More About Professional Corporations
More About Professional Corporations
Incorporation Attorney has helped many clients form professional corporations in California. To learn everything you need to know on how to start a nursing business, read this article. For more information about professional corporations, click here!
What is a Nursing Professional Corporation?
A nursing corporation is a type of professional corporation that is formally registered with the California Secretary of State and is engaged in providing services that are within the scope of the nursing profession.
What Government Agency Regulates Nursing Professional Corporations?
All professional corporations are required by the California Corporation Code § 13401(b) to register with the corresponding government agency that manages their specific profession. California Board of Registered Nursing regulates Nursing Corporations.
Get in touch with a corporate attorney who specializes in forming nursing corporations! Click here!
Client Question: Can family nurse practitioners open and own their own practices in California? I understand we need a standardized protocol and must collaborate with a physician, but can we own the practice and hire a physician? Would we be able to make a profit?
Yes, definitely! Family nurse practitioners can start their own businesses and provide nursing services in California. A nursing business should be a registered professional corporation. It is imperative that you and your colleagues work alongside a corporate lawyer that specializes in nursing corporations.
How to Form a Professional Nursing Corporation
Forming any type of professional corporation begins by filing the complete Articles of Incorporation with the California Secretary of State. After this step, there are nine other steps to follow. The process of forming a nursing professional corporation could be challenging for those who don’t know the legalities and all the details of doing so. This tedious process is why it is important to consult an expert corporate lawyer in California.
Learn about the ten steps in forming a professional corporation in California by clicking here!
COMMON QUESTIONS ASKED WHEN FORMING A NURSING CORPORATION:
At Incorporation Attorney, we have helped many clients form professional corporations. In the many years of doing this, we have gathered the most common questions asked, and these are:
What are the California Laws/Codes that professional nursing corporations need to abide by?
The California Laws/Codes that apply to professional nursing corporations are:
- California Corporations Code
- Business and Professions Code – The Nursing Practice Act is located in the California Business and Professions Code starting with Section 2700.
- California Code of Regulations
To read the full text of these laws/codes, see the end of this article.
Do I have to follow any name-style formalities when forming a nursing corporation?
The name that you choose for your company should comply with the California Business and Professions Code 2778, which states:
“The name of a nursing corporation and any name or names under which it may render professional services shall contain the words ‘nursing’ or ‘registered nursing,’ and wording or abbreviations denoting corporate existence.”
This code means that you can name your nursing professional corporation with any name you want, as long as it contains the words “nursing” or “registered nursing.” To make sure that you’re naming your company correctly, it is wise to review the name selection of your corporation with your corporate attorney.
Learn more about the name style rules and requirements for a nursing corporation here!
Are nursing corporations allowed to use a Fictitious Name?
A fictitious business name, also known as a “Doing Business As” or DBA, refers to the operating name of a corporation. Some companies use a DBA, instead of their legally registered name. According to the California Board of Registered Nursing, professional nursing corporations may use a fictitious name so long as the words “nursing” or “registered nursing” is part of the DBA.
Are bylaws needed when setting up the management team of the company?
All corporations need to have a set of bylaws so that the company can operate in an orderly manner. These rules and guidelines are necessary to address issues, such as the responsibilities of the board of directors, the management of corporate offices, the schedule of stockholder meetings, etc. Properly structured bylaws help the company avoid legal and corporate problems in the future.
Who can be a shareholder in a nursing professional corporation?
The following licensed professionals may be shareholders of a nursing corporation, provided that all the shares owned by each person do not exceed 49% of the total number of shares of the company:
- Licensed physicians and surgeons.
- Licensed doctors of podiatric medicine.
- Licensed psychologists.
- Licensed optometrists.
- Licensed marriage and family therapists.
- Licensed clinical social workers.
- Licensed physician assistants.
- Licensed nurses.
- Licensed acupuncturists.
- Naturopathic doctors.
- Licensed professional clinical counselors.
The number of licensed persons owning shares (for example, doctors and optometrists) in the Nursing corporation cannot exceed the number of licensed nurses that are shareholders. This rule does not limit employment by Nursing corporations to only those licensed professionals listed.
Can anyone serve as an officer or director of a nursing professional corporation?
These offices are dependent on the number of shareholders of the Nursing corporation.
A professional nursing corporation that only has one shareholder only needs one director. The shareholder shall stand as the director and can also serve as the president and treasurer of the company. In situations like this, the other officers in the corporation do not need to be licensed professionals.
If a professional nursing corporation has only two stockholders, it only needs two directors and they can be the stockholders themselves. These stockholder-directors between them shall fill the offices of the president, vice president, secretary, and treasurer of the company.
Are there additional certificates/documents in forming a professional nursing corporation?
Besides the Articles of Incorporation, there are other documents, certificates, and licenses that are needed by a nursing corporation to operate legally. To make sure that all of these requirements are covered, it is imperative that you seek the counsel of an experienced corporate lawyer. Talk to one today! Click here!
Does a licensed nurse need a certificate of registration as a nursing corporation?
No. Persons duly licensed by the California Board of Registered Nursing to render professional services for a professional nursing corporation are not required to obtain a certificate of registration to provide those services.
Do I need to file anything with the California Board of Registered Nursing to form a professional nursing corporation?
Click to learn more about what you need to do if you are moving your professional nursing corporation out of state!
Filing of licenses and/or certificates may be necessary for forming a professional nursing corporation. These will be filed through the California Board of Registered Nursing and involve submitting all the requirements and paying the necessary fees. To know the most updated requirements and fees, visit their website at http://www.rn.ca.gov/applicants/index.shtml
Nurses Also Ask:
Client Question: Can a nurse form a professional Nursing Corporation in California?
