Business of Optometry
- What are my obligations regarding patient records and patient notification when closing a practice?
- When closing a practice, it is best to make plans well in advance of the planned closing date to allow time to notify patients and find a repository for patient records.
Usually, the easiest method of securing patient records is to find another doctor to agree to take custody. It is imperative that there be a written agreement with the new records custodian (in this case, the doctor) requiring the custodian to maintain records in conformance with all state and federal laws regarding patient records and privacy. The doctor taking over the records should also agree to indemnify the original doctor in the event a claim is brought against the original doctor because of the new custodian's failure to properly maintain the records and make them available to patients.
The agreement with the new custodian should also include a provision allowing the original doctor to obtain access to a patient file if necessary in case a need arises in the future, for example to respond to an insurance audit or a lawsuit. Laws regarding how patients must be notified of a practice closure vary from state to state, so always check with your state association and/or state board of optometry for guidance.
Some states permit physicians to publish a notice in a local newspaper announcing the sale or closing of a practice in lieu of particularized notice to each patient. Other states put a time limit on the patient notification obligation, i.e. the doctor must notify only those patients seen within the past two years (the precise number of years may vary). If a closure is anticipated well in advance, and a plan for securing patient records is in place, a practice might consider providing written notice to patients during patient visits, thereby reducing the number of notices that must be mailed.
Finally, the notification to patients should contain information about where patients may obtain care in the future. Special care should be taken to ensure that patients being treated for ongoing conditions receive referral information about doctors of optometry who can continue to treat their condition.
- How should I go about hiring Prospective Counsel?
- Just as your patients went through a series of steps to determine which optometrist they wanted to select, so too will you have to consult several resources to determine what outside counsel you wish to use and when. The AOA does not give lawyer referrals. Referrals services however are available through some AOA affiliate associations as well as local and state bar associations. Attached is a comprehensive chart that identifies lawyer referral websites available in each of the fifty states. You should also ask friends, relatives, coworkers, or other members of your community to recommend lawyers with which they have worked especially if they were seeking help for legal issues like those you are facing. Remember, you want to select an attorney who is familiar with and practices in the area of law you are dealing with. Before you retain your lawyer, you should meet with the lawyer to determine if he/she is the best attorney for the job. Many attorneys will meet with you initially at no cost but make sure this is the case before you meet with the attorney.
- What questions should I ask prospective counsel in an interview?
- Make sure you find the answers to the following questions when interviewing outside counsel
- Am I being charged for this initial interview?
- How will the attorney fee be assessed? Will it be a flat fee (a set fee for the job-for example, $500.00 for a simple will), an hourly rate or a contingent fee (for example, 1/3 of the judgment amount)? If the attorney will charge via an hourly rate, what will that rate be?
- Does the attorney require a retainer? What is the nature of the retainer? A retainer fee is an amount of money paid upfront to secure the services of a lawyer. Once all fees have been paid, then the retainer is returned to the client.
- Before your meeting with the lawyer check to see if the attorney has had any complaints against him or her with the State Bar and what they were about. If you see something that concerns you, you may wish to discuss it with the attorney.
- Ask the attorney about their experience dealing with your type of legal matter.
- How responsive is the attorney? You may want to follow up your meeting with the attorney with a short email asking a question or two that requires an answer. The attorneys’ response to the email or lack thereof will give you a good indication of how responsive the attorney may be to your case.
- Will the attorney be handling the matter, or will it be referred to an associate? An associate is typically a junior attorney who works under the direction of a partner. Associates bill at a lower hourly rate than partners.
- How long do you estimate it will take to complete this matter?
- How much do you estimate your services will cost me?
- What expectations should you have of an attorney once you have hired him or her?
- When you go to the meeting with the attorney, you may want to bring:
- A written summary of the issues.
- The names, addresses, and phone numbers of all people or entities involved.
- All documents related to the matter.
Remember many times attorneys charge by the hour. The more organized you are in presenting your case, the more time you will save your attorney and the more money you will save yourself!
- What things can I do to prepare for an interview with this attorney?
- You should expect your attorney to:
- Prepare a written fee agreement that outlines everything you must pay and the reason for those charges.
- Tell you the strengths and weaknesses of your case.
- Keep you informed as to the status of your case and what he or she is doing to advance your case.
- Follow your instructions (so long as they are reasonable, legal, and ethical);
- Protect your interests and keep you informed when he or she is making important decisions about your case
- Not represent any client whose interests are adverse to your interest
- Provide you with copies of all the documents and letters that relate to your matter
- Send you monthly bills that outline all the work that he/she has done in your case and the fee for the work as well as any expenses incurred.
- What expectations will the attorney have of you as his/her client?
-
- Be present and on time for your appointments.
- Give her/him your contact information and make sure to update that information if it changes.
- Be completely honest. Except in special circumstances, the lawyer must keep what you or he tells you completely confidential.
- State Bar Lawyer Referral Services
An important consideration for any optometrist who decides to open his/her practice is what form of business organization he/she should chose. There are a variety of different types of business organizations and there are advantages and disadvantages associated with all of them.
