Today I’m going to show you how to start your California Professional Corporation FAST…
As a Business Lawyer for Professionals, I’ve assisted hundreds of professionals just like you start their business quickly and correctly the FIRST time.
If you’re a professional in California, you SHOULD form a Professional Corporation taxed as an S-corporation.
If you’re a lawyer, doctor, dentist, accountant, pharmacist, veterinarian, architect, optometrist, nurse, speech-language pathologist, audiologist, dental hygienist, family therapist, psychiatrist, or psychologist in California, you’re prohibited from registering an LLC or a traditional Corporation. Instead should register as a Professional Corporation taxed as an S-Corporation.
Each specific profession in California has special requirements when forming a Professional Corporation.
If done incorrectly, your Professional Corporation can be rejected by the Secretary of State, leaving you vulnerable to potential lawsuits and fines from various government agencies. You may even face discipline from your state’s professional regulatory board.
On this page, I will help you understand what a California Professional Corporation is and give you a step-by-step guide as to how to start your own Professional Corporation.
With this in mind, let’s discuss exactly how you can incorporate a California Professional Corporation.
What is a California Professional Corporation?
A Professional Corporation is a special type of corporation that professionals formed to provide professional services in California, instead of the traditional LLC or traditional corporation.
California professional corporations can be formed only to provide PROFESSIONAL services within a single profession, according to the Moscone-Knox Professional Corporation Act.
A professional service is defined as any service that requires a license issued by a California state regulatory licensing board, state court, or a similar agency.
Professions that are required to be professional corporations include many of those that must have a state license, such as doctors, dentists, lawyers, accountants, pharmacists, veterinarians, optometrists, marriage and family therapists, nurses, audiologists, architects, psychiatrists, and psychologists.
Why Should My Professional Corporation Be Taxed as an S-Corporation?
If you don’t elect to have your Professional Corporation taxed as an S-Corporation, the default status for it is to be taxed as a C-Corporation. You don’t want to be taxed as a C-Corporation because your corporation would pay federal taxes on its profits and you would also pay individual taxes if you receive a salary, bonuses, or dividends from the corporation.
By electing to be taxed as an S-Corporation, your Professional Corporation would instead be a pass-through tax entity, like an LLC or a partnership, which allows you to pass losses from the business to your income tax return. You can use the losses to offset income that you may have from other sources.
Also, you will NOT be required to pay self-employment taxes on any additional corporate profits that are paid to you as dividends as a shareholder in addition to your reasonable salary.
So if you’re a professional, you SHOULD elect to have your corporation to be taxed as an S-Corporation. More on this below….
Requirements of a California Professional Corporation
California Business and Professions Code require that only LICENSED persons can be shareholders of a professional corporation.
Unless an exception applies, a shareholder must be licensed in the profession that the professional corporation is engaged in.
Name Requirements of California Professional Corporation
Often, I receive phone calls or emails from professionals, just like yourself, who’s corporations have been rejected by the Secretary of State due to a mistake with it’s name.
California Professional Corporations have very strict name requirements for each specific profession.
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.
Firstly, the name of the professional corporation was also be DISTINGUISHABLE from the name of any other business entity on file with the California Secretary of State which you can search for here: https://businesssearch.sos.ca.gov
If you plan on trademarking the name of your business, you should conduct a thorough trademark search to make sure your name is available in your geographic area.
Secondly, each specific profession will have its own name requirement, such as including specific words. For example, the name of the California professional corporation for psychologists must include the word “psychology,” “psychological,” “psychologist,” “psychology consultation,” “psychology consultant,” “psychometry,” “psychometrics” or “psychometrist,” “psychotherapy,” “psychotherapist,” “psychoanalysis,” or “psychoanalyst.”
Thirdly, each specific profession will have special suffix requirements, psychology will accept “P.C.” as the corporate ending.
Which Professions Need to Form a California Professional Corporation?
The following professions need to form a Professional Corporation in California:
- Speech Language Pathologists
- Marriage and Family Therapists
- Clinical Social Workers
- Dental Hygienists
- Physician Assistants
If you’re a professional and you earned a degree from any of the following graduate school, then you need to form a Professional Corporation:
- Medical Board of California
- The State Bar of California
- The Dental Board of California
- California Board of Accountancy (CBA)
- The Veterinary Medical Board
- The California State Board of Pharmacy
- Speech-Language Pathology and Audiology Board
- Board of Podiatric Medicine
- Osteopathic Medical Board of California
- Dental Hygiene Committee of California
- California Architects Board
- Court Reporters Board of California
- The Board of Behavioral Sciences (BBS)
- California Board of Registered Nursing
- California State Board of Optometry
- Physician Assistant Board of State of California
- California Board of Psychology
Can a Professional Corporation Be an S Corporation?
