Proprietorship vs Company for Doctors: Questions to Ask Your CA

Most doctors start practising under their own name, and that's perfectly fine. The trouble starts years later.

The practice now has two locations, fifteen staff and a few lakh a month in equipment loans. An investor shows interest. And suddenly the structure everyone ignored becomes the reason the deal can't move.

I'm not a chartered accountant or a lawyer, and tax and legal rules change every year. So this post won't tell you which structure to pick. It will show you what each one means for a doctor, and give you the questions to take to your CA and lawyer so the decision gets made properly.

What structures can a medical practice use in India?

The structure decides four things: how you're taxed, how much personal risk you carry, how easily you can bring in partners or investors, and how easily you can one day sell.

For most practices at ₹50 lakh a month and beyond, a private limited company is usually where they end up. But "usually" isn't "always", and that's what your CA is for.

When should a doctor move from proprietorship to a company?

There isn't a single revenue figure. Look for these signals instead:

• You're running more than one location, or planning to.
• You want to give equity or a share of profits to an associate, a CEO or a key manager.
• An investor, hospital or chain has shown interest.
• Significant loans, leases or equipment contracts now sit in your personal name.
• You're thinking about selling all or part of the practice in the next few years.

Here's an example of why timing matters. A dermatologist we worked with was still a sole proprietor while running two clinics, so all the business risk rested on her personally. When an investor showed interest, the structure became a problem overnight. With her CA and lawyer, she moved the clinics into a private limited company, put contracts in place for every associate and staff member, and cleaned up the books. It worked, but it took months that a decision two years earlier would have saved.

Watch out: Restructuring a large, running business later is far harder and more expensive than choosing the right structure early.

Do doctors keep their professional practice separate from the company?

Often, yes. As practices grow, the structure often evolves into layers. Many doctors keep their personal professional practice, run the clinic business through a company, and hold the property in a separate entity that leases it to the clinic at fair rent.

That way the clinic company can bring in investors or be sold, and the property stays with you, paying rent.

Whether that suits you depends on how your income flows, what your state requires for clinical registration and what your CA advises on tax.

What should you ask your CA?

Take this list to your next meeting. These are the questions that matter.

1. Given my revenue and plans, which structure fits my stage now, and which will I need next?
2. Can you model my tax under each option, including how I'd take a salary and profits?
3. Does the presumptive scheme for professionals still suit me, or am I better off with regular books given my real expenses?
4. How should I pay associate and visiting doctors: as employees or as consultants on professional fees? What changes in TDS and paperwork?
5. What extra compliance will each structure add: filings, audits, board meetings?
6. If I add taxable services like cosmetic procedures, products or training, how does that change my GST position?
7. How should the clinic premises be held if I buy them?
8. What would a buyer or investor expect to see in our structure and books?

Note one change: India's new Income-tax Act, 2025 applies to income earned from 1 April 2026. Many section numbers you may have heard of have changed, even where the core ideas stayed the same. Make sure your CA's advice reflects the current law.

What should you ask your lawyer?

1. Do we need a partnership deed or a shareholders' agreement, and what should it say about exits, deaths and disputes?
2. Are our employment and associate agreements in place, covering confidentiality, ownership of patient data and the brand, notice and non-solicitation?
3. What personal guarantees am I carrying on loans and leases, and can they be reduced?
4. What registrations and licences move or need updating if we change structure?
5. Are our patient consent forms and data practices in order?

How does structure affect your exit?

Directly. Buyers and investors look first at how the business is structured, whether the books are clean and whether everything is compliant. A practice that's still a sole proprietorship with mixed books is very hard to value, let alone buy.

So even if selling feels far away, choose the structure as if you might. The same choices that make a practice sellable also let you own it without working in it.

Getting your structure, books and contracts ready for growth is part of our growth consulting, always alongside your own CA and lawyer. The full map of structure, tax and compliance is in Rich Doctors Walk Away, and you can book a free growth call to see what your stage needs.

The short version

• Sole proprietorship is simple but offers no separation, and is hard to sell or add partners to.
• LLPs suit doctor partnerships; a private limited company suits growth, investors and a sale.
• Many growing doctors separate the professional practice, the clinic company and the property.
• Decide early, because restructuring a running business later costs more.
• Take a written list of questions to your CA and lawyer, and make the decision with them.