The Moscone-Knox Professional Corporation Act expressly permits a nurse to be an owner of a nursing corporation (up to 100%). Here is the rule:
Corporations Code 13401.5. Notwithstanding subdivision (d) of Section 13401 and any other provision of law, the following licensed persons may be shareholders, officers, directors, or professional employees of the professional corporations designated in this section so long as the sum of all shares owned by those licensed persons does not exceed 49 percent of the total number of shares of the professional corporation so designated herein, and so long as the number of those licensed persons owning shares in the professional corporation so designated herein does not exceed the number of persons licensed by the governmental agency regulating the designated professional corporation.
This section does not limit employment by a professional corporation designated in this section to only those licensed professionals listed under each subdivision. Any person duly licensed under Division 2 (commencing with Section 500) of the Business and Professions Code, the Chiropractic Act, or the Osteopathic Act may be employed to render professional services by a professional corporation designated in this section.
(f) Nursing corporation.
(1) Licensed physicians and surgeons.
(2) Licensed doctors of podiatric medicine.
(3) Licensed psychologists.
(4) Licensed optometrists.
(5) Licensed marriage and family therapists.
(6) Licensed clinical social workers.
(7) Licensed physician assistants.
(8) Licensed chiropractors.
(9) Licensed acupuncturists.
(10) Naturopathic doctors.
(11) Licensed professional clinical counselors.
(12) Licensed midwives.
The Nursing Practice Act, specifically California Business and Professions Code section 2775 states: A nursing corporation is a corporation which is authorized to render professional services, as defined in Section 13401 of the Corporations Code, so long as that corporation and its shareholders, officers, directors, and employees rendering professional services who are registered nurses are in compliance with the Moscone-Knox Professional Corporation Act, the provisions of this article and all other statutes and regulations now or hereafter enacted or adopted pertaining to such corporation and the conduct of its affairs.
With respect to a nursing corporation, the governmental agency referred to in the Moscone-Knox Professional Corporation Act is the Board of Registered Nursing.
Client Question: I have been told that a physician must own the practice. The Medical Board states that the “… following types of medical practice ownership and operating structures also are prohibited:
- Non-physicians owning or operating a business that offers patient evaluation, diagnosis, care and/or treatment;
- Physician(s) operating a medical practice as a limited liability company, a limited liability partnership, or a general corporation;
- Management service organizations arranging for, advertising, or providing medical services rather than only providing administrative staff and services for a physician’s medical practice (non-physician exercising controls over a physician’s medical practice, even where physicians own and operate the business);
- and a physician acting as “medical director” when the physician does not own the practice. For example, a business offering spa treatments that include medical procedures such as Botox injections, laser hair removal, and medical microdermabrasion, that contracts with or hires a physician as its “medical director.”
In the examples above, non-physicians would be engaged in the unlicensed practice of medicine, and the physician may be aiding and abetting the unlicensed practice of medicine.
“physician acting as “medical director” when the physician does not own the practice.”
The above statement is a general statement pertaining to an unlicensed person or entity owned by unlicensed persons engaging in the corporate practice of medicine with which I would agree.
For example, it would not be legal for me, a licensed attorney, to establish a “medical practice”, specifically a business offering spa treatments that include medical procedures such as Botox injections, laser hair removal, and medical microdermabrasion and contract with or hire a physician to be its “medical director.”
This general statement regarding practice ownership and operating structures is modified by California Business and Professions Code section 2061 which states:
Nothing in this chapter {meaning the Medical Practice Act} shall be construed as limiting the practice of other persons licensed, certified, r registered under any other provision of law relating to the healing arts when such person is engaged in his or her authorized and licensed practice.
Remember, the Nursing Practice Act, specifically California Business and Professions Code section 2775 states that a nursing corporation is a corporation which is authorized to render professional services, as defined in Section 13401 of the Corporations Code, so long as the corporation is in compliance with the Moscone-Knox Professional Corporation Act
Client Question: You may not under any circumstance, however work in a collaboration with a physician.
I disagree with this statement. The nursing practice is a dependent relationship for the most part and that the only way a nurse can practice is in collaboration with a physician.
Client Question: I have been told that I must be employed by a medical practice. Is that true?
No. This statement directly contradicts the Moscone-Knox Professional Corporation Act.
Client Question: You cannot provide medical services through a nursing corporation in California.
This statement directly contradicts the Nursing Practice Act. Assuming you are supervised and follow written, standardized procedures, you may provide medical services.
NOTE: The ownership of a nursing corporation and employment of specified professionals though expressly permitted by the code, does not mean a nurse can run an independent medical practice to provide dependent medical functions without supervision and following standardized written procedures which I will discuss next.
How to Form a Professional Nursing Corporation
Forming any type of professional corporation begins by filing the complete Articles of Incorporation with the California Secretary of State. After this step, there are nine other steps to follow. The process of forming a nursing professional corporation could be challenging for those who don’t know the legalities and all the details of doing so. This tedious process is why it is important to consult an expert corporate lawyer in California.
Seek the Help of an Experienced Corporate Lawyer that Specializes in Professional Nursing Corporations in California
Forming a professional nursing corporation in California is not only a process that is lengthy but also one that needs to be done right. Any error – no matter how small – can cause a ton of legal and corporate problems in the future. To avoid these kinds of issues, it is wise to consult with a trustworthy corporate lawyer. Incorporation Attorney, for example, is one of the most dependable experts that specialize in forming professional nursing corporations in California.
Find the most trusted corporate attorneys in California by clicking here!
Full California Laws/Codes that Apply to Professional Nursing Corporations
