If you're a veterinarian thinking about starting your own practice in Iowa, or restructuring an existing one, an important decision you will face is how to legally set up your business. Your choice of legal entity isn't just paperwork; it affects your personal liability, how you're taxed, and whether you're in compliance with Iowa's professional regulations. Unlike many other small businesses, veterinary practices are a professional service and are subject to specific rules about who can own and operate them, which makes choosing the right entity an important decision. Taking the time to understand your options today can save you headaches later and set your practice up for long-term success.
Legal Entity Choice Matters
Choosing the right legal entity is especially important in the veterinary field because it directly impacts your legal risk, financial flexibility, and ability to grow your practice. For example, forming a professional limited liability company (PLLC) or a professional corporation (PC) can shield your personal assets from business-related liabilities, such as a malpractice lawsuit or a contract dispute.
Iowa law also limits those who can own a veterinary practice: only licensed veterinarians can own a veterinarian clinic or practice veterinary medicine. The legal entity you choose also affects how you pay yourself, whether as an employee of your own corporation or through pass-through income in a PLLC, and how your business is taxed at the state and federal level. In short, your entity structure isn’t just a technicality, it shapes your daily operations, your exposure to risk, and your long-term growth potential.
Common Legal Entities for Veterinary Practices in Iowa
Under Iowa law, veterinarians generally have six structuring options: a sole proprietorship, a general partnership, a limited liability partnership, a professional limited liability company, or a professional corporation. A Management Services Organization may also be used in conjunction with the clinical structure.
- Sole Proprietorship – This is the simplest and least expensive option, often used by solo veterinarians starting their business. While easy to set up, it does not offer liability protection that other entities can, meaning your personal assets are on the line in case of a suit against the business.
- General Partnership – If two or more veterinarians go into business together without registering an entity, they are typically going to be considered a general partnership under Iowa law. Like sole proprietorships, a general partnership does not protect the partners personal assets from potential creditors if there is a dispute.
- Limited Liability Partnership – An LLP can be utilized by two or more licensed veterinarians in Iowa who want to share ownership while limiting the personal liability for each other’s actions. Like a general partnership, this structure offers tax benefits but with the added benefit that each partner is generally not personally liable for the other’s mishaps.
- Professional Limited Liability Company – A popular option within any business space, a PLLC combines liability protection with simplicity and tax advantages. A PLLC does not require as much formal structure as a PC (listed below), but the profits are typically passed through directly to the owners, avoiding double taxation. This option is attractive for solo vets or small partnerships.
- Professional Corporation – A PC is a corporation designed for licensed professionals, including veterinarians. This structure offers limited liability, and potential tax benefits through a S-Corp or C-Corp election, depending on what requirements are met and what the shareholders desire, and offers a structured governance model.
- Management Services Organization – As previously mentioned, veterinary clinics are subject to professional ownership restrictions, meaning only licensed veterinarians can own and control the clinical practice. However, a common solution to this limitation is the use of a Management Services Organization (MSO). By separating the clinical practice from the business and administrative functions, the veterinary practice can remain owned by licensed veterinarians, while the MSO, a separate entity, can be owned by non-veterinarians. The MSO typically provides essential non-clinical services such as marketing, billing, HR, and facilities management. This structure allows outside investors or key team members without veterinary licenses to participate in the business’s economic upside, while staying compliant with Iowa’s professional ownership rules.
Next Steps
Whether you are launching your first practice or reviewing the structure of an existing one, looking at your legal entity is wise. New clinics should work with a lawyer to choose the right entity, draft formation documents, and ensure compliance with Iowa’s veterinary ownership laws from the very beginning. Existing clinics may benefit from reviewing their current structure, especially if ownership has changed, new partners are joining, or there is an anticipated expansion. Either way, working with an attorney who understands Iowa law and the profession can help protect your practice and position for long-term success.
Final Thoughts
Are you a veterinarian ready to start your own clinic, or do you run an existing practice with questions about the structuring of your business? We are here to help you make it happen. If you have any questions regarding the content of this blog, or you would like to start looking into business entity options, please contact BrownWinick attorney Caleb Brus. Special thanks to summer associate Bryant Agre for his assistance with this blog.
