If you are a licensed attorney or professional in the healthcare industry, such as, a General Practitioner, Optometrist, Chiropractor, Dentist, Veterinarian or Podiatrist then you will be incorporating as, A Professional Corporation, as dictated by your licensing board and the Business and Professions Code Sections 13400 – 13410.
What is an A Professional Corporation?
A Professional Corporation is an organization with a majority interest owned by a licensed professional that is engaged in rendering professional services in a single profession pursuant to a certificate of registration issued by the governmental agency regulating the profession.
However, the following shall not be required to obtain a certificate of registration in order to render those professional services, ʺany professional corporation or foreign professional corporation rendering professional services by persons duly licensed by the Medical Board of California or any examining committee under the jurisdiction of the board, the Osteopathic Medical Board of California, the Dental Board of California, the Dental Hygiene Committee of California, the California State Board of Pharmacy, the Veterinary Medical Board, the California Architects Board, the Court Reporters Board of California, the Board of Behavioral Sciences, the Speech-Language Pathology and Audiology Board, the Board of Registered Nursing, or the State Board of Optometry shall not be required to obtain a certificate of registration in order to render those professional services.ʺ
How Do I Incorporate as A Professional Corporation?
There are certain steps that you will take to incorporate your business, which are the same for every business, which are listed in the Business Incorporation Checklist. However, if you are a licensed professional then you will have to take additional steps to satisfy your licensing board and your Bylaws will be unique. If you have any questions please contact us.
Professional corporations must comply with applicable rules in the California Business and Professions Code. These rules vary by profession, but they all require that only licensed persons can be shareholders of a professional corporation. For example, the following licensed persons may be shareholders, officers, directors, or professional employees of a professional medical corporation so long as the sum of all shares owned by those licensed persons does not exceed 49 percent of the total number of shares of the professional corporation and so long as the number of those licensed persons owning shares in the professional corporation does not exceed the number of persons licensed by the governmental agency regulating the designated professional corporation:
- Licensed doctors of podiatric medicine.
- Licensed psychologists.
- Registered nurses.
- Licensed optometrists.
- Licensed marriage, family, and child counselors.
- Licensed clinical social workers.
- Licensed physician assistants.
- Licensed chiropractors.
- Licensed acupuncturists.
Unless an exception applies, a shareholder must be licensed in the profession that the professional corporation is engaged in. However, other licensed professionals may be officers, shareholders, directors, or professional employees in specified professions, as long as the total number of shares owned by these other licensed professionals is not more than 49 percent of the corporation’s total shares.
Corporate Director Requirements
A professional corporation which has only one shareholder need have only one director who shall be such shareholder and who shall also serve as the president and treasurer of the corporation. The other officers of the corporation in such situation need not be licensed persons. A professional corporation which has only two shareholders need have only two directors who shall be such shareholders. The two shareholders between them shall fill the offices of president, vice president, secretary and treasurer.
The name of a professional corporation in California must comply with rules governing the profession and any name requirements issued by the licensing agency for that profession. For example, my law firm is Coastal Pacific Law, APC. It also must be distinguishable from the name of any other business entity on file with the California Secretary of State. See California Business and Professions Code 13409 for name requirements.
You can request a free initial check on the availability of your professional corporation’s name by doing a business search on the Secretary of State website.
Coastal Pacific Law attorneys are experienced in business planning, and can help with your incorporation, contracts, trademarks or other issues in San Diego and Austin. To schedule a complimentary consultation, call (619)786-6563, or fill out a Contact Request Form.
This blog does not provide legal advice and does not create an attorney-client relationship. If you need legal advice, please contact an attorney directly.
Photo by Geran de Klerk