- What business structure options do I have?
-
- Sole proprietorship
- Parnership
- C Corporation
- S Corporation
- Limited Liability Corporation
There are several advantages and disadvantages associated with each of these forms of business organizations.
- What are some of the advantages and disadvantages associated with a sole proprietorship?
- In a sole proprietorship, the business is owned by one person, usually the individual who has the responsibility of running the business on a day-to-day basis. There are no special requirements to create a sole proprietorship. Basically, a person just starts their business. It is not necessary to register as a sole proprietorship. In some states, if a fictitious name is used, a fictious name registration must be made.
Advantages associated with a sole proprietorship is the ease of formation as noted above. In this form of business organization, the owner retains all the profits, and those profits are taxed only once. The owner can make all the decisions concerning the business and is in complete control of their company. Tax forms are not complicated for this form of business. Assets are easy to liquidate upon the death of the owner.
- A huge disadvantage with a sole proprietorship is that the owner faces unlimited liability if anything happens in the business. The owner’s personal assets are at risk. If someone sues a sole proprietor and secures a judgment, business and personal assets can be seized to satisfy that judgment. A sole proprietor is also much more limited in their ability to raise capital. The sole proprietor may have to take consumer loans to finance their business expansion.
- What are some of the advantages and disadvantages associated with a partnership?
- A partnership is when two or more people share ownership of a single business. A partnership can arise by operation of law. In other words, if two people work together on their business and share profits, the courts will find that a partnership exists. It is much better though if the partners have a legal agreement that sets forth how decisions will be made, profits will be shared, disputes will be resolved, how future partners will be admitted to the partnership, how partners can be bought out or what steps will be taken to dissolve the partnership when needed.
One advantage to a partnership is that it is easy to establish and can arise simply by the actions of the parties. However, a partnership agreement is well worth the effort to prevent problems in the future. Profits are taxed only once as the income passes through the partnership to the individual partners. Successful partnerships often bring together people with different skills sets to enhance the business.
There are also disadvantages associated with a partnership. First, partners are jointly and severably liable for the actions of the other partners. So, if your partner decides to lease the pricy downtown office space, the other partner will be bound by that business decision. This divided decision making inherently can cause problems. Profits made in the partnerships need to be shared with the other partners. Additionally, as noted above, the business can suffer if a detailed partnership agreement is not in place.
Most partnerships are general partnerships. However, there is a form of partnership known as a limited partnership. In a limited partnership, there must be at least one general partner and one limited partner. A limited partner does not participate in the day-to-day management of the business. A limited partner’s risk is limited to the amount of money they have invested in the partnership. The general partner’s risk is unlimited.
- What are some advantages and disadvantages associated with a C Corporation?
- A C corporation is taxed separately from its owners. It gives the owners limited liability which tends to encourage more risk taking and potential investment.
One of the advantages associated with a C corporation is the limited liability. If the corporation is sued and the corporation is adequately capitalized and has pursued all the corporate formalities, liability is limited to the corporation. Personal shareholders of the corporation are not personally liable for the debts of the corporation. It is also easier to transfer an ownership interest in the corporation. Shareholder need only sell their shares of the corporation. Capital is easier to raise through the sale of stock.
A disadvantage with a C Corporation is double taxation. The company’s earnings will be taxed at the relevant corporate tax rate, and dividends paid to the owner shareholder will be taxed separately as personal income. A corporation can be costly to form as there are specific documents that must be filed with the Secretary of State’s office. There are also more administrative duties associated with operating a corporation vs. a sole proprietorship, partnership, or LLC. You will be required by law to have annual meetings, notify stockholders of the meetings, and keep minutes of the meetings in a specific location. Typically, corporate taxes are paid at a different time frame than personal taxes, which adds another layer of operational complexity.
- What are some of the advantages and disadvantages associated with a S Corporation?
- An S corporation is a tax classification. An S corporation provides limited liability protection but also offers corporations with 100 shareholders or fewer to be taxed as a partnership. An S corporation is also known as an S subchapter. The shareholders must report their income on their individual income tax returns. The advantages associated with the S corporation are limited liability and an avoidance of double taxation by having profits taxed only once. Capital is also easier to raise through the sale of stock.
Disadvantages associated with S Corporation is that they can be more complicated and costly to form. Stockholders are limited to individuals, estates or trustees.
- What are some of the advantages and disadvantages associated with a Limited Liability Company?
- A limited liability company is a legal designation that can protect small-business owners from personal liability in business obligations. Owners of LLCs are known as members. LLCs can have one owner (single member LLC) or more than one owner (multi-member LLC). Owner-employees of LLCs are self-employed. LLCs offer a formal business structure, while they can also be taxed similarly to sole proprietorships or partnerships. An LLC is more flexible than a corporation in organization and profit distribution, and does not come with the same annual meeting requirements of a corporation. An LLC canchoose taxation as a corporation, and owners can save money by electing S corp. tax status. A limited liability company is a hybrid business structure that provides the limited legal liability of a corporation and the operational flexibility of a partnership or sole proprietorship.
- State by State Links on Business Organizations