According to California's professional corporations statute, a California PC can be formed to provide "any type of professional services that may be lawfully rendered only pursuant to a license, certification, or registration authorized by the Business and Professions Code, the Chiropractic Act, or the Osteopathic Act.
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The primary distinctions between a “regular” corporation and a professional law corporation are: 1. Each director, shareholder, and officer of a professional law corporation MUST be licensed to practice law. 2. If a professional law corporation has only one shareholder, then it is required to have only one director.
Additionally, the corporation is subject to the statutory requirements of §§ 6000-6228 of the Business and Professions Code. In addition to the above named statutory requirements, a professional law corporation is subject to the rules and regulations of the California State Bar.
The provisions of the General Corporation Law apply to professional corporations, except where such provisions are in conflict with or inconsistent with the provisions of the Moscone-Knox Professional Corporation Act.
The short answer: no. Lawyers in California, along with a set of other professionals, are prohibited from forming a California LLC, or LLC formation. In other states, professionals are required to start PLLCs, Professional Limited Liability Companies, instead.
To be a professional law corporation, your company has to possess a certificate of registration, and this certificate has to come from the California State Bar. You will also have to make sure that any professional services you provide come through staff members who are licensed to practice law.
These professional corporations are usually similar to regular corporations, but have certain special requirements. California requires certain professionals, such as lawyers, dentists, optometrists, doctors, certified public accountants, psychologists, and psychiatrists, to create a professional corporation rather ...
In most states, professionals who want to incorporate their practice can do so by forming a professional corporation or a professional service corporation.
Steps to Form a California PCDetermine whether a California PC structure is right for you.Choose a name for your California PC.Select a California registered agent.Complete your California Articles of Incorporation.Establish a corporate record in California.Designate a California PC board of directors.More items...
A California Professional Corporation may be a C-Corporation or an S-Corporation, and is organized to provide services in professions that require a state license in order to practice.
A professional corporation conveys limited liability to its members just as a regular corporation. However, in most cases, the corporation does not convey limited liability for the malpractice of the individual members. Ideally, professionals manage that type of risk through malpractice insurance policies.
While traditional corporations their professional corporations are mostly similar, there is one key difference: with professional corporations (such as C Corps), owners are protected from legal claims made against their business, unless the claim was a result of the owner's own mistake.
Professional corporations offer most of the same advantages as a regular corporation: personal asset protection, the ability to issue stock, and tax advantages. The downsides to a professional corporation are also the same as those of a regular corporation, such as the time and money spent on corporate formalities.
To form a company, they can draft articles of incorporation, which is a document detailing the establishment of a business as well the management of its internal affairs. They can help you create partnerships, limited liability companies, limited liability partnerships, or business trusts.
Professional corporations or professional service corporation (abbreviated as PC or PSC) are those corporate entities for which many corporation statutes make special provision, regulating the use of the corporate form by licensed professionals such as attorneys, architects, engineers, public accountants and physicians ...
A professional corporation is one that only performs services in one, single profession. It is a specific type of corporation for professionals like doctors, lawyers, accountants, etc. The professional is able to form a corporation, but the professional remains liable for his or her own actions.
Code Sections 13400-13410). Unless an exception applies, California professional corporations can be formed only to provide professional services (including secondary services) within a single profession. A professional service is defined as any service that requires a license issued by a California state regulatory licensing board, state court, or similar agency. To provide services, all California professional corporations must have a currently effective certificate of registration issued by the governmental agency regulating their profession.
There is a specific form for professional corporations on the California Secretary of State's website (go to the Business Entities page and click on the Forms, Samples & Fees link to find the form). Follow the instructions provided with the form for completing and filing your articles of incorporation. Your articles must include the corporate name, corporate purpose, corporate agent for service of process, corporate street address and mailing address, and number of stock shares. 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. The articles must contain a statement that the corporation is a professional corporation under California law.
A professional corporation which has only two shareholders can have those two shareholders also appointed as the only two directors. Those two shareholders between them can fill the offices of president, vice president, secretary, and treasurer of the corporation.
Unless the corporation has less than three shareholders, California professional corporations must have at least three directors on their board.
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. To see a complete list of licensed individuals who may own shares in any ...
Unlike many other states, California does not allow professionals to form a limited liability company ...
If you have only one 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 two shareholders can have those two shareholders also appointed ...
