State guide · Texas
Starting a Medical Practice in Texas
What physicians need to know about Texas's regulatory environment, entity requirements, and practice-specific rules.
Entity required
Professional Association (PA) or Professional LLC (PLLC)
LLC permitted
No
CPOM enforcement
Strict
Top income tax
None
Min. franchise tax
None below $2.47M revenue (no-tax-due threshold)
Med board registration
Required
The information on this page is provided for general reference only and may not reflect recent regulatory or legislative changes. Entity formation requirements, tax rates, and CPOM rules vary by state and change frequently. Always verify requirements with your state's official agencies, a qualified healthcare attorney, or a CPA with medical practice experience before making business formation decisions. Nothing on this page constitutes legal or financial advice.
Entity Requirements
Texas physicians cannot practice through a standard LLC or general business corporation. The two permitted vehicles are the Professional Association (PA) under Texas Business Organizations Code (BOC) Chapter 302, and the Professional Limited Liability Company (PLLC) under BOC Chapter 304. All members or shareholders must be licensed Texas physicians.
Filing is done with the Texas Secretary of State. The entity name must include "Professional Association," "P.A.," "Professional Limited Liability Company," or "PLLC." Texas also recognizes a Certified Nonprofit Health Organization (5.01(a) corporation) as a workaround for hospital-employed physician arrangements.
Worth knowing
Texas allows hospitals to employ physicians indirectly through 5.01(a) certified nonprofit health organizations — verify this structure with healthcare counsel if it applies to your situation.
- •Form a Professional Association (PA) or Professional Limited Liability Company (PLLC) — standard LLCs and corporations cannot practice medicine
- •All members/shareholders must be licensed Texas physicians
- •File Certificate of Formation with the Texas Secretary of State (Form 204 for PLLC, Form 203 for PA)
- •Entity name must include "PA," "P.A.," "PLLC," or the equivalent words
- •Register the entity with the Texas Medical Board within 30 days of formation
Corporate Practice of Medicine
Texas enforces a strict Corporate Practice of Medicine doctrine. Hospitals, general business corporations, and non-physician owners cannot employ physicians to deliver clinical care or own equity in a medical practice. The Texas Medical Board and the Attorney General actively enforce these limits.
MSO (Management Services Organization) structures are commonly used in Texas to allow non-physician investment in the business side of a practice. The MSO contracts with the physician-owned PA or PLLC for administrative services. The MSO cannot direct clinical care, set treatment protocols, or take a percentage of clinical revenue in a way that constitutes fee-splitting.
Important
Texas Occupations Code §164.052 prohibits aiding the unlicensed practice of medicine, and §165.156 makes corporate practice violations a basis for board discipline against the involved physicians. MSO arrangements should be reviewed by Texas healthcare counsel and structured around fair-market-value administrative fees.
Tax Considerations
Texas has no state personal income tax, which is a major advantage for physician owners of pass-through entities. The state does impose a franchise tax (the "margin tax") on entities with revenue above approximately $2.47 million (2024 threshold — verify current figure).
For most solo and small-group practices, the no-tax-due threshold means no franchise tax is owed, though a No Tax Due Report must still be filed annually. Practices over the threshold pay 0.375% on retail/wholesale or 0.75% on other businesses, calculated on a margin base.
- •No Texas personal income tax
- •Franchise (margin) tax no-tax-due threshold: Verify — approximately $2.47M total revenue (2024)
- •Annual franchise-tax report (or No Tax Due Report) required for all entities
- •Local property and sales taxes can be significant for practices with real estate or equipment
- •Texas does not require a state-level entity income-tax election (no S-corp election needed at state level)
Texas Medical Board
Texas requires the practice entity itself to register with the Texas Medical Board (TMB) as a Professional Entity. Registration must occur within 30 days of formation, and the entity must renew biennially. The TMB maintains a public registry of licensed professional entities.
- •File a Professional Entity Registration with the Texas Medical Board within 30 days of formation
- •Provide the entity's certificate of formation and a list of all owners with their Texas medical license numbers
- •Renew registration biennially
- •Notify the TMB of any changes in ownership, name, or address within 30 days
Employment Law Considerations
Texas employment law is generally employer-friendly compared to coastal states. There is no state minimum wage above the federal $7.25, no state-mandated paid sick leave, and at-will employment is the default. Non-compete agreements are enforceable for physicians but subject to specific statutory requirements under Texas Business & Commerce Code §15.50.
- •At-will employment is the default
- •Physician non-competes enforceable but must (i) be reasonable in geography and duration, (ii) provide a buyout option, and (iii) allow continued treatment of patients with acute illness
- •No state-mandated paid sick leave (some city ordinances were preempted in 2023)
- •Texas Workforce Commission handles unemployment insurance — register within 10 days of first paying wages
- •Federal FLSA, ADA, FMLA, and Title VII apply — Texas does not add significant additional layers
Official resources
Bookmark these official agency portals for Texas entity formation, tax registration, and medical board information.
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State medical license requirements, controlled-substance registration, and Medicaid enrollment specifics for Texas.
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