Owning a Professional Medical Corporation in California is an excellent way to enhance your medical practice. If you are planning to begin your career in California, the first question you should ask is: who can own a medical corporation in California? It’s interesting to note that only shareholders possessing a medical license can be the majority owner of this type of corporation.
This informative blog post will guide you through the ownership requirements, formation process, and benefits of owning a professional medical corporation in California. So, let’s dive into the details and demystify professional medical corporations!
Key Takeaways
- Only shareholders possessing a medical license can wholly own a professional medical corporation in California.
- A licensed physician must own at least 51 percent of the corporation, with limited ownership allowed for other registered healthcare professionals.
- Non-licensed individuals are prohibited from voting by proxy and cannot own shares in the corporation.
- Various healthcare professions, including physicians, nurses, dentists, chiropractors, and urgent care physicians, are eligible for ownership.
In the complex world of professional services, understanding the various terms and regulations is crucial. This article aims to demystify the concepts of professional services, professional corporations, licensed persons, disqualified persons, and the specific regulations surrounding the ownership of shares in professional medical corporations.
What are Professional Services?
Professional services refer to any type of services that may only be lawfully rendered pursuant to a license, certification, or registration authorized by the Business and Professions Code, the Chiropractic Act, or the Osteopathic Act. This includes services that require specialized skills, knowledge, and legal authorization.
In addition to the above, professional services also encompass services lawfully rendered only pursuant to a license authorized by the Yacht and Ship Brokers Act (Article 2 of Chapter 5 of Division 3 of the Harbors and Navigation Code).
What is a Professional Corporation?
Before delving into who can own a medical corporation in California, the first thing you need to understand is the definition of a professional corporation.
A professional corporation is a specific type of corporation organized under the General Corporation Law to render professional services in a single profession. It must obtain a certificate of registration issued by the governmental agency regulating the profession, except for certain professions such as those licensed by the Medical Board of California, Dental Board, Veterinary Medical Board, and others.
A professional corporation must designate itself as a professional or other corporation as required by statute. There is also a category known as a “foreign professional corporation,” which refers to a corporation organized under the laws of a state other than California, engaged in a profession authorized in the Business and Professions Code.
What is a Licensed Person?
A licensed person is a natural person who is duly licensed under the provisions of the Business and Professions Code, the Chiropractic Act, or the Osteopathic Act. They must be qualified to render the same professional services as the professional corporation or foreign professional corporation of which they are an officer, director, shareholder, or employee.
What is a Disqualified Person?
A disqualified person refers to a licensed person who becomes legally disqualified, either temporarily or permanently, to render the professional services that the particular professional corporation or foreign professional corporation is or was rendering. This disqualification can occur for various legal reasons.
Licensed Persons Owning Shares in Professional Medical Corporations
According to the California Corporations Code Section 13401.5, certain licensed persons may own up to 49% of the total number of shares of the professional medical corporation.
Below is a list of licensed persons who may own shares:
- Licensed Doctors of Podiatric Medicine: Specialists in foot and ankle care.
- Licensed Psychologists: Professionals in mental health assessment and therapy.
- Registered Nurses: Licensed healthcare providers in various medical settings.
- Licensed Optometrists: Eye care specialists.
- Licensed Marriage and Family Therapists: Professionals providing relationship counseling.
- Licensed Clinical Social Workers: Experts in social work and community services.
- Licensed Physician Assistants: Medical professionals working under a physician’s supervision.
- Licensed Chiropractors: Specialists in musculoskeletal system care.
- Licensed Acupuncturists: Practitioners of traditional Chinese medicine.
- Naturopathic Doctors: Experts in natural medicine.
- Licensed Professional Clinical Counselors: Mental health professionals.
- Licensed Physical Therapists: Experts in physical rehabilitation.
- Licensed Pharmacists: Professionals in medication management.
- Licensed Midwives: Specialists in childbirth and women’s health.
- Licensed Occupational Therapists: Experts in therapeutic practices for daily living skills.
Ownership Requirements for a Professional Medical Corporation in California
So, who can own a medical corporation in California and what does it all mean? Let’s break it down into more simple terms. A professional medical corporation in California must have majority ownership by a licensed physician and surgeon, with limitations on non-physician ownership.
Majority ownership by licensed physician and surgeon
In the state of California, a licensed physician must own at least 51 percent of a professional medical corporation. This stipulation ensures that the majority control and decision-making power lie with a qualified medical practitioner.
Other registered healthcare professionals can acquire the remaining 49 percent shares, but the lion’s share always goes to the licensed physicians or surgeons. The concept stems from prioritizing patient care over profits by emphasizing decisions made by those most experienced in providing effective health care solutions.
Who can own a professional medical corporation in California? Limitations on non-physician ownership
When it comes to who can own a medical corporation in California, non-physician ownership of a California professional medical corporation comes with certain restrictions. First and foremost, the law stipulates that shareholders must hold specific and valid “medical” licenses to own and operate such an entity.
This requirement narrows down the pool of eligible owners significantly as it excludes non-licensed individuals from participation. These folks are sometimes referred to as “Allied Professional.”
