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I Want to Start a Group Practice with a Friend - What Should I Do?

On first impression, starting a group practice with a friend sounds like a fantastic idea, and a good way to split the risk and responsibility of owning a practice. However, there are several important things to consider when contemplating entering into a business relationship with a friend.

Partnership Basics

First, you need to be aware that there are unique challenges of forming a partnership, and you’ll need to carefully consider these before entering a formal working relationship with a friend or colleague. Starting a business involves creating a legal entity and requires clear understanding and agreement from both parties on how the new entity will operate. Choosing the appropriate legal entity can be an involved process, but can include partnerships, limited liability partnerships, limited liability companies, or corporations. Your accountant or attorney can help you decide what the most appropriate selection is. Also, each potential partner needs to be on the same page as far as the vision for the company, services offered, communities served, and short and long term goals. The best way to do this is to develop a business plan together that serves as the foundation for the company and is essentially the roadmap for your practice’s creation and growth.

Partnership Agreement

Once you are on board with your business plan, you must create a partnership agreement that outlines the terms of the business relationship, how finances are handled, decision making processes, dispute resolutions, and exit strategies. A key part of the partnership agreement outlines how you’ll split profit, handle expenses, share the financial responsibilities and pay yourselves. This is an essential document that will need to be provided to your accountant and tax preparer, as it details the proper way to treat the company’s income and expenses. It is always best to work with an attorney to draft this document and any other legal document, such as an operating agreement or employment contract, for the practice.

Financial Considerations

On the financial side of things, it’s critical to align the way you look at your income in a partnership. Many partnerships fail because each partner is focused on the dollars they’re bringing in specifically to the practice and think that money should only be allocated to them. In reality, starting a successful partnership involves putting all income and expenses together in a way that sustainably helps the practice grow and evolve. For example, maybe one partner loves seeing clients and the other is gifted at administration. The income directly attributed to one partner may far exceed the other, but the contribution of both is necessary for the function of the partnership. If your goal is to hang on to all the income you bring in, it’s probably best to remain a solo practitioner and potentially just share office space with your friend, rather than creating a partnership with them.

Be Honest with Yourself

A partnership is much more involved than two clinicians seeing patients and splitting everything down the middle. It’s more about two or more people going into business together that share a common goal and are willing to pool their resources to attain those goals reasonably and sustainably. Partnerships can sometimes be difficult to operate in, if one or more partners is not on board with an idea or vision, so it’s incredibly important to make sure those goals align from the beginning. Otherwise, it can be an unfortunate ending to the partnership and the friendship in the long term.

You should also know that some states have rules about how partnerships can be created, based on the license that each person holds. It’s best to check with an attorney or with state resources to find out if a partnership you are thinking of starting is eligible for creation.

If you are thinking about starting a group practice, whether on your own or with someone else, please check out our resources to help get your practice off on the right financial foot. And if you're an already-established practice looking for accounting support and financial insight, please schedule a free consultation to learn more about how our specialized services can help you!


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This article is designed to provide information only and should not be considered legal or tax advice. Because of the complexity of the law and the variables in your own personal tax situation, you can’t rely on our advice specifically related to your unique circumstances. In order to get the best tax savings and legal advice available to you, you should consult with your own accountant, attorney or advisor regarding your particular facts and circumstances. GreenOak Accounting is an accounting firm that specializes in working with counselors and therapists in private practice. We provide monthly accounting & bookkeeping services, 1-time services and online courses. For more information on our specialized services for therapists please visit


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