If you’re a veterinarian in California, you SHOULD form a Professional Veterinary Corporation taxed as an S-Corporation.
California law prohibits veterinarians from forming an LLCs or a traditional corporations to practice veterinary medicine and instead must register as 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, and even the California State Board.
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.
Professional Veterinary Corporation
A Professional Veterinary Corporation is a professional corporation which is registered with the Veterinary Medical Board, to provide veterinary services.
3 Steps to Starting a Professional Veterinary Corporation
The 3 steps to starting a Professional Veterinary 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 Starting A Professional Veterinary Corporation
There are plenty of benefits of incorporating a professional veterinary corporation in California.
Correctly starting a veterinary 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.
Name Requirements For A Professional Veterinary Corporation
The name of a professional veterinary corporation must contain the words “veterinary corporation” or words or abbreviations which denote its corporate existence, such as “Inc”, “Corp”, or “Corporation”. Also the veterinary corporation may adopt any name permitted by a law expressly applicable to veterinary medicine or by a rule or regulation of the Veterinary Medical Board.
Also, “LLC” is not permitted as a corporate designation within California for the purposes of practicing veterinary medicine, based on underlying Corporate Code concerning Professional Corporations.
Who Regulates Professional Veterinary Corporations?
According to the California Corporations Code 13401(b), all professional corporations must be registered with the corresponding government agency that is tasked to manage their profession.
California Veterinary corporations must be approved for licensure by the Veterinary Medical Board the before practicing or holding out to the public as an veterinary corporation.
Who Can Be A Shareholder Of The Professional Veterinary Corporation
Each director, shareholder, and officer of the professional veterinary corporation MUST be licensed to practice veterinary medicine.The director of an veterinary corporation must be a licensed shareholder.
Shares of stock in the veterinary corporation may only be issued to people who are licensed to practice veterinary medicine. Any shares shares issued to others who do not practice veterinary medicine are void.
A corporation also may have a non-licensee shareholder, vice-president, or secretary (officer).
However, a non-licensee may not be both a shareholder and an officer. A non-licensee cannot be a director of the firm.
Also, shares in the veterinary corporation may only be transferred to those who are licensed to practice veterinary medicine, to a shareholder of the corporation or to the professional veterinary corporation itself.
What Happens If A Shareholder Of the Professional Veterinary Corporation Becomes Disqualified From Practicing Veterinary Medicine
If a shareholder becomes ineligible to practice Veterinary Medicine in California or is legally disqualified from rendering professional services to the veterinary corporation, she must sell or transfer her shares to a qualified shareholder within 90 days of her ineligibility or disqualification.
Can a Veterinary Corporation Be Opened As An LLC In California?
A veterinary corporation can’t be opened as an LLC in California.
The Corporations Code section 17375, does not certify LLCs (Limited Liability Companies) for the purpose of practicing veterinary medicine. If an veterinarian wants to provide professional services in California, they must open a Professional Corporation.
Can A Professional Veterinary Corporation Use a DBA Or Fictitious Name?
In California, a veterinary corporation can use a fictitious name so long as they file a fictitious business name statement within 40 days of starting the vetrinary corporation. You must also make a fictitious name filing in every local county recorder’s office for which you are practicing.
How To Form A California Professional Veterinary Corporation
Here are the 10 steps you must take to form the California Professional Veterinary 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 “Veterinary Medicine”.
- Register the Veterinary Corporation’s location with the Veterinary Medical Board by providing them with the location of your practice.
- Conduct a corporate meeting where you will issue shares and elect offcials and directors for the Professional Veterinary Corporation
- Create custom Accountancy 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 Accountancy 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.
As a Business Lawyer for Professionals, I’ve assisted hundreds of professionals just like you start their California Veterinary Corporations and I can definitely help you with yours.
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