By Alex R. Thiersch, JD, Founder/Director of the American Med Spa Association (AmSpa)

When opening a medical spa in Illinois, deciding on the appropriate corporate structure for the practice is an important choice that is not always at the front of peoples' minds. There are many options, however recent updates to the LLC law in Illinois may make it the preferable structure for medical spas and aesthetic practices in the state.

Limited liability companies (LLCs) are businesses structured to allow their owners and operators more flexibility when compared to traditional corporations. They essentially allow the owners of a company to organize the company however they like and choose how they wish to be taxed. This gives owners a good idea of the company's financial position at all times and allows them to plan accordingly for upcoming events. The LLC is a relatively new legal construct, but in the medical aesthetic industry, it has quickly become a preferred organizational method. As an attorney, I recommend that clients use LLCs all the time.

In Illinois, LLCs are governed by the Limited Liability Act, which was enacted on January 1, 1994. However, as of July 1, 2017, the act has been dramatically revised in an effort to bring it in line with recommendations from the National Conference of Commissioners on Uniform State Laws and similar legislation that has been passed in other states. These revisions help to make the act a bit more predictable and make the enforcement of certain provisions easier, because standardizing the law as much as possible helps to give both regulators and LLCs a good idea of how courts will interpret it in certain situations.

My colleague, Renee E. Coover, goes into detail regarding the changes to the Illinois law in this blog post for the national medical aesthetic law firm of ByrdAdatto. Although the revisions apply to LLCs in all different industries, they make some basic administrative and structural changes that medical spa owners and operators should be aware of.

First of all, the LLC Act now allows oral operating agreements. Typically, an LLC drafts an operating agreement—the "constitution" of the company, if you will. This agreement determines how the company acts and how changes can be made by specifying who gets what votes, who has control, how decisions are made, what happens when somebody leaves, what happens if somebody wants to sell, and so forth. The revision to the LLC Act allows oral operating agreements, so now elements of an operating agreement that have been agreed to orally do not need to be codified to be binding, which is a distinct change from the way that the statute has previously been enforced.

Another key aspect of these revisions that medical spa owners and operators should note is that the LLC Act now allows forthe waiver of fiduciary duties by a manager. A fiduciary duty is an inherent, implied duty of loyalty in which an individual acts in furtherance of the company's interest at all times. The revisions to the LLC Act allow managers and members of the company to waive fiduciary duty, which gives more power and flexibility to the owners, who can essentially run the company as they see fit.

Finally, the revisions to the LLC Act establish specific authority for members and managers. This means that the LLC can file a statement with the Illinois Secretary of State's office that either grants or limits the authority of a member or manager in the organization to make certain decisions outlined in the statement.

If you own a medical aesthetic practice or medical spa in Illinois that is operating under an LLC, you should consult a business attorney to make sure that your operating agreements are up to date. If you are considering starting a new company under an LLC, you should be aware of the revisions to the Illinois LLC Act and factor them into your decision-making process.

Find out more about how to set up your medical spa's legal structure – from corporate structure, to ownership, to employee payment plans, to HIPAA compliance, and more – at AmSpa's Medical Spa and Aesthetic Boot Camp October 15-16 in Chicago, Illinois.