Setting up shop

Providers sign contracts with businesses that look like businesses. The setup below is the minimum credible posture, and most of it is a weekend of work plus some waiting.

Entity and banking

Form an LLC. A sole proprietorship works legally, but you are asking practices to hand you their revenue cycle and their patient data, and "Dana Smith Billing" without a liability veil makes the office manager's attorney nervous. Costs run roughly thirty-five to five hundred dollars depending on state filing fees (LLC University's 2026 fee table), with most states clustered between fifty and one hundred sixty. Get the EIN from the IRS site (free), open a business checking account, and keep every client dollar and every business expense out of your personal accounts from day one. Commingling is the mistake that pierces everything.

Registering as a vendor in your state, where required, is usually a simple filing with the Secretary of State. No state licenses medical billers, a fact worth repeating to prospects who ask about credentials, and one the course puts in context later.

Insurance

Errors and omissions coverage is priced by the broker marketplace, and Insureon's E&O data is the cleanest public read on it: small-business E&O averages about $88 a month, 46 percent of Insureon's customers pay under $75 a month, and annual premiums across its book run from roughly $400 to over $7,000 depending on limits, revenue, and industry. Medical billing services appear on Insureon's list of professions that typically carry E&O, and a solo home-office service with modest limits and no payroll sits toward the low end of that band. E&O covers claims that your professional mistakes caused financial harm, like a botched timely filing that costs a practice real revenue. It does not cover fraud, and it does not cover data breach liability, which is a separate cyber policy conversation once you have a payroll to protect. At launch, E&O plus disciplined compliance is the standard posture.

The service agreement

Your contract with each practice is where your business actually lives. Before the BAA (which you met in "HIPAA at your kitchen table") is the services agreement, and it must cover:

• Scope: which services you perform, and explicitly which you do not (credentialing, coding audits, front-desk work). Scope creep is the silent margin killer in this business.
• Fee and terms: the percentage or per-claim fee, what counts as collections, when you invoice, when they pay.
• Term and termination: twelve months initial with renewal, and a termination-for-convenience clause with sixty to ninety days notice. Yes, you are writing your own firing terms. That is the point. Practices sign services with clean exits far more readily than services that trap them.
• Transition out: on termination, you export and return all practice data, in a usable format, within a defined window. This clause closes deals because it removes the hostage fear, and the fear is legitimate: practices get stuck when a billing service walks away with their receivables history.
• Fee schedule changes: Medicare and commercial allowed amounts change every January. Your percentage floats with collections automatically, but if you charge per claim, build in an annual review date.

Use a healthcare-services attorney for the template once, then reuse it. A few hundred dollars for a contract that wins deals and survives a dispute is the best money in this course.

The stack

Start free, upgrade when a client forces it.

| Tier | What | Cost | |---|---|---| | Launch | Office Ally clearinghouse + Practice Mate practice management | $0 (Office Ally) | | As needed | Paper claim print-and-mail | $0.75 per claim | | Client demands EHR | Tebra (Kareo's successor platform) | Reported around $99 to $399 per provider per month (Pabau cost guide; Tebra's own pricing page is quote-only), priced into the engagement | | Any | Your bookkeeping (spreadsheet, then software) | $0 and up |

The rule: the client's needs drive platform upgrades, and the engagement's pricing absorbs the cost. Never pay enterprise software prices to win a client who needs a free tier.

The skill path and the certification question, answered honestly, come later in this course.