An Overview of California Professional Corporations: Veterinarians
Veterinarians are among the healing arts practitioners that are permitted to form professional corporations in California. The two statutes that govern veterinary professional corporations are:
- The Moscone-Knox Professional Corporation Act — see Corp. Code, §13400 et seq.
- The Veterinary Medicine chapter of the California Business and Professions Code — see Bus. & Prof. Code, § 4800 et seq.
To form your San Diego veterinary professional corporation, you must file articles of incorporation with the California Secretary of State. This process is similar to how a regular corporation is formed. Veterinarians cannot form any other type of corporate entity, such as a limited liability company, for purposes of providing veterinary services. An experienced San Diego corporate attorney can provide advice and counsel with respect to forming your professional veterinary corporation.
In addition to proper formation, your professional veterinary corporation must be maintained annually with tax returns filed with the California Franchise Tax board and Internal Revenue Service, conduct annual board of directors and shareholder meetings, and file annual statements of information with the Secretary of State. However, professional veterinary corporations are not required to obtain a certificate of registration from the California Medical Veterinary Board in order to render veterinary services.
Forming a California professional veterinary corporation has many advantages including shielding your personal and family assets from business-related creditors and obligations. However, there are certain limitations. Under the statutory provisions linked above, only licensed veterinarians may be owners — shareholders — of your professional veterinary corporation. If one or more of the veterinarians lose their license, then those newly-unlicensed professionals will have to be removed as owners. If shares of your veterinary corporation are owned by persons who are not licensed as veterinarians, then there is a risk that your corporation will be held invalid. This will eliminate the advantages that accrue to you, the professional, in forming the professional corporation. This requirement also limits the person to whom you can sell or transfer shares of a veterinary corporation. Those buying or receiving shares must also be licensed as veterinarians.
In a similar manner, only licensed veterinarians can be officers, directors, and employees rendering professional services. See Cal. Bus. & Prof. Code, §4910. There is no limitation on hiring non-veterinary employees if those employees are not providing veterinary services. This allows you to hire a bookkeeper or a receptionist, for example. A solo-practitioner can form a California professional veterinary corporation. This is actually quite common. In that case, there would be only one shareholder of the corporation and that same person would be the sole director and hold the requisite corporate offices of CEO and Treasurer/CFO. Note that, while paying employees a reasonable wage/salary is acceptable, various ethical rules prevent fee-sharing and profit-sharing with non-veterinarians.
Legally speaking, a California professional veterinary corporation — like every corporation — becomes a separate legal entity upon formation. Like a natural person, a corporation needs a name and there are rules with respect to naming. First, generally, the name must be unique. Then, with respect to a veterinary corporation, the corporation must contain the word “veterinary” and must also contain words or abbreviations which denote a corporate existence.
Contact San Diego Corporate Law Today
If you have questions about the formation of your veterinary corporation, and if the veterinary corporation is the right fit for you and your practice, call Michael Leonard, Esq., of San Diego Corporate Law. Mr. Leonard focuses his practice on business law, transactional, and corporate matters, and he proudly provides legal services to business owners in San Diego and the surrounding communities. Call Mr. Leonard at (858) 483-9200 or contact him via email. Like us on Facebook.