A professional corporation can and SHOULD be an S Corporation.
S Corporation is a special type of corporation that’s designed to avoid the double taxation disadvantages of regular C corps. S corps allow profits, and some losses, to be passed through directly to owners’ personal income without ever being subject to corporate tax rates.
S Corporation is great for self-employed professionals in California.
With an S Corp for your professional corporation, you should be able to avoid self-employment tax which save you usually around 15.3% of your income.
If you have a business that generates a nice profit over and above what you would consider reasonable compensation for the services that the owners provide, you may be unnecessarily subjecting the profits to self employment taxes.
Here is a scenario that seems to help clarify things:
Maria is a sole proprietor bringing in sales of $90,000. After she pays her costs & expenses, her profit is $60,000. As a sole proprietor, she is required to pay self- employment tax of 15.3% on this entire $60K of profit, which equates to $9,180.
Now, let’s assume Maria formed an S-Corporation for her business, and chooses to pay herself $35K for the year in salary, and take the remaining $25K of profit through a distribution. She still earns the same $60K in profit. But, let’s look at the tax situation. Because corporations only pay Social Security & Medicare taxes on salaries, she’s only liable for $5,355, saving over $3,800 in taxes.
You SHOULD have a business lawyer properly prepare and file your Form 2553 with the IRS to make sure it’s filed correctly in order to get taxed as an S Corporation for your professional corporation.
Unless you make this tax election and properly file the paperwork, your professional corporation will be taxed as a C Corporation by default, which you DEFINITELY want to avoid at all costs.
Advantages of a California S Corporation for Professional Corporations
By having S Corporation tax election for your California Professional Corporation, you will be enjoy the following advantages:
- Avoiding self-employment tax which could save you around 15.3% of your income
- Avoiding double taxation
- Being taxed as a pass-through entity like an LLC
- The ability to pass losses from the business to offset your personal income tax liability
If you’re unsure about whether your professional corporation should make the S Corporation election, contact me at firstname.lastname@example.org or call me directly at 424-256-6686 so I can walk you through the advantages and disadvantages.
Can I Form an LLC For My Professional Business?
No, you cannot form an LLC as a professional in California to perform professional services.
Under the California Revised Uniform Limited Liability Company Act, if you provide professional services, you must register your company as a Professional Corporation.
In 2004, the California Attorney General confirmed that anyone providing a form of professional service must comply with the Moscone-Knox Act mentioned before.
Also, if you will be forming a general partnership to operate your professional business with a non-licensed individual, you must organize your private practice as a professional corporation, a sole proprietorship, or a registered limited liability partnership.
Can I Form A Professional Corporation If Am A Disqualified Person?
A Disqualified Person is a licensed person who has become legally disqualified from conducting professional services.
If you had your license but have since become disqualified, you are not able to create a professional corporation or remain as a director, officer or shareholder of a professional corporation.
How Do I Form a California Professional Corporation?
Here are 11 actionable steps to start your Professional Corporation in California:
- File Articles of Incorporation
- Notify Your Profession’s State Agency That Manages Your Profession
- Hold a Board of Director’s Meeting and Appoint Directors
- Get Professional Corporation Bylaws Drafted By An Attorney
- Apply for EIN
- File Statement of Information
- File Form 2553 for S-Corporation Tax Election
- Pay California Corporate Taxes to the California Franchise Tax Board
- Register with the EDD If You Will Be Hiring Employees
- Apply for Local Business Registration and Licenses
- Hire Business Lawyer to Make Sure You’re Doing Everything CORRECTLY
1. File Articles of Incorporation
To form your California Professional Corporation, you must correctly prepare and file an Articles of Incorporation with the California Secretary of State.
You can find a blank copy of the Articles of Incorporation for a California Professional Corporation here: https://bpd.cdn.sos.ca.gov/corp/pdf/articles/arts-pc.pdf
Your articles of incorporation must include the following:
- Name of the Corporation (each profession has very specific naming requirements – feel free to call me at 424-256-6686 or email me if you have any questions)
- Business Address
- Name and Address of Service of Process (if an individual person is listed as the agent for service of process, the agent’s California street address must be included, along with a California street address, not a post office box address, where documents may be served).