Professionals often take the do-it-yourself to incorporating their businesses.
The following California professionals are required to form professional corporations (as opposed to regular corporations):
When is the best time to form a California professional corporation? Is it better to wait until the new year if you are forming a professional corporation towards the end of the year?
It is important to note that California law prohibits professionals from using Limited Liability Companies (LLCs), in connection with a professional license, pursuant to California Corporations Code §17375.
Ensure that all of the officers, directors and shareholders (owners) of the professional corporation are licensed to practice the applicable profession, in the State of California.
California professional corporations can be taxed two ways: (1) as a C corporation or (2) as an S corporation.
Ensure that the professional corporation name that you would like to use is available with the California Secretary of State and meets the requirements specific to your profession.
A professional law corporation is formed by the filing of Articles of Incorporation with the Secretary of State.
A California professional corporation organized to engage in the practice of veterinary medicine is controlled generally by all of the provisions of the California Corporations Code and specifically by the provisions of §§ 13400-13410 (Professional Corporations) of that Code.
A medical corporation is a corporation which is authorized to render professional services, as defined in §§ 13401 and 13401.5 of the Corporations Code, so long as that corporation and its shareholders, officers, directors and employees rendering professional services who are physicians, psychologists, registered nurses, optometrists, podiatrists physician assistants, are in compliance with the Moscone-Knox Professional Corporation Act, the provisions of Business and Professions Code §§ 2000-2521, and all other statutes and regulations now or hereafter enacted or adopted pertaining to the corporation and the conduct of its affairs.
A “licensed person” is any natural person who is duly licensed under the provisions of the Business and Professions Code to render the same professional services as are or will be rendered by the professional corporation of which he or she is or intends to become, an officer, director, shareholder, or employee.
An accountancy corporation is a corporation which is registered with the California Board of Accountancy and has a currently effective certificate of registration from the board. Subject to all applicable statutes, rules and regulations, an accountancy corporation is entitled to practice accountancy.
California Business and Professions Code, §§ 6000-6228. General Discussion: A California professional law corporation is controlled generally by all of the provisions of the California Corporations Code and specifically by the provisions of §§ 13400-13410 of that Code.
The California State Bar may suspend or revoke a professional law corporation’s certificate of registration if the corporation, a shareholder, or another person licensed to practice law fails to acquire all of the shares of a shareholder who is disqualified from practicing law within 90 days of the disqualification.
It is very important to note that the requirement as to whom could be a. shareholder in a particular professional corporation is not uniform. The Code should be carefully.
Generally, shareholders of the professional corporation are not personally liable for corporation’s debts, EXCEPT certain payroll taxes and obligations arising from the corporation’s own negligence; NOTE: Professional Limited Liability Companies (LLCs) are NOT allowed in California.
Shareholders and Directors in a Professional Corporation. Generally, only a licensed professional practicing the profession the professional corporation is. engaged in may be a shareholder. Nonetheless, in certain situations, some other licensed. professionals may also hold shares.
Generally, shareholders may NOT limit their own malpractice liability in corporate form. However, shareholders may limit their personal liability for the malpractice of their associates.
While a Professional Corporation is similar to a regular Corporation, it differs in a number of ways: Only licensed professionals can form a Professional Corporation. It must be formed for the sole purpose of rendering professional services.
The director, president, vice president, treasurer and secretary must be licensed professionals. The shareholders must be licensed professionals. The shares of stock can only be transferred to other licensed professionals. A shareholder cannot delegate his/her powers to a non-licensed person.
The new laws specifically allow California LLCs to become licensed contractors with the California Contractors State Licensing Board.
A California RLLP is formed by filing Form LLP-1 with the Secretary of State. For other professionals, the most commonly used alternative is the Professional Corporation. A California Professional Corporation is formed by filing Form ARTS-PC.
“Registered” simply means that the entity is registered with the California Secretary of State.
So in 2004, the California Secretary of State requested an opinion letter from the California Attorney General. The Attorney General opinion letter is worth a read (takes 5-10 minutes), however, the Attorney General’s summary was as follows:
In most states, licensed professionals (architects, accountants, doctors, lawyers, therapists, etc.) offering professional services cannot form a “regular” LLC, but instead must form a Professional LLC (PLLC). California is unique in that not only are professionals prohibited from forming an LLC (with minor exceptions), ...