recognizes certified nonprofit health organizations under Occupations Code § 162.001 as an alternative structure permitting physician employment, a different architecture worth evaluating before defaulting to a PA
- Texas is a strict CPOM state, so the MSA’s clinical carve-out matters more than usual
Steps
1
Confirm the PA is the right form
In Texas, compare PA against PLLC with counsel — the practical differences are modest and the choice is often driven by tax planning and precedent.
2
Clear the name
PA naming requires the designator, “P.A.” or “Professional Association”, and may be subject to board naming rules. File a DBA if the brand differs.
3
Appoint a registered agent
In the state of formation.
4
File the certificate of formation
Include:
- A professional purpose statement
- A licensee ownership attestation
- Governance structure — PAs are typically governed like corporations, with directors and officers
- Registered agent and office
5
Adopt bylaws and hold the organizational meeting
Elect directors and officers (licensees where required), adopt bylaws, authorize the issuance of ownership interests and the opening of bank accounts. Record by written consent.
6
Issue ownership interests with transfer restrictions
With a restrictive legend if certificated. Execute the transfer restriction agreement at or immediately after issuance.
7
Get the EIN
Free from the IRS. Save the CP 575 and record the legal name exactly.
8
Register for state taxes and as an employer
In Texas this includes the franchise tax and Workforce Commission registration. Note that Texas has no state income tax but does impose a franchise (margin) tax on entities.
Verify it worked
- State-stamped certificate of formation
- Entity active and in good standing
- Bylaws and organizational consents in the minute book
- Ownership interests issued with transfer restrictions in place
- CP 575 received; legal name recorded
- Franchise tax and employer registrations complete