- Number of Shares (typically 1,000,000 shares)
- Purpose Statement (each profession must have a very specific “purpose of the corporation” that must be specified on the Articles of Incorporation. If you have any questions about this, email me)
- Signature and Date
Feel free to call me directly at 424-256-6686 or email me at email@example.com and I can draft your Articles of Incorporation and make sure it does not get rejected when filed with the Secretary of State.
2. Notify Your Profession’s State Agency That Manages Your Profession
Most professions require that you notify your profession’s state agency that manages your professions to let them know you are operating under your corporate name.
For example, lawyers must inform the State Bar of California and notify the board of the filed Articles of Incorporation and also complete an application process with the State Bar after their professional corporation is fully formed.
3. Hold a Board of Director’s Meeting and Appoint Directors
Next, you should hold your first board of directors meeting. At the meeting, the board of directors can adopt bylaws, appoint corporate officers, authorize the issuance of stock, adopt an official stock certificate form and corporate seal, establish the professional corporation’s fiscal year, and other tasks.
The board of directors’ actions can be documented in the corporate minutes. Corporate minute forms usually come with corporate kits that come with forming a professional corporation.
If you’re the single shareholder in your corporation, you may draft and sign your Bylaws at this time.
To be eligible to be an officer or director of a professional corporation, the individual must be LICENSED to conduct the professional activity that the corporation is engaging 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.
Officers and directors of professional corporations generally must be licensed to perform the professional activity that the corporation is engaged in. Unless the corporation has less than 3 shareholders, California professional corporations must have at least 3 directors on their board.
If you have only 1 shareholder, that shareholder can also be the only director and can also serve as the president and treasurer of the corporation.
The other officers of the corporation in that situation need not be licensed professionals. A professional corporation which has only 2 shareholders can have those 2 shareholders also appointed as the only 2 directors. Those 2 shareholders between them can fill the offices of president, vice president, secretary, and treasurer of the corporation.
For professional corporations, the general rule is that officers and directors must be licensed to conduct the professional activity.
The incorporator should prepare the Incorporator’s Statement form, which shows the names and addresses of the initial directors (the statement does not need to be filed with the Secretary of State). The directors can also be appointed in the articles of incorporation.
In general, corporations in California must have at least three directors on their board unless the company has less than three shareholders. In that case, the number of directors must not be less than the number of shareholders. However, California Corporations Code section 13403 provides, in pertinent part:
“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.”
4. Get Professional Corporation Bylaws Drafted
California Professional Corporation Bylaws is a corporate document that details the rules for the day-to-day operation your professional corporation.
Bylaws address issues like the size of the board of directors, how the board of directors functions, the method and term of their election, the existence of corporate offices, how and when shareholder meetings are held, what happens if the corporation gets dissolved, and other such issues.
Bylaws are like a contract between the shareholders and the professional corporation.
Bylaws are not filed with the California Secretary of State, but they need to be maintained in your records. It is best to maintain corporate Bylaws because they establish clear operating rules, which can help avoid disputes down the line.
You should have Bylaws because they establish your corporation’s operating rules, and help show banks, creditors, IRS, and others that your corporation is legitimate.
Bylaws are also necessary for your business to get personal liability protection. Also, most professions require that professional corporations have specific language in their bylaws.
I also advise maintaining all of your professional corporation’s important documents in one organized binder at your place of business.
Bylaws are the nervous system for your corporation. That is why it is very important to have a capable business lawyer draft clear and correct bylaws from the start.
5. Apply for EIN
Every business needs an Employer Identification Number (EIN) (also known as a Tax ID number) to start a business.
EIN is a Tax ID number issued by the Internal Revenue Service (IRS) to identify a business. Think of an EIN as the social security number for your business.
You need an EIN to:
- Open a business bank account
- Apply for business permits and licenses
- Hire employees, and
- File taxes
If you have a Social Security Number (SSN), you can apply for your EIN on IRS’s website here: https://sa.www4.irs.gov/modiein/individual/index.jsp
If you don’t have a Social Security Number (SSN) and would like to apply for your EIN, you can email me at firstname.lastname@example.org
6. File Statement of Information
California has additional requirements that must be submitted in order for your professional corporation to remain in compliance.
