How to Run Your LLC Properly
If you use a limited liability company (LLC) for locums shifts or other 1099 work, you need to know how to run it properly to actually get the liability protection you're after. Here's what that looks like in practice.
What Protection Does an LLC Offer?
Let's start with a common misconception: an LLC does not protect you from malpractice liability. Malpractice is always personal. The only thing that protects you there is malpractice insurance.
What an LLC can do is shield you from other types of liability — but only if you treat it like a real business, distinct from yourself and your personal finances.
Treat Your LLC Like a Business
Larger LLCs with multiple owners and employees tend to operate formally out of necessity. When it's just you doing locums or 1099 work, it's easy to get sloppy. Don't.
If you don't run your LLC properly, a plaintiff can ask the court to disregard it and hold you personally liable — a legal concept sometimes called "piercing the corporate veil." Here's how to avoid that.
Maintain Separate Finances
Open a business bank account and credit card, and run all business transactions through them. This keeps your finances clean and makes tax time significantly easier.
Never mix funds. If you want to use business money for personal expenses, transfer it from the business account to your personal account first, then spend from there. No shortcuts.
Sign Contracts in the Name of Your LLC
Without an LLC, you sign contracts in your personal name and take on personal liability for every term. With an LLC, that changes — if you do it right.
Contracts should list your LLC as the service provider, and your signature line should look like this:
[Your LLC Name], LLC
________________________ [Your Name], Member
This makes clear that the other party is contracting with a business entity, not with you personally.
Invoice Clients in the Name of Your LLC
Invoice under your LLC's name, not your own. It reinforces that you're acting as a business representative — and it makes it much easier to receive payments made out to the LLC rather than to you personally.
File Taxes Correctly
A single-member LLC is treated as a sole proprietorship for federal tax purposes. That means your business revenue and expenses flow through a Schedule C on your Form 1040. The math is straightforward: revenue minus expenses equals taxable net income.
File Annual Reports With Your State
Most states require LLCs to file a simple annual report and pay a small fee to stay in good standing. This often takes just a few minutes online — but skipping it gives a plaintiff grounds to argue the court shouldn't respect your LLC at all.
Set a recurring annual calendar reminder, or schedule a recurring email to yourself with the link to your state's filing page. Gmail doesn't support recurring emails natively, but a tool like Boomerang for Gmail works well for this. (No financial relationship with Boomerang — just a useful tool.)
Ready to put this into practice? If you're an ER physician or high-income professional looking for straightforward, evidence-based financial guidance, we'd love to connect. Schedule a free intro call with Yahara Wealth Management — no pressure, no sales pitch, just a conversation.
This article is for educational purposes only and does not constitute legal, tax, or financial advice. Every situation is different — consult a qualified attorney, CPA, or financial advisor before making decisions about your business structure or tax filing.