What Doctors Should Know When Forming a Medical Professional Corporation in California


Whether you are a doctor or another kind of healthcare provider, you may want to form a professional corporation in California that will let you offer medical professional services legally under the law. This requires you to understand how to form this corporation, so you will know the next steps to take and make sure your legal rights are protected. It is important to visit an experienced la healthcare attorney regarding the start of a medical professional corporation. 

In California, doctors need to register their practice as a professional corporation. This process must be done correctly to avoid rejection of the registration by the Secretary of State of California. When the registration is rejected, the doctor can be open to lawsuits and government fines. 

Benefits of a Professional Medical Corporation

Establishing a professional medical corporation will let a doctor enjoy the following benefits:

  • Legal protection. With a professional medical corporation, a doctor can separate personal assets from business assets. This will limit personal liability against lawsuits and creditors. It protects the doctors’ personal assets from claims that arise from the malpractice of a colleague, employee-related lawsuits, or commercial claims.
  • Business credit. A professional medical corporation allows a doctor to build business credit, necessary when forming a partnership or selling a business. Also, they may avoid giving personal guarantees. 
  • Taxation. By choosing a professional medical corporation as an S-Corp, profits and losses pass through to shareholders, avoiding double taxation. 
  • Fringe benefits. Under a professional medical corporation, a doctor can avail of medical care and retirement plans.

Forming a Professional Corporation

To form a professional corporation in the state of California, you need to file articles of incorporation with the California Secretary of State, together with applicable filing fees. The articles should include the corporate name, corporate purpose, corporate agent for service of process, corporate street address and mailing address, and the number of stock shares. 

Moreover, the corporation should file a Statement of Information, together with applicable filing fees, within 90 days of filing the articles of incorporation and then every year thereafter during the applicable filing period. After forming your professional corporation, you must comply with tax and other regulatory requirements that apply to this. 

What Can Go Wrong with Forming a Professional Corp?

Forming a professional corporation improperly can lead to many consequences. For instance, you can form an entity that doesn’t provide the benefits or protection you need. Also, you could miss the timeframe for filing an S Corp election. Your corporation can be determined as a de facto corporation. This is the reason you need to retain an attorney from the get-go. 

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