California Professional Corporation San Diego

California Professional Corporation Summary

A California professional corporation is a corporation created pursuant to California Corporations Code §§ 100-2319 to practice a single profession in a corporate form. Professions are services that may be rendered pursuant to a license, certification, or registration authorized by California law. California Corporations Code §§ 13401(a), 13401.3.

Operating a California professional corporation formed by San Diego Corporate Law may have several, distinct advantages over sole proprietorship and other forms of business organization, including:

• Limiting personal liability against claims from lawsuits and creditors;

• Obtaining credit without making a personal guarantee;

• Reducing self-employment taxes for shareholders earning wages; and

• The availability of fringe benefits, such as medical care and retirement.

All California professional corporations formed by San Diego Corporate Law include attorney-drafted articles of incorporation, bylaws, federal EIN application, corporate records book, stock certificates, and minutes for the organizational meeting of the board of directors.

Flat Fee Price

$1,180
  • Includes Filing Fees
  • See Pricing Assumptions
  • Securities Issuance by Quotation

sproles

Michael J. Leonard helped us obtain our 501(c)(3), created our bylaws, and completed all of the necessary forms to establish a tax exempt status for our non-profit foundation. He was professional, quick, and great to work with. Mr. Leonard is also very connected in the community and has referred us to useful contacts.

Michel Sproles, Sproles Empowered Youth

FO

My experience working with San Diego Corporate Law has been nothing short of excellent. Michael Leonard is a tremendous asset, and provided us much needed assistance when forming our insurance agency. He assisted with the formation of our corporation, buy / sell agreement, company bylaws, minutes, and stock certificates. Michael is an utmost professional that I would refer to any friend or client.

Michael Fusco, Fusco & Orsini Insurance Services, Inc.

gwr

Michael J. Leonard at San Diego Corporate Law has provided GWR valuable assistance and professional advice. As a San Diego based high tech equipment manufacturer, we appreciate that we never have to waste his or our time explaining the engineering or scientific details of our situation as his strong, hands on physics and engineering background is invaluable. We are well protected with Mike looking out for our interests.

Richard Reineman, GWR Instruments, Inc.

pattersoneng

In 2009 San Diego Corporate Law converted my Sole Propriety Engineering Company into a “S” Corporation. My experience was painless and Mr. Leonard has done an excellent job staying in contact and continues to be a great advisor. San Diego Corporate Law comes highly recommended.

Curtis Patterson, P.E., Patterson Engineering, Inc.

best-rate-repair

Michael J. Leonard at San Diego Corporate Law is not your typical attorney experience. Michael puts his full attention into understanding your needs and provides the best solution to meet your goals. I highly recommend San Diego Corporate Law to any of my friends and associates.

Jeff A. Mudd, Best-Rate Repair Company, Inc.

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Working with San Diego Corporate Law made dealing with all the paper work of incorporating and setting up my business a dream! Michael is the ultimate professional and knows corporate law inside and out! San Diego Corporate Law is always available to answer questions, assist me with follow up items, and be my go-to and support team.

Elloise Bennett, AP Test Service, LLC

anazana

Mr. Leonard is competent, dependable, and gets the work done on time and within budget. He is very responsible to his customers. We would recommend him to anyone that requires a true professional.

Lidija Skolnija, anaZana, Inc.

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I was recommended to Michael to help me set up a new corporation I was starting. The advice he gave me was great, and I eventually hired his services to create the agreements and contracts between myself and my business partner. Throughout the process he guided me and asked very detailed questions. I felt that he had my back and my best interest at heart. Looking back now, the contracts he wrote have saved me close to $40,000 in money that I would have otherwise had to pay. Thank you Michael. Everyone should follow your standards.

Jason Delfos, Marketing and Advertising Design Group, LLC

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We hired San Diego Corporate Law to help us establish our business in San Diego. In the initial stages of setting up our business and transitioning to California, we were frequently out of town. During this time, Michael answered questions promptly and thoroughly by phone and email. He went above and beyond to keep us on deadline for our aggressive schedule. I would not hesitate to recommend San Diego Corporate Law to another business owner.

Alicia Sorber-Gallegos, Two Men and a Truck

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Having no prior experience with business law, I approached Michael to help me set up an LLC for my new company and help me review my legal disclaimers. Michael was very straightforward, honest and helpful. He took the time to explain every detail and answer all of my questions. His work was very diligent and completed exactly by the deadline promised. Michael and San Diego Corporate Law hold my highest recommendation!

Anton Ivanov, Dreams Cash True

clean-usa-power

Michael J. Leonard helped me configure my business entities into a solid investment vehicle. He is very professional, knowledgeable, easy to reach and timely. San Diego Corporate Law produced a unique and informative Private Placement Memorandum (PPM) for my business for less than half the cost other law firms were charging. I expect to use the PPM and San Diego Corporate Law for many years. I recommend Michael because of his efficient, hands on, practical approach to legal work in a time of dramatic changes with securities laws (JOBS Act).

