Under California statutory law, podiatrists can form professional podiatric medical corporations through which to operate their practice. Podiatrists are physicians or surgeons qualified to diagnose and treat conditions affecting the foot, ankle, and related structures of the leg.

Many licensed professionals in California are allowed to form professional corporations that allow them to enjoy the benefits of using corporate entities. Corporate entities are “limited liability” entities in the sense that business creditors can only seize business assets to pay for business liabilities and obligations. This is the nature of the “limited liability.” As an example, if there is an accident at the clinic — say a trip-and-fall — the injured person can only sue and recover against the business, not against you personally or your family. A podiatrist cannot offer medical services in California under any other type of corporate entity.

California professional corporations are allowed under the Moscone-Knox Professional Corporation Act (the “Moscone-Knox Act”). See Cal. Corp. Code, §13400 et seq. However, California professional corporations are subject to various rules and prohibitions as set forth in the Moscone-Know Act. Each type of professional corporation has rules unique to it. With respect to podiatrists, the provisions of the Moscone-Knox act establish that only currently-licensed medical professionals can be shareholders — owners — of the corporation. Thus, your spouse cannot be a shareholder unless your spouse is also a licensed medical professional. Further, one or more licensed podiatrists must own at least 51% of the corporation and the remaining owners are limited to the following list of licensed medical professionals:

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

The directors elected to the board of directors are limited to being licensed podiatrists and, similarly, only podiatrists can be hired in senior management positions. Non-podiatrist employees are permissible, but their tasks cannot be medical service related. Thus, a receptionist or a bookkeeper can be hired for those tasks. Likewise, the Assistant Treasurer for the corporation can be a non-podiatrist.

The first step in forming your California professional podiatry corporation is to contact an experienced San Diego corporation attorney for assistance. The second step is to formally file Articles of Incorporation with the California Secretary of State. The Articles must contain a specific statement that the corporation is a California professional podiatry corporation. In addition, when filing, the corporation must have a proper legal name. That means the name must be unique and must include both a reference to podiatric medicine and to the fact that the entity is a corporation. Again, your trusted San Diego corporate attorney can ensure the name is compliant. Next, the shareholders must meet to elect the board of directors, hold an initial meeting, adopt bylaws, and issue stock.

Note that if any owner or member of the board or member of senior management loses his/her license, then that person must be removed as an owner, director, or high-level employee. Thus, at an early stage in setting up your California professional podiatry corporation, it is essential to negotiate and agree on an Owners Agreement or Buy-Sell Agreement among the shareholders. This Agreement would, among other things, specify that loss of licensure would lead to a loss of ownership and loss of management responsibilities. The Agreement would also specify timing and the various mechanisms for separating the no-longer-licensed podiatrist or medical professional. Issues such as payment for shares and earned-but-as-yet-unpaid fees must be resolved. It is highly advisable to have those issues written out in an agreement long before the provisions are needed. Emotions are level at the beginning, but emotions are likely to be running high when someone has just lost his or her license and may be in dire need of funds.

Contact San Diego Corporate Law Today

For more information, contact attorney Michael Leonard, Esq., of San Diego Corporate Law. Mr. Leonard can be reached at (858) 483-9200 or via email. Mr. Leonard has been named a “Rising Star” for four years running by SuperLawyers.com.  Mr. Leonard can ensure your professional podiatry corporation is set up correctly. Mr. Leonard provides a full panoply of legal services for businesses. Like us on Facebook.

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