California Professional Corporation Requirements
As any California business lawyer will tell you, limited liability companies and traditional corporations have long been the chosen structure of most new companies in the state. If you have walked into a grocery store, bakery, or hair salon recently, there is a good chance that they were operating under one of these two organizational systems.
There are, however, several professions that are prohibited from forming an LLC or traditional corporation. The state mandates that they must instead incorporate as a professional corporation.
Which professions are required to incorporate as a professional corporation?
Generally speaking, a profession that requires a state license to practice needs to form a professional corporation to do business. A small sampling of these professions would include:
- Lawyers
- Doctors
- Veterinarians
- Certified public accountants (CPAs)
- Dentists
- Psychiatrists
- Therapists
- Psychologists
- Optometrists
For many of these professions, there are also additional requirements that must be fulfilled to stay on the right side of the law. Attorneys, for instance, must register their corporation with the state bar prior to taking on any clients.
If you are a member of one of these professions and would like to find a business attorney in San Diego to help you form a professional corporation, you need to look no further than the Semanchik Law Group. We offer a flat-fee pricing model which even covers some additional services like the aforementioned state bar registration.
What makes a professional corporation different than an LLC or traditional corporation?
Professional corporations in California have much stricter rules and restrictions than LLCs and traditional corporations. For instance, the officers and directors of a professional corporation are almost always required to have a state license to practice the profession.
Professional corporations must also adhere to the rules set forth by the profession’s governing body. Some agencies require all professional corporations to have specific language in their bylaws. Others have restrictions about what the corporation can be named.
If you would like to learn more about the rules your new professional corporation will need to follow, you may wish to speak with an experienced California business lawyer – like those here at the Semanchik Law Group.
Do professional corporations have any tax benefits?
The simple act of setting up a professional corporation for your new business is unlikely to result in any immediate tax benefits. However, if you then opt to have the business taxed as an S corporation, you may be able to save quite a bit of money on self-employment taxes. To find out more about whether you could benefit from electing to be taxed as an S corporation, you should speak to your California business lawyer and certified public accountant.
Semanchik Law Group
When you need a small business attorney in San Diego to help you form a professional corporation, you can count on the Semanchik Law Group. We will work diligently to make sure that your new company is set up for success from the very beginning. Give us a call today at (619) 535-1811 to schedule your initial consultation.