John Copyak, Clean USA Power, Inc.

MGIV

San Diego Corporate Law helped me set up MGIV Inc and get established as an S-corp in 2013. I was a one man show and didn’t have a substantial amount of money to spend to get started. I was in the process of filing for a LLC through Legalzoom.com when something didn’t feel right. I picked up the phone and asked Michael if he was available to help. This was my first business so I knew nothing about filing for a corporation or legally establishing a business. Using his knowledge and expertise he coached me toward filing for an S-corp instead of an LLC. It saved the corporation $800 in 2013 and positioned it for success based on the MGIV Communication Consulting model. I find comfort knowing that my business is in good hands. Michael is a great resource and very personable so working with him is convenient and affordable! I recommend San Diego Corporate Law to anyone needing legal assistance with their business!

Michael Gordon IV, MGIV, Inc.

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When I needed to move my business from an office suite to a brick and mortar location, San Diego Corporate Law was instrumental in ensuring that the lease provisions were in my best interests. The specialized skills that Michael and his team possess, the fair and transparent fee structure, and their professional yet low pressure consultation process are the reasons why I will retain their services in the future.

Scott Weathers, Alpha Graphics La Jolla

cram

Michael J. Leonard at San Diego Corporate Law not only helped us establish our small business in San Diego, but he helped us to solidify our partnership to avoid any gray areas as we are a family-run business. Michael was easy to work with, knowledgeable, responsive, and professional, and we will continue to use him as our company lawyer moving forward.

Karen Posner, Camp Run-A-Mutt Sorrento Valley

kamo1

I have nothing but compliments to say about San Diego Corporate Law. Michael and his team have always delivered not only an extremely high level of service, but also have been so patient through the whole process of setting up our LLC. Whenever I have questions or need their service, they are very easy to communicate with and very reasonably priced. I will not only use them for any legal advice that I may need in the future, but also refer all the people that may also need their services.

Andrey Kamogari, Kamo Housing

mending-matters-teal

Michael assisted us with the process of incorporating our non-profit organization. Michael was responsive to all of our questions, and sensitive to the expedited timelines that we encountered. Among the best aspects we experienced in working with Michael was his appreciation for our specific goals and his candid and honest guidance to accomplish those objectives. I would highly recommend Michael Leonard and San Diego Corporate Law.

Esther Hemmen, Mending Matters

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San Diego Corporate Law has been a crucial partner for Little Black Diamond. Whether it’s routine incorporation paperwork or complex employment law, Michael is always very responsive and available to help handle our legal issues. He takes the time to understand your business and the unique issues that surround it in order to provide accurate and timely advice that considers the best interest of your business. San Diego Corporate Law is a true partner for any business.

Adam Rosenberg, Little Black Diamond, LLC

California Professional Corporation San Diego Details

Eligible Professions

The following businesses are among those that may incorporate as professional corporations:

Accounting (California Business and Professions Code §§ 5150–5158);

Acupuncture (California Business and Professions Code §§ 4975–4979);

Architecture (California Business and Professions Code §§ 5610–5610.7);

Chiropractic (California Business and Professions Code §§ 1050–1058);

Clinical Social Work (California Business and Professions Code §§ 4998–4998.5);

Dentistry (California Business and Professions Code §§ 1800–1808);

Law (California Business and Professions Code §§ 6127.5, 6160–6172);

Marriage and Family Therapy (California Business and Professions Code §§ 4987.5–4988.2);

Medicine (California Business and Professions Code §§ 2402–2417);

Naturopathic Doctors (California Business and Professions Code §§ 3670–3675);

Nursing (California Business and Professions Code §§ 2775–2781);

Optometry (California Business and Professions Code §§ 3160–3167);

Osteopathy (California Business and Professions Code §§ 2402–2417, 3600);

Pharmacy (California Business and Professions Code §§ 2402–2417, 3600);

Physical Therapy (California Business and Professions Code §§ 2690–2696);

Physician Assistants (California Business and Professions Code §§ 3540–3546);

Podiatry (California Business and Professions Code §§ 2402–2417);

Psychology (California Business and Professions Code §§ 2907–2913, 2995–2999);

Shorthand Court Reporters (California Business and Professions Code §§ 8040–8047);

Speech-Language Pathology and Audiology (California Business and Professions Code §§ 2536–2537.4); and

Veterinarians (California Business and Professions Code §§ 4910–4917).