California professional corporations must file a State of Information within the first 90 days of registration of your corporation, and then every year thereafter before the end of the calendar month of the original registration date or immediately if there are any changes to your Registered Agent address or business address.
The purpose of the Statement of Information is to keep the state updated with your professional corporations’ contact information.
You should immediately file your Statement of Information after you’ve registered your professional corporation.
You can file your Statement of Information for your California professional corporation here: https://businessfilings.sos.ca.gov
Also, leave a note in your calendar to file your Statement of Information every year due before the end of the calendar month of the registration date or immediately if there are any changes to your Registered Agent address or business address.
7. File Form 2553 for S-Corporation Tax Election
As I explained earlier, S Corporation is a special type of corporation that’s designed to avoid the double taxation disadvantages of regular C corps. S corps allow profits, and some losses, to be passed through directly to owners’ personal income without ever being subject to corporate tax rates.
With an S Corporation, you would be able to avoid self-employment tax which saves you usually around 15.3% of your income. If you have a business that generates a nice profit over and above what you would consider reasonable compensation for the services that the owners provide, you may be unnecessarily subjecting the profits to self-employment taxes
To have your professional corporation receive the tax treatment of an S Corp, you must file an election with the IRS using Form 2553.
You must file Form 2553 within the first two months and fifteen days of the beginning of the tax year in which the election is to take effect. If you file it later, your election will be effective for the next tax year.
You can find Form 2553, Election by a Small Business Corporation, on IRS’s website here: https://www.irs.gov/pub/irs-pdf/f2553.pdf
You can find instructions for Form 2553 here: https://www.irs.gov/pub/irs-pdf/i2553.pdf
You should get a business lawyer to properly file your Form 2553 or you may miss out on all of the great benefits you would enjoy with the S-Corporation tax election.
8. Pay California Corporate Taxes and Fees to the California Franchise Tax Board
California professional corporations operating in California must pay taxes to the California Franchise Tax Board.
The professional corporation must pay the minimum annual tax $800 to the California Franchise Tax Board.
Taxes must be paid during the first quarter of each accounting period, even if the corporation is inactive, operates at a loss, or does not do any business in California. This is a “prepay” tax meaning it pays for the current year.
Your first payment for the Franchise Tax is due by the 15th day of the 4th month after your professional corporation is filed. Then, every year after your first payment, your Franchise Tax is due by April 15th.
I recommend immediately filing your Franchise Tax as soon as your professional corporation is registered so you don’t forget. Failure to file before the deadline will result in the state charging late fees and penalties and they may even eventually dissolve your corporation if you don’t pay the franchise tax.
You can sign up for an account with the California Franchise Tax Board (FTB) at ftb.ca.gov and remember to file any amount due. You should hire an accountant or contact the Franchise Tax Board if you have any questions regarding paying California taxes.
9. Register with the EDD If You Will Be Hiring Employees
If you will be hiring employees for your professional corporation, you must register as an employer with the California Employment Development Department (EDD).
The professional corporation is subject to pay California’s payroll tax even if the corporation only has a president and there are no other employees and if that office is being paid more than $100.
You can register for your EDD payroll tax account number here: http://www.edd.ca.gov/Payroll_Taxes/e-Services_for_Business.htm
Once you’ve registered your business with the EDD, you will be issued an employer payroll tax account number, also known as a State Employer Identification Number (SEIN). You must use your employer payroll tax account number when filing returns and making deposits in all electronic and paper filings. Please talk to an accountant if you have any questions about enrolling for EDD.
For more information on California payroll taxes please visit the California Employment Development Department (EDD) here: http://www.edd.ca.gov/
10. Apply for Local Business Registration and Licenses
Even though you have complied with the California Secretary of State to form your professional corporation, you also need to make sure you’re registered with the city or county where you’re operating your business to make sure your business has the proper federal and local permits to operate legally.
These requirements vary, depending on where your business is located and what business you’re operating.
This can be as simple as submitting a form to the city and can be as complicated as requiring the approval of local government agencies.
For example, in Los Angeles, all professionals conducting business activities within the City of Los Angeles are required to apply for and obtain a Business Tax Registration Certificate with the City of Los Angeles, Office of Finance.
You can apply for the Los Angeles Business Tax Registration Certificate here: https://latax.lacity.org/oofweb/eappreg/eappreg_criteria.cfm
Because each locality is different, it is imperative that you consult with me before formally opening to make sure that you have properly satisfied all local requirements.
