If you are a registered nurse, you SHOULD form a Nursing Professional Corporation in California taxed as an S-Corporation.
California law prohibits registered nurses from forming LLCs or a traditional general corporations for their nursing practices. Instead, they must register as a Nursing Professional Corporation when starting a nursing business.
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, and even the California Board of Registered Nursing.
As a Business Lawyer for Professionals, I’ve assisted hundreds of professionals just like you start their Professional Corporation and I can definitely help you start yours.
What is a Nursing Professional Corporation?
A Professional Nursing Corporation Corporation is a professional corporation which is registered with the California Secretary of State and the California Board of Registered Nursing.
In California, all professional corporations must be registered with the corresponding governmental agency that is tasked to manage their profession. California Professional Nursing Corporation must hold a certificate of registration from the California Board of Registered Nursing.
3 Steps to Starting a Professional Nursing Corporation
The 3 steps to starting a Professional Nursing Corporation are:
- File the Articles of Incorporation of a Professional Corporation with the Secretary of State to form the Professional Corporation
- Notify your Profession’s state agency that manages your profession, hold a Board of Director’s Meeting and appoint directors, get your Professional Corporation Bylaws drafted, apply for your EIN, file your 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, and apply for local business registration and licenses.
- Do all the steps above yourself or hire a Business Lawyer to do everything for you.
Benefits of a Nursing Professional Corporation
Incorporating a Professional Nursing Corporation in California will limit your personal liability against creditors and lawsuits, minimize the self-employment taxes of the shareholders, allow you to build corporate business credit, and much more.
Learn more about the benefits of a Professional Corporation here.
Name Requirements of a Nursing Professional Nursing Corporation
The Professional Nursing Corporation’s name must include “nursing” or “registered nursing.” 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.
Also, “LLC” is not permitted as a corporate designation, and California does not certify an “LLC” for the purposes of practicing Registered Nursing, based on underlying Corporate Code concerning Professional Corporations.
Who Can Be A Shareholder Of The Professional Nursing Corporation?
At least 51 percent of the shares must be owned by the registered nurse. The remaining 49 percent may be owned by Licensed physicians and surgeons, Licensed doctors of pediatric medicine, Licensed psychologists, Licensed optometrists, Licensed marriage and family therapists,Licensed clinical social workers, Licensed physician assistants, Licensed chiropractors, Licensed acupuncturists, Naturopathic doctors, Licensed midwives and Licensed professional clinical counselors.
The number of licensed persons cannot exceed the number of registered nurses, and cannot exceed a combined share total of 49 percent.
Any shares issued to others who do not are not the professionals listed above are void.
Also, shares in the Professional Nursing Corporation may only be transferred to those who are licensed to practice registered nursing, to a shareholder of the corporation or to the Professional Nursing Corporation itself.
If a shareholder becomes ineligible to practice registered nursing in California or is legally disqualified from rendering professional services to the Professional Nursing Corporation, she must sell or transfer her shares to a qualified shareholder within 90 days of her ineligibility or disqualification.
Can A Nursing Corporation Be Opened As An LLC In California?
A Nursing Corporation can’t be opened as an LLC in California. The California Corporations Code does not certify LLCs (Limited Liability Companies) for the purpose of practicing registered nursing. For a registered nurse to provide professional services in California, they must open a Professional Corporation.
Can A Professional Nursing Corporation Use a DBA Or Fictitious Name?
In California, a Professional Nursing Corporation can use a fictitious name so long as they file a fictitious business name statement within 40 days of starting the Professional Nursing Corporation.
You must also make a fictitious name filing in every local county recorder’s office for which you are practicing. Also, Professional Nursing Corporations may use fictitious business names, so long as such names are not false, misleading or deceptive.
How To Start a Nursing Professional Corporation
Here are the 9 steps you must take to form the California Professional Nursing Corporation:
- File the Articles of Incorporation with Secretary of State and pay the filing fee. The filing fee is currently $100. You must also state within its Articles of Incorporation that its purpose is “Nursing”.
- Conduct a corporate meeting where you will issue shares and elect officials and directors for the Professional Nursing Corporation
- Create custom Professional Nursing Corporation bylaws
- Apply for an EIN
- File the Statement of Information with the Secretary of State
- File Form 2553 for S-Corporation Tax Election for the Professional Nursing Corporation
- Pay California Corporate Taxes and Fees to the California Franchise Tax
- Register with the EDD if you will be hiring employees
- Apply for local business registration and licenses
What To Do Next
While these following these steps above might seem straight forward, one mistake while creating your Professional Corporation can cause your corporation to be rejected by the Secretary of State, costing you money and time.
As a Business Lawyer for Professionals, I’ve assisted hundreds of professionals just like you start their Professional Nursing Corporation and I can definitely help you with yours.
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