Forming a California Professional Corporation

Professional corporations are governed by the Moscone-Knox Professional Corporation Act. California Corporations Code §§ 13400–13410. The formation process for a California professional corporation is similar to the formation of as a California nonprofessional corporation and is generally subject to the same requirements. The laws generally applicable to nonprofessional California corporations apply to professional corporations except when such provisions conflict with or are inconsistent with the Moscone-Knox Professional Corporation Act. California Corporations Code § 13403.

Purpose

The purpose stated in the articles of incorporation of a California professional corporation must state the particular profession to be practiced by the corporation and that the corporation may practice only that profession. California Corporations Code § 13404. In addition to practicing a particular profession, a California professional corporation may also engage in another business if permitted to do so by the governing board of such profession. California Corporations Code §§ 13401(b), 13404.

Permissible Shareholders and Directors

Unless subject to an exception under the California Corporations Code, only an individual licensed to practice the profession of the professional corporation may be a shareholder; however, for certain professions, other licensed professionals may hold shares or be officers, directors, or professional employees as long as shares owned by these other licensed professionals do not total more than 49% of all shares in the corporation. California Corporations Code §§ 13401(b), (d), 13401.5. A complete list of licensed persons that may hold shares in any particular professional corporation may be found in California Corporations Code § 13401.5 as follows:

Medical corporations:

Licensed doctors of podiatric medicine;
Licensed psychologists;
Registered nurses;
Licensed optometrists;
Licensed marriage and family therapists;
Licensed clinical social workers;
Licensed physician assistants;
Licensed chiropractors;
Licensed acupuncturists;
Naturopathic doctors;
Licensed professional clinical counselors; and
Licensed physical therapists.

Podiatric medical corporations:

Licensed physicians and surgeons;
Licensed psychologists;
Registered nurses;
Licensed optometrists;
Licensed chiropractors;
Licensed acupuncturists;
Naturopathic doctors; and
Licensed physical therapists.

Psychological corporations:

Licensed physicians and surgeons;
Licensed doctors of podiatric medicine;
Registered nurses;
Licensed optometrists;
Licensed marriage and family therapists;
Licensed clinical social workers;
Licensed chiropractors;
Licensed acupuncturists;
Naturopathic doctors; and
Licensed professional clinical counselors.

Speech-language pathology corporations:

Licensed audiologists.

Audiology corporations:

Licensed speech-language pathologists.

Nursing corporations:

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 chiropractors;
Licensed acupuncturists;
Naturopathic doctors; and
Licensed professional clinical counselors.

Marriage and family therapist corporations:

Licensed physicians and surgeons;
Licensed psychologists;
Licensed clinical social workers;
Registered nurses;
Licensed chiropractors;
Licensed acupuncturists;
Naturopathic doctors; and
Licensed professional clinical counselors.

Licensed clinical social worker corporations:

Licensed physicians and surgeons;
Licensed psychologists;
Licensed marriage and family therapists;
Registered nurses;
Licensed chiropractors;
Licensed acupuncturists;
Naturopathic doctors; and
Licensed professional clinical counselors.

Physician assistants corporations:

Licensed physicians and surgeons;
Registered nurses;
Licensed acupuncturists; and
Naturopathic doctors.

Optometric corporations:

Licensed physicians and surgeons;
Licensed doctors of podiatric medicine;
Licensed psychologists;
Registered nurses;
Licensed chiropractors;
Licensed acupuncturists; and
Naturopathic doctors.

Chiropractic corporations:

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; and
Licensed professional clinical counselors.

Acupuncture corporations:

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 physician assistants;
Licensed chiropractors;
Naturopathic doctors; and
Licensed professional clinical counselors.

Naturopathic doctor corporation:

Licensed physicians and surgeons;
Licensed psychologists;
Registered nurses;
Licensed physician assistants;
Licensed chiropractors;
Licensed acupuncturists;
Licensed physical therapists;
Licensed doctors of podiatric medicine;
Licensed marriage and family therapists;
Licensed clinical social workers;
Licensed optometrists; and
Licensed professional clinical counselors.

Dental corporations:

Licensed physicians and surgeons;
Dental assistants;
Registered dental assistants;
Registered dental assistants in extended functions;
Registered dental hygienists;
Registered dental hygienists in extended functions; and
Registered dental hygienists in alternative practice.
Professional clinical counselor corporation:
Licensed physicians and surgeons;
Licensed psychologists;
Licensed clinical social workers;
Licensed marriage and family therapists;
Registered nurses;
Licensed chiropractors;
Licensed acupuncturists; and
Naturopathic doctors.

Physical therapy corporations:

Licensed physicians and surgeons;
Licensed doctors of podiatric medicine;
Licensed acupuncturists;
Naturopathic doctors;
Licensed occupational therapists;
Licensed speech-language therapists;
Licensed audiologists;
Registered nurses;
Licensed psychologists; and
Licensed physician assistants.