11. Hire Business Lawyer to Make Sure You’re Doing Everything Correctly
Every day I get another phone call from an upset client begging me to help correct their misfiled corporation. DON’T LET THIS BE YOU! Misfiled or incorrectly filed corporations can lead to insurances not allowing you to be a provider. It can also lead to discipline from your governing board.
You can either take the complicated, time-consuming steps detailed in this article to properly form your California Professional Corporation yourself or you can hire me to make sure you’re doing everything correctly.
As a Business Lawyer for Professionals, I’ve assisted hundreds of professionals just like you start their California Professional Corporation and I can definitely help you start yours.
Law Corporation for Lawyers and Attorneys
If you’re a lawyer or attorney in California, you SHOULD form a Professional Law Corporation.
A California professional law corporation must follow the rules of the California State Bar and the California Rules of Professional Conduct.
The professional law corporation’s name must include a corporate ending such as: “A Professional Corporation” “A Professional Law Corporation” “Professional Corporation” “Professional Law Corporation” “Law Corporation” “APC” “A.P.C.” “PC” “P.C.” “Prof. Corp.” “A Professional Legal Corporation” “Professional Legal Corporation” “A Legal Corporation” “Inc.” “Incorporated” “Corporation” “A California Professional Corporation” “L.C.” “Ltd.” “Limited” “P.A.” and “Professional Association”.
The professional law corporation’s name cannot include “APLC” “PLC” or “LLC” as its corporate endings.
The name of your law corporation in State Bar records (and on file with the Secretary of State) is the only name under which it may practice law.
The professional corporation must also state within its Articles of Incorporation that its purpose is “law.”
After you form a professional law corporation, you must register the entity with the State Bar of California by providing the State Bar with original proof of your Articles of Incorporation from the Secretary of State.
Dental Corporation for Dentists
If you’re a dentist in California, you SHOULD form a Dentistry Professional Corporation.
To open a professional dental corporation, you must be licensed by the Dental Board of California.
The name of the dental professional corporation must contain the name or the last name of one or more of the present, prospective, or former shareholder and must include the words “dental corporation” “Professional Corporation” “Prof. Corp.” “Corporation” “Corp.” “Incorporated” or “Inc.”
If you will be opening your professional dental corporation under a fictitious name, you must file a fictitious business name statement in the county which you will be seeing patients as well as the California Dental Board.
Medical Corporation for Doctors and Physicians
If you’re a doctor or physician in California, you SHOULD form a Professional Medical Corporation.
To open a professional medical corporation, you must be licensed by the Medical Board of California.
In a professional medical corporation, at least 51% of the shares must be owned by a licensed physician or surgeon. Also, under the Business and Professions Code, physicians can only partner with other physicians, osteopaths, or podiatrists.
You must also get pre-approval from the Medical Board of California if you would like to use a fictitious business name, other than your name.
Accounting Corporation for Accountants
If you’re an accountant or CPA in California, you SHOULD form as an accountancy corporation.
You must also be approved for license by the California Board of Accountancy (CBA) to form a professional corporation.
The accounting corporation must also have at least one shareholder who has an active CPA or PA license.
The name on the Articles of Incorporation that are filed with the Secretary of State must match the name on the application submitted for licensing.
Veterinarians Corporation for Veterinarians
If you’re a veterinarian in California, you SHOULD form a veterinary corporation.
Only a professional licensed to practice veterinary medicine can be a shareholder of a California professional veterinary corporation. But other licensed professionals can be officers, directors, or professional employees as long as the shares they own are not more than 49% of all shares in the corporation.
The veterinary corporation can pick any name permitted by the rules of the Veterinary Medical Board. The name of a veterinary professional corporation has to include the word veterinary and either “Corporation” “Corp.” “Incorporated” or “Inc.”
Dental Hygiene Corporation for Dental Hygienists
If you’re a registered dental hygienist, you MUST form a dental hygienist Corporation.
If you’re a registered dental hygienist, you’re prohibited from forming an LLC or a traditional corporation for your nursing practice and instead must register as a Professional Corporation.
The Professional Registered Dental Hygienist In Alternative Practice Corporation’s name must include “dental hygiene group,” “dental hygiene practice” or “dental hygiene office,” and (2) contains the family name of one or more of the past present or prospective associates, partners, shareholder, or members of the group.