Furthermore, these individuals are also barred from vote casting by proxy. This simply means they can’t assign their voting rights to another party in case they aren’t able to attend shareholder meetings or make important decisions related to corporate governance.
The state has put in place additional constraints regarding share division too. In all cases, at least 51 percent of the shares should be owned by a licensed physician directly involved in the practice’s operations and management.
Other registered healthcare professionals like nurses or dentists may take up ownership roles but their combined stake cannot exceed 49 percent of the total shares.
These regulations help maintain standards for patient care and service delivery while preventing undue influence over clinical decision-making processes within medical corporations by non-medical staff or business interests.
The rules foster professional autonomy for physicians allowing them full control over how medicine is practiced in their respective facilities ensuring public trust remains intact at all times.
Who Can Own a Professional Medical Corporation in California? Eligibility and Qualifications for Ownership
To qualify for ownership of a professional medical corporation in California, individuals must hold the required licenses and qualifications as healthcare professionals.
Required licenses and qualifications for healthcare professionals
To become an owner of a professional medical corporation in California, healthcare professionals must meet certain licensing and qualification requirements. These are:
- They must obtain a valid professional license granted by the state’s relevant licensing board.
- They need to possess the necessary qualifications in their respective medical field.
- It is mandatory to stay compliant with all state laws and regulations pertaining to their profession.
- Every shareholder in the corporation should hold a valid, professional license.
- Healthcare professionals must maintain ethical practices and avoid any activity that may involve illegal fee-splitting or violation of their professional code.
- Continuous legal education may be necessary for maintaining the validity of their professional licenses.
Professions eligible for ownership
The various professions that are eligible for ownership in a professional medical corporation in California are listed above.
Formation Process for a Professional Medical Corporation in California
To establish a professional medical corporation in California, individuals must follow a number of specific steps, including submitting necessary documentation and licenses to the relevant authorities and completing the registration process.
Steps to establish a professional medical corporation
To establish a professional medical corporation in California, follow these steps:
- Obtain the necessary licenses and qualifications for healthcare professionals, including a valid medical license.
- Choose the professions eligible for ownership within the corporation, ensuring that all shareholders hold the required licenses.
- Meet the minimum requirements for ownership, such as holding a specific percentage of shares.
- Complete the formation process by submitting the necessary documentation and licenses to the relevant authorities.
- Register the professional medical corporation with the Secretary of State and obtain a fictitious name permit from the California Medical Board if needed.
- Comply with California law by adhering to the Moscone – Knox Professional Corporation Act and other applicable regulations.
- Establish key positions within the corporation, such as president, corporate secretary, and treasurer or chief financial officer.
- Create bylaws that outline how the professional medical corporation will be governed and operated.
Necessary documentation and licenses
To form a professional medical corporation in California, you will need to gather the following necessary documentation and licenses:
- Articles of Incorporation: This is the official document that establishes your corporation with the Secretary of State. It includes important information such as the corporation’s name, purpose, and shareholder details.
- Medical License: Every shareholder in the professional medical corporation must hold a valid medical license. This ensures that only qualified individuals are involved in the ownership and operation of the corporation.
- Fictitious Name Permit: If you plan to operate your professional medical corporation under a name other than your own, you will need to obtain a fictitious name permit from the county clerk where your business is located.
- Bylaws: These are the rules and regulations that govern how your professional medical corporation will operate. They cover matters such as shareholder meetings, voting rights, and decision-making processes.
- Business Licenses: Depending on the specific type of healthcare services you provide, you may need additional business licenses or permits from state or local authorities.
- Tax Identification Number: To fulfill your tax obligations, you will need to apply for a tax identification number from the Internal Revenue Service (IRS). This number is used to identify your professional medical corporation for tax purposes.
Registration with relevant authorities
A crucial step in forming a professional medical corporation in California is registering with the relevant authorities. This process involves complying with industry regulations that are specific to the type of medical provider.
Each profession has its own licensing board that provides information on the specific rules and requirements. By completing this registration, you ensure that your corporation is operating within legal boundaries and can continue providing quality healthcare services.
The Moscone-Knox Professional Corporation Act governs the establishment of a professional medical corporation in California, further emphasizing the importance of proper registration with the appropriate authorities.
Benefits of Owning a Professional Medical Corporation
Owning a professional medical corporation in California brings numerous benefits, including liability protection, tax advantages, enhanced professional reputation, increased control and autonomy, and potential for increased profitability.
Discover how these advantages can benefit you and your medical practice.
Liability protection
A professional medical corporation in California provides valuable liability protection for its shareholders. By operating as a corporation, the shareholders are shielded from personal liability for any debts or obligations of the company.
This means that if the corporation faces a lawsuit or incurs financial issues, the shareholders’ personal assets are generally protected. This is particularly important in the healthcare field where there is a higher risk of malpractice claims and other legal liabilities.
By forming a professional medical corporation, healthcare professionals can safeguard their personal finances and focus on providing quality care to their patients without worrying about individual liability.
Tax advantages
Professional medical corporations in California enjoy several tax advantages. One of the benefits is the option to choose S-Corp status, which allows for the transfer of profits and losses to shareholders, helping to avoid double taxation.
