Most professionals work hard to gain their license. They study hard, practice hard, work hard, and invest all of their time, energy and money into it. To be a professional is a noble job in every society. While this is true, most professionals in California now venture into starting their own business by offering their professional services in the form of a corporation. Read more to understand what a professional corporation is!
Non-professionals and other businessmen are also keen on starting their own by investing in corporations that will be run by professionals. As this is true, there are many factors and steps to take to proceed in forming this type of business.
In California, practicing professionals who want to engage in business can only open their business by forming a professional corporation. If you are planning to start your own business or thinking of investing with someone who is, this is the perfect article for you. Read more into this as we share important tips and information on starting your own professional medical corporation in California.
What is A Professional Corporation?
A professional corporation is a type of business entity for practicing professionals who wish to start their own business by offering their professional services. As a professional, you cannot just open your clinic or office without following the regulations and requirements of your state. Professional corporations are important because they regulate any form of malpractice of professional services as well as provide protection and benefits for the professionals as well as individuals who will avail of their professional services.
Professional Categories that Can Form a Corporation
One of the most common professional categories stems from the medical field. This type of industry can be a very lucrative type of business and more and more people are investing in it. These medical categories include doctors, nurses, chiropractors, physical therapists, dentists, acupuncturists, pharmacists, psychologists, etc.
Non-medical professional categories on the other hand include lawyers, architects, accountants, engineers, court reporters, etc. Most of them require certificates of registration from their respective professional boards as one of the pre-requisites in forming their professional corporation. These include the following:
- Medical Board
- Osteopathic Medical Board
- Dental Board
- California State Board of Pharmacy
- Veterinary Medical Board
- California Architects Board
- Court Reporters Board of California
- Board of Behavioral Sciences
- Speech-Language Pathology and Audiology Board
- Board of Registered Nurses
- State Board of Optometry
These boards regulate professionals offering their professional services through businesses to any malpractice or negligence on their part. Proper laws, information, guidelines, and reviews are provided, and the designated boards assess every professional is updated in their professional field before starting into their private practice.
Specific Laws That Regulate Professional Corporations in California
There are quite a few laws that govern professional corporations in California. However, there is one main law known as the “Moscone-Knox Professional Corporation Act” which is a regulatory requirement for any professional seeking to form their own corporation. This law can be found in the California Corporations Code. While general stock corporations are the common form of corporation people go into for their professional businesses, this does not apply in California as it is a requirement according to the noted law above, that professionals who want to start their own business with their professional practice should form a professional corporation.
Is Forming A Limited Liability Company an Accepted Alternative for Business in California?
While it is generally encouraged for professionals to start their business in the form of a corporation, they can actually opt for a sole-proprietorship or a registered limited liability partnership. However, these have restrictions in the case that your business should be operated by licensed individuals related to the professional services you will provide. You can find out more about the limitations set out in the California Revised Uniform Limited Liability Company Act. In essence, all these types of business entities differ based on the laws they provide for the companies and the people that will benefit from their professional services.
Protection of Personal Assets for Professional Corporations
There is no direct protection of assets for professionals in their professional corporations whether due to malpractice or negligence. However, there is individual protection from liability for the malpractice and negligence of other professional shareholders. There are other claims that you may avail protection for your professional corporation. In general, personal malpractice protection is not offered in professional corporations, but protection from other professional shareholders’ negligence is an available option to protect your personal assets.
Start Your Own Professional Corporation with Us Today!
There are many rules and regulations that govern professional corporations in California. We’ve made it clear that these laws are important and have a direct impact and benefits to the corporation and the people who will avail of the professional services.
If you want to understand more about what a professional corporation is, or if you are a professional planning to start your own private practice, or if you are an individual willing to invest in professional services business, you now understand the need to hire an expert corporate attorney to process and guide you in starting a professional corporation. Contact us now at +1 (714) 634-4838 and let us help you with what we can for your business.
