Forming a professional corporation (PC) in California is essential for medical professionals who want to provide their services within a legal and compliant framework. Here, we break down everything you need to know to establish a professional corporation seamlessly.
Why Choose a Professional Corporation?
A professional corporation offers several advantages, including liability protection, tax benefits, and compliance with California’s strict corporate practice of medicine laws. For medical professionals, this structure allows them to practice while shielding their personal assets from potential business liabilities.
Key Benefits of a Professional Corporation:
- Liability Protection: Personal assets are shielded from business-related liabilities.
- Tax Advantages: PCs allow for various tax planning opportunities, such as retirement contributions and income splitting.
- Credibility: Operating as a professional corporation signals professionalism to patients and peers.
Steps to Forming a Professional Corporation
- Choose a Compliant Name
Your corporation’s name must adhere to California Business and Professions Code requirements. Typically, it should include terms like “Professional Corporation” or “Medical Corporation.” Ensure the name reflects your professional designation and is approved by the relevant licensing board. - File Articles of Incorporation
Submit Form ARTS-PC to the California Secretary of State. This form establishes your corporation’s existence. Be prepared to pay the required filing fee. - File Fictitious Name Permit with your licensing board if needed
Medical Board and Osteopathic Board have naming requirements which may make it necessary for your to file a fictitious name permit (FNP) with your board. - Draft Corporate Bylaws
Corporate bylaws outline how your corporation will be governed, including shareholder roles, director responsibilities, and operational procedures. - Appoint Directors and Officers
Shareholders must appoint a board of directors and elect officers. California law requires all directors and officers in a medical corporation to hold professional licenses. - Apply for an EIN
Obtain an Employer Identification Number (EIN) from the IRS for tax filing and employee payroll purposes. - File a Statement of Information
Within 90 days of filing your articles of incorporation, you must file a Statement of Information with the California Secretary of State. This document must be updated annually.
Compliance Requirements for Professional Corporations
- Ownership Restrictions
Under California law, only licensed professionals can own shares in a professional corporation. For medical corporations, licensed physicians must hold at least 51% of the shares, with the remainder owned by other licensed medical professionals. - Stark Law and Anti-Kickback Statutes
These federal laws govern financial relationships in healthcare. Ensure your corporation’s operations comply to avoid penalties. - Annual Meetings and Records
Conduct annual meetings with shareholders and directors. Maintain corporate minutes and records to preserve the legitimacy of your corporation.
Common Mistakes to Avoid
- Failing to Register with the Correct Licensing Board: Ensure your corporation is registered with the appropriate board for your profession.
- Skipping Annual Filings: Late filings can result in penalties and suspension of corporate status.
- Ignoring Ownership Rules: Allowing unlicensed individuals to own shares violates California’s corporate practice of medicine laws.
How the Law Office of Kris Mukherji Can Help
At the Law Office of Kris Mukherji, we specialize in forming professional corporations for medical professionals in California. Our services include:
- Filing Articles of Incorporation
- Drafting customized bylaws
- Ensuring compliance with California’s corporate practice of medicine laws
- Providing ongoing legal support for corporate governance
With over 12 years of experience, we’ve helped countless medical professionals establish and maintain their corporations with confidence. Visit www.kmsdlawoffice.com to schedule a consultation.
Final Thoughts
Forming a professional corporation is a significant step for medical professionals looking to establish a compliant and efficient practice. By following the steps outlined above and partnering with an experienced attorney, you can build a solid foundation for your career.
Contact the Law Office of Kris Mukherji today at www.kmsdlawoffice.com to learn more about our services and start your journey toward establishing a professional corporation.