Pharmacy Corporation for Pharmacists
If you’re a pharmacist in California, you MUST form a pharmacy corporation.
The name of a pharmacy professional corporation and any name or names under it will open under must contain “pharmacist” “pharmacy” or “pharmaceutical” and wording or abbreviations which show that it is a corporation such as “Corporation” “Corp.” “Incorporated” or “Inc.”
Every shareholder, director, and officer of a pharmacy corporation, except an assistant secretary and an assistant treasurer, must be a licensed person as defined in Section 13401 of the Corporations Code.
Audiology Corporation for Audiologists
If you’re an audiologist in California, you MUST form an Audiology Corporation.
To be able to open your audiology corporation, you must be licensed by the Audiology Board.
The name of the professional audiology corporation must include “audiology” “audiologist” “audiological” “hearing clinic” “hearing clinician” “hearing therapist” or any similar name.
Chiropractic Corporation for Chiropractors
If you’re a chiropractor in California, you MUST form a chiropractic corporation.
Professional chiropractic corporations may NOT use fictitious names. The name of the professional chiropractic corporation must include “chiropractic”, the name or last name of one or more of the present, prospective, or former shareholders, and the word “corporation” or some other word denoting corporate existence.
Once the professional chiropractic corporation is formed, you must also submit a Certificate of Registration to the California Board of Chiropractic Examiners.
Optometric Corporation for Optometrists
If you’re an optometrist in California, you MUST form an optometric corporation.
The name for an optometric professional corporation must have the name of the optometrist who is the owner, or the name of at least one of them if there is more than one optometrist who owns it.
At least 51% of the shares of the optometric corporation must be owned by a licensed optometrist. The other 49% can be owned by physicians and surgeons, podiatrists, psychologists, registered nurses, marriage and family therapists, clinical social workers, physician assistants, chiropractors, acupuncturists, naturopathic doctors or any other licensed person.
Podiatry Corporation for Podiatrists
If you’re a podiatrist, you MUST form a Podiatry Corporation.
A Professional Podiatry Corporation is a professional corporation that is registered with the California Secretary of State, the Medical Board of California, and The American Board of Pediatrics.
The Professional Podiatry Corporation’s name must contain the name or the last name of one or more of the present, prospective, or former shareholders. It must also include a corporate ending such as: “Podiatry Corporation”, “Podiatry Corp.”, “Podiatrist”, “Doctor of Podiatric Medicine”, “D.P.M”, “A Professional Corporation”, “Professional Corporation”, “APC”, “A.P.C.” “PC”, “P.C.”, “Prof. Corp.”, “Inc.”, “Incorporated”, “Corporation”, “A California Professional Corporation” or words or abbreviations which denote its corporate existence.
Physician Assistant Corporation for PA’s
If you’re a physician assistant PA, you MUST form a Physician Assistant Corporation.
Incorporating a Professional Physician Assistants Corporation in California will limit your liability against creditors and lawsuits, minimize the self-employment taxes of the shareholders, allow you to build corporate business credit, and much more.
The Professional Physician Assistants Corporation’s name must contain the words “physician assistant”. It must also include a corporate ending such as: “A Professional Corporation”, “Professional Corporation”, “APC”, “A.P.C.” “PC”, “P.C.”, “Prof. Corp.”, “Inc.”, “Incorporated”, “Corporation”, “A California Professional Corporation” or words or abbreviations which denote its corporate existence.
Nursing Corporation for Nurses
If you’re a nurse in California, you MUST form a nursing corporation.
The name of the nursing professional corporation must include the words “nursing” or “registered nursing”. The name of a nursing professional corporation must also include a word or abbreviation which shows its corporate existence like “Corporation” “Corp.” “Incorporated” or “Inc.”
Professional nursing corporations may use a fictitious name so long as the words “nursing” or “registered nursing” is part of the name.
Speech-Language Pathologist Corporation
If you’re a speech-language pathologist in California, you MUST form a Speech-Language Pathology Corporation.
To form a professional corporation for speech-language pathology, you must first be licensed by the Speech-Language Pathology Board of California.
The name of the professional speech language pathology corporation must include “speech pathologist” “speech pathology” “speech therapy” “speech correction” “speech correctionist” “speech therapist” “speech clinic” “speech clinician” “language pathologist” “language pathology” “logopedics” “logopedist” “communicology” “communicologist” “aphasiologist” “voice therapy” “voice therapist” “voice pathology” “voice pathologist” “language therapist” “phoniatrist”, or any other similar titles.
