More About Professional Corporations
More About Professional Corporations
Many licensed chiropractors in California want to form a chiropractic LLC. But, what they should be forming if they want to start a chiropractic business in California is a professional chiropractic corporation.
Just like all other types of corporations, forming a chiropractic corporation involves filing the necessary Articles of Incorporation with the California Secretary of State. We include 8 crucial questions to ask when forming a professional chiropractic corporation in California.
For a complete list of steps in forming professional corporations, click here!
First, What Is a Professional Chiropractic Corporation in California?
A professional chiropractic corporation is a type of professional corporation that is accredited by the California Secretary of State and is registered with the State Board of Chiropractic Examiners. Professional chiropractic corporations are formed to render chiropractic services instead of an LLC.
Can a chiropractor form an LLC in California for their chiropractic business?
No, California does not permit chiropractors to form an LLC as chiropractic services are considered a professional service.
What government agency regulates chiropractic professional services in California?
California Corporation Code § 13401(b) requires all professional corporations to register with the appropriate government agency that regulates their profession, this includes chiropractors with professional corporations. All professional chiropractic corporations in California must be registered with the State Board of Chiropractic Examiners.
The LAWS: What are the California State Laws that regulate the formation of a Chiropractic corporation?
- California Corporations Code
- Business and Professions Code
- California Code of Regulations
Read the full text of these laws or codes at the end of this page.
Client Question: I recently graduated from UWS in March and moved myself down to Chino California (greater LA area). I tried to find a suitable associate position but have found that to be close to impossible I am in the process of starting my own small clinic.
I am having a hard time finding an accountant to help me decide on what kind of business entity I want to be, every local chiropractor that I have asked has only told me how much they hate their accountant and are looking for a new one. I think it is best to limit my liability by going for a PC (or professional corporation, the California version of an LLC) or an S-Corp since I will hope to be taking out a small business loan to start out. I just don’t know which will be better for me as a single doctor clinic starting out. I know there are different tax implications for each form, but even after researching online, I couldn’t really figure out what they were. The only disadvantage I have heard on in an S-Corp is that you have to have yearly documented board meetings in order to maintain legitimacy, which I think would consist of me sitting in a room talking to myself saying, ‘Same plan as last year guys? Yeah, that sounds good.’
A few chiropractors have recommended that I do all the paperwork and incorporation online rather than through an attorney as it is faster and saves a lot of money, has anyone been burned by this before?
What corporation is best for a small startup clinic, and did you form your company online or through an attorney?”
The short answer to your question is the best option for a chiropractor setting up a small clinic and running it as a one chiropractor operation would be to form a Professional Corporation making the S election for tax purposes.
There are a lot of complexities in the forming of a professional Corporation. You need to satisfy not only state law but the specific requirements of your particular board. Though I suppose it would be possible to learn how to perform chiropractic procedures by using some online service like YouTube, the most reasonable thing for a person to do is turn it over to a professional like a chiropractor. The same is true when it comes to practicing law.
It is far better to allow the professionals to guide you through the complicated process, rather than to try to figure out how to do it online. Just avoiding the problems that you will run into with the State Board of Chiropractic Examiners will make the investment in using a professional well worth the money
8 Questions to Ask When Forming a Chiropractic Professional Corporation in California (the LLC equivalent)
The steps in forming a chiropractic LLC or professional corporation in California are best done through the assistance of a corporate lawyer. The help of an experienced legal counsel is necessary because a mistake in the formation process can cause a plethora of problems in the future, such as creating weaknesses in your legal protection.
There are numerous considerations when forming a chiropractic professional corporation in California. The following are the most common questions asked by chiropractors who plan to start a chiropractic business:
1. What are the California Laws/Codes that apply to chiropractic LLCs and professional corporations?
All chiropractic LLCs and professional chiropractic corporations in California must abide by these laws/codes:
- California Corporations Code
- Business and Professions Code
- California Code of Regulations
To read the full text of these laws/codes, see the end of this article.
2. Do I have to follow any Name-style formalities when forming a chiropractic corporation?
The California Business and Professions Code 1054 requires all professional chiropractic corporations to use a name that contains the name or the last name of one or more of the present, prospective, or former stockholders of the company. Moreover, the business name should include the word “chiropractic” and the word “corporation.” These words may be spelled in full or abbreviated.
