Business setup · 9 min read
What Comes First? The OT Private Practice Setup Order
The license, business entity, EIN, bank account, and insurance are connected, and doing them out of order can create avoidable cleanup. Here is the sequence, plus the places where state rules or professional advice may change it.
The short version
What to know before you start.
- Confirm professional and ownership rules before choosing an entity.
- Form the entity before requesting its EIN.
- Bind coverage for the exact services, locations, and delivery model.
- Keep legal names, numbers, filings, and renewals in one owner-controlled record.
1. Write down where and how you will work
Write down where the business will be formed, where you will physically work, where clients may be located, whether you will use telehealth, and whether you will employ or contract with others. Those facts determine which boards, filing offices, tax agencies, and local governments to check.
2. Confirm professional authority
Verify that your credential and license are active for the work you plan to perform. Check scope, telehealth, supervision, advertising, professional-title, facility, and continuing-competence rules. Record the official source and review date.
If a professional entity or certificate of authorization is required, the professional rule may constrain the entity choice. Confirm it before filing a generic LLC or corporation.
3. Choose the entity before you request its EIN
Sole proprietorship, LLC, professional entity, partnership, and corporation structures can affect liability, administration, tax treatment, ownership, and payer enrollment. A licensed attorney and tax professional can help you choose the structure that fits your clinical and financial facts when the consequences are material.
4. Clear and register the name
Check state entity records, professional naming rules, assumed-name requirements, domain availability, and potential trademark conflicts. Legal clearance requires more than domain availability. Register the entity and any required assumed name with the correct state or local office.
5. Obtain the EIN from the IRS
The IRS says the EIN application is free and advises legal entities to be formed through the state before applying. Apply directly through IRS.gov, use the legal name exactly as filed, and store the confirmation securely outside the planning workspace. The IRS currently limits issuance to one EIN per responsible party per day.
6. Separate money and records
Open a business bank account using the bank’s required formation and identity documents. Choose bookkeeping software or a professional, establish a chart of accounts, capture receipts, reconcile monthly, and set tax reserves. Keep client funds and business revenue separate from personal spending.
7. Insure the practice you will actually run
Discuss professional liability, general liability, cyber coverage, property, business interruption, workers’ compensation, hired or non-owned auto, and any contractual limits relevant to your model. Confirm population, services, home or mobile work, telehealth jurisdictions, employees or contractors, and retroactive coverage where relevant.
Keep certificates, policy terms, exclusions, renewal dates, and incident reporting instructions in your founder-owned compliance file.
8. Finish local, tax, and policy requirements
Check state tax registration, local business licenses, zoning or home-occupation rules, labor requirements, signage, and accessibility obligations. Then complete reviewed client agreements, notices, consent, cancellation, records, privacy, security, incident, emergency, and vendor procedures before accepting clients.
Sources
Check the rules for yourself.
- SBA: Choose a business structure
- SBA: Register your business
- IRS: Get an employer identification number
- AOTA: State licensure
These sources support the claims in this guide, but requirements can change. Confirm the current rules with your state, payer, insurer, and advisers before you act.
How we worked on this guide
Research first. Advice second.
OT Bestie checks material claims against the sources above and revises time-sensitive details as the guidance changes. Use this article to plan your questions and next steps, then bring decisions that depend on your circumstances to the right legal, tax, billing, insurance, or clinical professional.