Engineer Corporation for Engineers
If you’re an engineer in California, it is highly recommended that you create a professional engineering corporation.
While engineering practices are allowed to be LLCs in limited situations, it is more beneficial in the long run to create a professional corporation instead. There are many added benefits to incorporating as a professional engineering corporation such as limiting personal liability, obtaining business credit without a personal guarantee, and passing profits and losses to shareholders to avoid double taxation.
Engineering professional corporations have specific name requirements. If the name of the professional engineering corporation contains the name of a person, that person must be a licensed engineer, a licensed land surveyor, a licensed architect, or a registered geologist.
Professional engineering corporations are also allowed to use a Doing Business As (DBA) or a fictitious name.
Architectural Corporation for Architects
If you are an architect in California, it is highly suggested that you create a professional architectural corporation.
There are many added benefits to incorporating as a professional architectural corporation such as limiting personal liability, obtaining business credit without a personal guarantee, and passing profits and losses to shareholders to avoid double taxation.
The professional architectural corporation’s name must contain the name or the last name of one or more of the present, prospective, or former shareholders, or of someone who was associated with a predecessor person, partnership, or other organization and whose name or names appeared in the name of the predecessor organization.
Professional architectural corporation name must also include either the words “architectural corporation” or the word “architect” or “architects” and wording which shows corporate existence such as “Corporation” “Corp.” “Incorporated” or “Inc.”
California Professional Corporation for Physical Therapists
If you’re a physical therapist in California, you MUST form a professional physical therapy corporation.
Each shareholder, director and officer of a physical therapy corporation, except an assistant secretary and an assistant treasurer, has to be a licensed person defined in Section 13401 of the Corporations Code.
The name of a physical therapy professional corporation must contain the words “physical therapy” or “physical therapist” and any wording or abbreviations which show corporate existence such as “Corporation” “Corp.” “Incorporated” or “Inc.”
Marriage and Family Therapist Corporation
If you are a marriage or family therapist in California, you MUST open a marriage and family therapy corporation.
The name of a marriage and family therapy corporation has to contain one or more of the words “marriage” “family” or “child.” The name of a marriage and family therapy corporation must also contain one or more of the words “counseling” “counselor” “therapy” or “therapist”.
The licensed marriage and family therapist must also tell its clients at the beginning of treatment that it is doing business as a marriage and family corporation.
California Clinical Social Worker Corporation
If you are a licensed clinical social worker in California, you MUST open a clinical social worker corporation.
The name of the licensed clinical social worker corporation must include the words “licensed clinical social worker.” The name of a licensed clinical social worker professional corporation must also include a word or abbreviation which shows its corporate existence like “Corporation” “Corp.” “Incorporated” or “Inc”.
If you plan on doing business under a fictitious name, you cannot use a name that is false, misleading or deceptive.
You must also tell your clients at the beginning of their treatment that the business is a licensed clinical social worker corporation.
Psychology Corporation for Psychologists
If you are a psychologist in California, you MUST open a Psychology Corporation.
The name of the psychology professional corporation must include “psychology” “psychological” “psychologist” “psychology consultation” “psychology consultant” “psychometry” “psychometrics” “psychometrists” “psychotherapy” “psychotherapist” “psychoanalysis” or “psychoanalysts.”
The name of the psychology professional corporation must also include a word or abbreviation which shows its corporate existence like “Corporation” “Corp.” “Incorporated” or “Inc”.
You must also tell your clients at the beginning of their treatment that the business is a licensed clinical social worker corporation.
What To DO next
If you’re a lawyer, doctor, dentist, accountant, pharmacist, veterinarian, architect, optometrist, nurse, speech-language pathologist, audiologist, dental hygienist, family therapist, psychiatrist, or psychologist, you probably don’t have the time to do all of the complicated above steps yourself to start your business.
While the 11 steps above give a basic overview of what is required to form the Professional Corporation, there are several complicated nuances that may affect the formation of your Professional Corporation.
Most problems that corporations run into in the long run are caused by mistakes in the formation stage of the professional corporation.
One of the best things you can do is to work with a business lawyer who can help you get started with your Professional Corporation without dealing with the legal headache of understanding the intricacies of properly filing your professional corporation.
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