Choosing the Best Legal Structure for Your Assisted Living

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Starting an assisted living business is exciting, but before you welcome your first resident, you need to protect yourself legally. Choosing the right business structure is one of the most important steps to keeping your assets safe and your business running smoothly.

Should you go with an LLC? An S Corp? A two-entity setup? Let’s break it down in simple terms!

Quick note: I am not an attorney, and this blog or my content should not be taken as legal advice - please talk to a legal professional when it comes to legal matters.

Check out the video, too:

Start with Legal Guidance

Before you file any paperwork, talk to an attorney. It’s tempting to use online services like LegalZoom, but assisted living is a highly regulated industry. The wrong setup could put you at risk of lawsuits or financial losses.

A specialized attorney can help you:
✔️ Choose the best legal structure
✔️ File the right paperwork
✔️ Protect your personal assets

💰 Cost: Expect to pay $800 to $2,500 to set up two entities (one for real estate and one for operations). This investment is worth the peace of mind!


Which Business Structure Is Best for Assisted Living?

Here’s a quick guide to common legal structures:

🚫 Sole Proprietorship (Not Recommended)

❌ No liability protection
❌ Your personal assets (house, car, savings) may be at risk
❌ Not suitable for assisted living businesses

🏢 C Corporation (For Large Companies, Not Small Businesses)

✔️ Strong liability protection
❌ Double taxation (you pay taxes twice—on business profits and personal income)
❌ More expensive to set up and maintain
Best for: Large companies, not small residential assisted living businesses

🏠 LLC (Most Popular Option)

✔️ Protects personal assets from business lawsuits
✔️ Simple to set up and run
✔️ Can be owned by one person or multiple partners
Best for: Most assisted living operators

📉 S Corporation (Similar to an LLC, With Tax Benefits)

✔️ Same liability protection as an LLC
✔️ Potential tax savings on self-employment taxes
❌ Requires more paperwork and tax filings
Best for: Owners with high profits who want tax savings (consult your CPA first!)


Why Many Owners Use a Two-Entity Structure

A two-entity setup is a smart way to maximize protection. Here’s how it works:

🏡 Entity #1: Real Estate LLC (Owns the property)

  • Protects the building from lawsuits related to operations
  • Leases the property to your operating company

🏥 Entity #2: Operating LLC (Runs the business)

  • Handles resident care, staffing, and daily operations
  • Keeps financial and legal risks separate from the property

🚨 Why does this matter?
If a resident’s family sues your business, they can’t go after your property because it’s owned by a separate company!


Where to Find a Great Attorney

Hiring the right legal expert can make a huge difference. Here are two top recommendations:

📝 Clint Coons – A legal expert in assisted living structures. Tons of great content online.
📝 KKOS Lawyers (Mark J Kohler’s Team) – A law firm that specializes in tax and legal strategies for small businesses. I've used them in the past.

👀 Pro Tip: Find a local attorney who understands your state’s assisted living regulations.


Final Thoughts

Picking the right business structure isn’t just paperwork—it’s about protecting your business and personal assets.

Best option for most owners? An LLC or S Corp with a two-entity structure (one for real estate, one for operations).
Step one? Talk to an attorney before setting anything up.
Long-term benefit? Peace of mind knowing your business is legally secure!

Thinking about starting your assisted living business? Drop a comment or check out our resources to get started the right way!

Final Thoughts

Ready to take the next step in your assisted living journey? Download our Business Plan Checklist to ensure you have all the elements needed for a successful business plan. This tool will help you outline your business strategy, identify key goals, and prepare for a profitable venture. Additionally, consider exploring the Assisted Living Investing Mastermind program. This comprehensive 12-month program is designed to guide you step-by-step toward owning and operating your own assisted living facility. With the added benefit of personalized coaching support, the program ensures you have the resources and guidance needed to succeed in this rewarding industry.

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