Working as a locum tenens oncologist offers exceptional freedom, but with that independence comes added responsibility.
Unlike traditional W-2 employees, independent contractors are responsible for managing their own taxes, liability protection, and business structure. For many oncology professionals, forming a limited liability company (LLC) for locum tenens work is a smart way to protect personal assets and simplify their business operations.
If you’re evaluating your options, here’s what to know about forming an LLC as a locum oncologist.
LLC for Locum Tenens Oncologists: The Basics
Before digging into the details, let’s address some frequently asked questions about forming an LLC for locum tenens oncologists.
Can a doctor be an LLC?
Yes. An LLC is highly recommended for locum tenens physicians operating as independent contractors. It offers crucial personal liability protection, safeguarding personal assets from business debts and lawsuits, a significant advantage given potential malpractice risks.
What are the benefits of LLCs for locum tenens providers?
LLCs offer liability protection, tax flexibility, and a professional brand image. An LLC can project a more established and professional image compared to operating as a sole proprietorship. This can enhance credibility with hospitals, clinics, and other potential clients, as it suggests a formal business structure and a commitment to your practice.
What is an independent contractor physician LLC?
An LLC for a locum oncologist creates a separate business entity for independent contractor physicians, offering crucial personal liability protection for assets and potential tax advantages. This structure professionalizes the practice, simplifies financial management, and optimizes tax burdens, transforming the physician into a recognized business entity rather than just an individual contractor.
Forming an LLC as a Locum Tenens Oncologist
An LLC is a business structure that separates your personal and professional finances. This structure can help shield your personal assets from contract disputes or business-related debt, while also offering tax flexibility.
Although an LLC doesn’t protect against malpractice claims (that’s what malpractice insurance is for), it does reduce risk in other areas. Many locum oncologists choose to have their LLC taxed as an S-Corporation, which can help minimize self-employment tax obligations for high earners.
Some providers consider forming a PLLC (Professional Limited Liability Company). Still, for most locum tenens oncologists, a standard single-member LLC is more practical than a PLLC, offering similar liability protection with less administrative complexity and lower costs. PLLCs are typically used for professions with a higher risk of negligence, where states require individual accountability. However, for many locum tenens roles, especially under a hospital’s insurance, a PLLC’s extra scrutiny might be unnecessary. A standard LLC’s simpler structure eases financial and tax management, benefiting mobile professionals.
Top Benefits of LLCs for Locum Tenens Providers
1. Personal asset protection
An LLC shields your personal assets by separating your professional and personal liabilities, such as your home, vehicle, or retirement savings, from business-related lawsuits or debts. For example, if a facility disputes payment or breaks contract terms, only your LLC’s assets are at risk.
2. Tax flexibility
LLCs are treated as pass-through entities, meaning business income passes directly to you and is only taxed once. You can also elect to have your LLC taxed as an S-Corporation. This allows you to:
- Pay yourself a reasonable salary
- Distribute the remaining profits separately
- Potentially reduce your payroll tax burden
If you’re a full-time locum tenens oncologist earning above the Security Wage Limit ($176,100 in 2025), this setup may offer meaningful tax savings. Keep in mind, however, that S-Corp status comes with additional compliance requirements, including separate business tax filings and maintaining accurate records.
3. Simple and cost-effective setup
Starting an LLC is generally straightforward, even for busy providers. Compared to corporations, LLCs require:
- Fewer administrative burdens
- Lower filing fees (typically $50 to $500, depending on the state you live in)
- More straightforward formation process: select a name, file Articles of Organization, appoint a registered agent, and get an Employer Identification Number, or EIN
4. Enhanced professional branding
When a seasoned oncologist forms an LLC for their practice, it enhances their professional image. Staffing agencies take note of their commitment and organization, boosting their credibility in contract negotiations. The LLC streamlined tax and contract navigation, making them attractive for high-profile, long-term oncology assignments.
Understanding the Limits of an LLC
While an LLC offers valuable protection and flexibility, it’s not a complete shield. Here’s a quick breakdown of what an LLC covers over a sole proprietorship:
| Business Structure | Protection from Contract Disputes? | Assets Protected from Business Debts? | Protection from Malpractice Lawsuits? |
|---|---|---|---|
| Sole Proprietorship | No | No | No |
| Locum Tenens LLC | Yes | Yes | No |
You’ll still need malpractice insurance, even with an LLC.
S-Corps Compliance Considerations
If you choose S-Corp taxation, you must pay yourself a reasonable salary, as mentioned earlier. Only earnings above the Social Security Wage Limit threshold are exempt from payroll taxes.
Also note:
- S-Corps require separate tax filings from your personal return
- If you’re also a W-2 employee elsewhere, you could face double taxation on certain earnings
- Hiring a CPA can help ensure compliance and avoid penalties
Who Should Consider Forming an LLC?
If you’re unsure whether to form an LLC, start by asking:
- Do I earn more than $176,100 annually from locum work?
- Do I have significant personal assets that need protection?
- Am I comfortable managing a business or hiring help to do so?
Quick guide
Here is a basic framework you can use to decide whether forming an LLC is worth it or not based on your situation:
- Sole Proprietor: Best for providers who work occasional locums and have minimal personal assets.
- LLC without S-Corp: Ideal for part-time locum providers with significant assets.
- LLC with S-Corp: Best suited for full-time locum oncologists earning above the Social Security Wage Limit.
In general, part-time locum providers should avoid filing as an S-Corp, even if you make significant income, since your W-2 status will lead to double taxation for Social Security and Medicare taxes.
How to Form an LLC: Step-by-Step
If you’ve decided to move forward with forming an LLC, here’s how to get started:
- Choose a professional business name (i.e., Precision Oncology Care, LLC)
- Select your state (some prefer Delaware or Wyoming for their favorable business laws)
- Apply for an EIN (federal tax ID)
- Draft an operating agreement, even for single-member LLCs
- Open a business bank account to keep finances separate
How Cancer CarePoint Supports Locum Oncologists
At Cancer CarePoint, we support oncology professionals at every stage of their locum tenens journey, including those operating as LLCs. Whether you’re just starting or looking to optimize your business structure, our team simplifies credentialing, contracting, and onboarding.
With more than 30 years of experience and 125 years of combined oncology staffing expertise, we understand the complexities of working as an independent contractor. Let’s build your future together.
Schedule a consultation with Cancer CarePoint today to learn how we can support your locum oncology career.