Other restrictions on who may be a shareholder are contained in the California Business and Professions Code and the California Corporations Code. Persons licensed under the California Business and Professions Code, the Chiropractic Act, or the Osteopathic Act may be employed to render professional services by a California professional corporation listed in California Corporations Code § 13401.5. There are also various restrictions on whether a licensed professional may be a shareholder of more than one California professional corporation and whether a shareholder of a California professional corporation may be another professional corporation or must be an individual.

A California professional corporation with only one shareholder need have only one director who also must be the sole shareholder, and the sole shareholder must also serve as president and treasurer of the California professional corporation; in general, other officers need not be licensed professionals. California Corporations Code § 13403. A California professional corporation with only two shareholders need have only two directors who also must be the two shareholders, and those two sole shareholders must also serve as president, vice-president, secretary, and treasurer of the California professional corporation. California Corporations Code § 13403.

Deciding to Form a California Professional Corporation

Non-Tax Considerations

The primary non-tax advantage to forming a California professional corporation is that the shareholders of a professional corporation are not personally liable for the corporation’s debts and other liabilities, except certain payroll taxes and malpractice liability arising from the professional shareholder’s own negligence. While a professional may not limit their own malpractice liability by practicing in corporate form, practicing as a California professional corporation allows a licensed professional to limit personal liability for the malpractice of their colleagues and for the commercial, general liability, and vendor obligations of their professional corporations. California Business and Professions Code § 6160; California Commercial Code § 2343(3).

The following professions must provide malpractice insurance within specified limits:

Accountants (16 California Code of Regulations § 75.8);

Attorneys (State Bar Law Corp. R 3.158);

Chiropractors (16 California Code of Regulations § 367.8(b));

Dentists (16 California Code of Regulations § 1059);

Optometrists (16 California Code of Regulations § 1547); and

Naturopaths (16 California Code of Regulations § 4266).

The following professions are not legally required to provide malpractice insurance:

Medical doctors (16 California Code of Regulations Div 13, ch 1, art 13);

Psychologists (16 California Code of Regulations §§ 1380–1397.71);

Physical therapists (16 California Code of Regulations Div 13.2, art 9);

Speech-language pathologists and audiologists (16 California Code of Regulations Div 13.4, art 9);

Acupuncturists (16 California Code of Regulations Div 13.7, art 7);

Physician assistants (16 California Code of Regulations Div 13.8);

Podiatrists (16 California Code of Regulations Div 13.9);

Nurses (16 California Code of Regulations Div 14);

Pharmacists (16 California Code of Regulations Div 17);

Clinical social workers and marriage, family, and child counselors (16 California Code of Regulations Div 18, art 4.5); and

Certified court reporters (16 California Code of Regulations Div 24, art 7).

Tax Considerations

A California professional corporation that does not make an S corporation election will more than likely be treated as a personal service corporation that will result in the California professional corporation being taxed at a flat 35 percent. Internal Revenue Code § 11(b)(2). Such a California professional corporation cannot deduct “unreasonable compensation” for income tax purposes. Klamath Med. Serv. Bureau v. Commissioner, 29 T.C. 339 (1957), aff’d 261 F.2d 842 (9th Cir. 1958), cert. denied, 359 U.S. 966 (1959); Eduardo Catalano, Inc., Pension Trust, et al. v. Commissioner, 38 T.C.M. 763 (1979). Therefore, distributions made to a shareholder that are determined to be unreasonable compensation will be taxed as a dividend, subjecting the distributions to tax at both the corporate and the shareholder level, unless the corporation elects S-corporation status.

A California professional corporation may elect to be taxed as a Subchapter “S” corporation. Electing to be taxed as a Subchapter “S” corporation prevents the California professional corporation from being treated as a personal service corporation. With regard to fringe benefits, Subchapter “S” corporations are treated as partnerships, with all shareholders holding more than 2 percent of the corporation’s stock being treated as partners of a partnership. Internal Revenue Code § 1372(a)(2). Subchapter “S” corporations are generally treated as “flow-through” entities for income tax purposes, but still pay a California tax on corporate income, albeit at a reduced rate. California Revenue and Taxation Code §§ 23151, 23501, 23802(b)(1). Like California nonprofessional corporations, California professional corporations must pay the Franchise Tax Board the $800 minimum tax regardless of whether the corporation has taxable income; the minimum tax is waived in the first year of incorporation. California Revenue and Taxation Code §§ 23153(d)(1), 23153(f)(1).

Pricing Assumptions

The organization of a California Professional Corporation for $1,180.00 assumes a single class of stock. More complex organizations available by quotation. Filings required by applicable federal and blue sky securities laws available for additional fees and with additional costs.


California
Professional Corporation Questions?

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