This also helps decrease shareholder self-employment taxes. Additionally, professional medical corporations have access to fringe benefits such as medical care and retirement schemes.
Taking advantage of these tax benefits can lead to significant savings and financial stability for medical professionals in California.
Enhanced professional reputation
Owning a professional medical corporation in California can have numerous benefits, one of which is an enhanced professional reputation. By establishing and operating a medical corporation, healthcare professionals can showcase their expertise and commitment to providing high-quality care.
A professional medical corporation provides credibility and demonstrates that the physicians are dedicated to maintaining higher standards in their practice. This can attract patients who value professionalism and trustworthiness, ultimately increasing the visibility and reputation of the healthcare providers within their community.
In addition, being part of a well-respected medical corporation can also lead to networking opportunities with other professionals in the field, further enhancing their professional standing.
Furthermore, owning a professional medical corporation allows physicians to collaborate with colleagues who share similar goals and values. This collaboration fosters teamwork and innovation among healthcare professionals as they work together towards improving patient outcomes.
The ability to consult with other experts within the same professional entity creates an environment for continued learning and growth, enhancing both individual reputations as well as those of the entire team involved in running the corporation.
Increased control and autonomy
A professional medical corporation provides shareholders with increased control and autonomy in their practice. Through key positions such as the president, corporate secretary, and chief financial officer, shareholders have the ability to make important decisions that impact the direction of the corporation.
They also have the authority to assign additional positions within the organization based on specific business needs. This increased control and autonomy can be enjoyed even with just one member in the corporation, as there will only be one director and one shareholder.
Whether they are physicians, nursing professionals, dentists, chiropractors, or urgent care physicians, forming a professional medical corporation allows these healthcare professionals to have greater control over their own practice.
Potential for increased profitability
A professional medical corporation in California has the potential for increased profitability. This is because owning a medical corporation allows physicians to have more control and autonomy over their practice, which can lead to better financial outcomes.
By being able to make strategic decisions regarding services offered, pricing, and business operations, physicians can optimize their revenue streams and maximize profitability. Additionally, owning a professional medical corporation provides tax advantages that can further enhance profitability.
By taking advantage of deductions and incentives available to businesses, physicians can reduce their tax burden and keep more of their hard-earned income. Overall, owning a professional medical corporation offers the potential for improved financial success in the healthcare industry.
The Importance of Seeking Legal Advice to Fully Understand Who Can Own a Professional Medical Corporation in California
The issue of who can own a medical corporation in California can be complicated for a newbie. This is why seeking legal advice is crucial in understanding the subject. It can help ensure compliance with the complex regulations and requirements, protect against potential legal issues, and provide guidance on maximizing the benefits of ownership.
Don’t navigate this complex process alone. Call our office at 714-634-4838 or visit www.professionalmedicalcorporationcalifornia.com to schedule an appointment and discuss forming your professional corporation with our experienced corporate attorneys.
To learn more about the importance of seeking legal advice for professional medical corporation ownership, continue reading.
Working with an Incorporation Attorney
An incorporation attorney is an essential resource when forming a professional medical corporation in California. They have the expertise to navigate the complex legal requirements and ensure that the corporation is owned and operated by shareholders with a valid medical license.
With their guidance, key positions within the corporation can be established, ensuring compliance with industry regulations specific to different types of medical providers.
Additionally, licensing boards can provide information on profession-specific regulations, which an incorporation attorney can interpret to help make informed decisions throughout the formation process.
Who Can Own A Professional Medical Corporation In California and Other Frequently Asked Questions
1. Can anyone own a professional medical corporation in California?
No, only licensed healthcare providers such as doctors, dentists, or podiatrists can own a professional medical corporation in California.
2. Can non-medical professionals be shareholders in a professional medical corporation?
No, non-medical professionals cannot be shareholders in a professional medical corporation. Only licensed healthcare providers can hold shares.
3. Are there any limitations on who can own shares in a professional medical corporation?
Yes, there are limitations on who can own shares in a professional medical corporation. Shareholders must hold the same type of license as the services provided by the corporation.
4. What is required to form and maintain a professional medical corporation in California?
To form and maintain a professional medical corporation in California, you need to file certain documents with the Secretary of State’s office, comply with ongoing reporting requirements, and abide by laws regarding licensed healthcare providers owning corporations.
Learn Who Can Own a Medical Corporation in California and How to Find Success in Your Private Practice
The ownership of a professional medical corporation in California is restricted to licensed healthcare professionals. The majority ownership must be held by a physician and surgeon, while non-physician ownership is limited.
Small business attorneys are invaluable when it comes to navigating the legal complexities of owning a professional medical corporation. If you are wondering who can own a medical corporation in California or have other questions on the formation process, a business attorney can provide expert advice and guidance. By working with small business attorneys, medical professionals can ensure that their professional medical corporation is set up properly and operates in accordance with all applicable laws and regulations.
Ready to take the next step in forming your professional medical corporation? Our specialized service is here to assist you. Call us now at 714-634-4838 or visit this page to schedule an appointment with our corporate attorneys.