3. Are professional chiropractic corporations in California allowed to use a fictitious name?
A fictitious business name, or a “Doing Business As” (DBA), may be allowed for some types of corporations. Chiropractic professional corporations, however, are not allowed to use a fictitious name to render their services. This prohibition is according to the Certificate of Registration for Chiropractic Corporation Application.
Learn more about the requirements for naming your professional chiropractic corporation here!
4. Are bylaws needed in setting up the management in a chiropractic business?
In order for any professional corporation to function efficiently, a set of bylaws has to be created. These are rules and guidelines necessary to address issues in the company, such as the responsibilities of the board of directors, the schedule of stockholder meetings, the operation of corporate offices, etc. A well-organized set of bylaws will help a chiropractic professional corporation avoid legal and corporate problems in California.
Bylaws help set up protection for chiropractic practices, like LLCs in California do for corporations that don’t offer a professional service.
5. Who can be issued stocks in a professional chiropractic corporation in California? Be Aware of the Limitations
This list includes all the persons that may be issued stock in a professional chiropractic corporation in California:
- Licensed physicians and surgeons.
- Licensed doctors of podiatric medicine.
- Licensed psychologists.
- Registered nurses.
- Licensed optometrists.
- Licensed marriage and family therapists.
- Licensed clinical social workers.
- Licensed acupuncturists.
- Naturopathic doctors.
- Licensed professional clinical counselors.
According to the California Corporations Code, the stocks owned by each person in a chiropractic professional corporation must not exceed 49% of the total number of stocks of the company. Additionally, the shareholders in the company must not exceed the number of persons licensed by the State Board of Chiropractic Examiners. This does not, however, imply that the corporation should only hire persons on this list.
6. Who can serve as an officer or director of the company?
The licensed professionals who can be issued stock in a chiropractic corporation are the same individuals who can serve as officers or directors of the company. The number of officers or directors allowable in a chiropractic professional corporation depends on the number of stockholders in the business.
A chiropractic enterprise that only has one shareholder only needs one director. This shareholder can serve as the director of the company while holding office as president and treasurer of the corporation. In cases like this, the other officers of the chiropractic professional corporation do not need to be licensed professionals.
Professional chiropractic corporations in California that only have two stockholders only need to have two directors, and the directors could be the two stockholders themselves. The two shareholders between them shall serve as president, vice president, secretary, and treasurer of the company.
7. Do I have to file a Chiropractic Corporation Special Report with the Board of Chiropractic Examiners to keep them apprised of changes in my Chiropractic Corporation?
Pursuant to California Code of Regulations section 367.10(b), each chiropractic corporation shall file a special report within 30 days of any change of the corporate officers/directors, shareholders, employees rendering professional services, and articles of incorporation. Include corporation name change (not the change of ownership) or change of corporate practice address on this form. Each special report filed must be accompanied by a filing Check all that apply and complete the appropriate section below:
Change of corporate officers
Corporation name change (not ownership) (Attach a copy of the endorsed Articles of Incorporation)
Change of corporate directors
Change of shareholder(s)
Change of employees rendering professional services
Change of corporate practice address
Filing fee of $5.00.
8. Do I need to have a Certificate of Registration as a Chiropractic Corporation (LLC) in California?
According to the Business and Professions Code section 1051 and Title 16, California Code of Regulations section 367.5, all professional chiropractic corporations in California must submit an application to register as a chiropractic corporation to the Board of Chiropractic Examiners. A minimal fee of $100 is required along with the application. The processing time is three to four weeks.
There are many more documents, certificates, and licenses that chiropractic professional corporations need to prepare, in order to be registered as a legally operating business. To ensure that all the requirements are completed, seek the counsel of a corporate attorney that specializes in forming professional chiropractic corporations in California. Find a trustworthy corporate lawyer today by clicking here!
Why Seek Help From a Corporate Lawyer in Forming a Professional Chiropractic Corporation in California?
Any mistake in the process of forming a chiropractic professional corporation (such as instead attempting to form a chiropractic LLC) in California could result in problems that may cost the company a lot of money. To avoid issues, the process has to be done correctly. Hiring a corporate lawyer, like Incorporation Attorney, can help chiropractors form a professional chiropractic business properly without mistakes. Call Incorporation Attorney today to get more information. Contact +1 (714) 634-4838 now to navigate forming a professional chiropractic corporation the RIGHT way.
Full Text of the California Codes/Laws that Apply to Chiropractic Professional Corporations in California.
Corporations Code
