Starting a California Professional Optometry Corporation may seem like a daunting task, but with the right knowledge and approach, it can be a straightforward process. Whether you plan to hire an experienced corporate attorney to ensure the work is done right the first time or you are planning to go it alone with an online service, this article will guide you through the seven essential steps to form a Professional Optometry Corporation in California so you will understand each step of the formation process. By following this guide, optometrists can verify that they have navigated the complexities of regulations and legal requirements effectively to best protect their personal assets, enjoy tax benefits, and ultimately, set their California Professional Optometry Corporation on the path to success.

Executive Summary: Putting the Conclusion First for Busy Optometrists

Ensure your California Professional Optometry Corporation is formed correctly the first time with the help of San Diego Corporate Law. Our dedicated team of corporate attorneys focus on California corporate law and is committed to providing personalized guidance every step of the way when forming California professional corporations. Protect your personal assets, secure tax advantages, and set a solid foundation for your professional optometry practice. Contact us today to schedule a consultation and take the first step towards your professional independence with confidence.

Step 1: Draft and File California Professional Articles of Incorporation Specific to an Optometry Practice with the California Secretary of State

The initial step to forming a California Professional Optometry Corporation involves the drafting and filings of Articles of Incorporation for a California Corporation specific to the profession of optometry for the California Professional Optometry Corporation. Articles of Incorporation of a California Professional Optometry Corporation must comply with the California Corporations Code, California Business and Professions Code, and the rules of the California Secretary of State.

Drafting Articles of Incorporation for a California Professional Optometry Corporation

When drafting the Articles of Incorporation for a California Professional Optometry Corporation, the document must include specific details that fulfill the legal requirements of both the California Corporations Code generally and the Moscone-Knox Professional Corporations Act specifically, while also complying with the California Business and Professions Code sections applicable to the profession of optometry for the California Professional Optometry Corporation. The necessary information typically encompasses the information outlined below.

The Name of the California Professional Optometry Corporation

The name of a California Professional Optometry Corporation must be unique and not easily confused with existing corporations in California. The name must also have a corporate designation, such as using the word “Corporation” or “Incorporated” or the abbreviation “Inc.” as the designation.

California Professional Optometry Corporations also have the following specific naming requirements pursuant to California Business and Professions Code Section 3163:

“Except as provided in Section 3078, the name of an optometric corporation and any name or names under which it may be rendering professional services shall contain and be restricted to the name or the last name of one or more of the present, prospective, or former shareholders and shall include the words optometric corporation or wording or abbreviations denoting corporate existence, provided that the articles of incorporation shall be amended to delete the name of a former shareholder from the name of the corporation within two years from the date the former shareholder dies or otherwise ceases to be a shareholder.”

The Purpose of the California Professional Optometry Corporation

The purpose of a California Professional Optometry Corporation must be stated as follows to comply with the California Corporations Code and California Business and Professions Code and also be accepted by the document examiners at the California Secretary of State:

“The purpose of the corporation is to engage in the profession of optometry and any other lawful activities (other than the banking or trust company business) not prohibited to a corporation engaging in such profession by applicable laws and regulations. This corporation is a professional corporation within the meaning of California Corporations Code section 13400 et seq.”

Any deviation from the language above almost guarantees rejection of Articles of Incorporation of a California Professional Optometry Corporation, even where California law reads that there is flexibility in the purpose statement a California Professional Optometry Corporation may adopt.

The Initial Street Address of a California Professional Optometry Corporation

In drafting Articles of Incorporation, a California Professional Optometry Corporation must provide an initial street address, which will serve as the principal place of business. This address cannot be a post office box and must be a physical location where the books and records of the California Professional Optometry Corporation will be maintained.

The initial street address of a California Professional Optometry Corporation will be made public on record with the California Secretary of State permanently, so using a home address or other address that might someday be inconvenient to have established in a readily available public record should be considered before designating any such personal address. While the ongoing physical address of a California Professional Optometry Corporation must be kept current to ensure compliance with California law and requirements for service of process and other legal notices, updating such address will not remove any address previously provided from public records.

The Initial Mailing Address of a California Professional Optometry Corporation

In addition to an initial street address, a California Professional Optometry Corporation may also provide an initial mailing address, which can be different from the street address and may be a post office box, if the address for mail is different than the physical address of the California Professional Optometry Corporation. This address may be a post office box and need not be a physical location provided the California Professional Optometry Corporation can receive official notices and correspondence at the address.

As with the initial street address, the initial mailing address of a California Professional Optometry Corporation will be made public on record with the California Secretary of State permanently, so using a home address or other address that might someday be inconvenient to have established in a readily available public record should be considered before designating any such personal address. While the ongoing mailing address of a California Professional Optometry Corporation must be kept current to ensure compliance with California law and requirements for service of process and other legal notices, updating such address will not remove any address previously provided from public records.

Registered Agent for Service of Process

Every California Professional Optometry Corporation is required to designate a Registered Agent for Service of Process. This agent is an individual or a corporation designated to receive any legal documentation, notices of lawsuits, and other official government correspondence on behalf of the California Professional Optometry Corporation.

An individual agent must reside in California and their address must be listed in the Articles of Incorporation. A corporate agent must be a Registered Corporate Agent for Service of Process and have a Registered Corporate Agent for Service of Process Certificate on file with the California Secretary of State on California Secretary of State Form 1505 and otherwise comply with the California laws and regulations for Registered Corporate Agents for Service of Process.

It is permissible for an individual to be the Registered Agent for Service of Process for their own California Professional Optometry Corporation, but the California Professional Optometry Corporation cannot act as its own Registered Agent for Service of Process. San Diego Corporate Law acts as the Registered Agent for Service of Process for California Professional Optometry Corporations it forms free of charge initially and without charge on an ongoing basis as long as the California Professional Optometry Corporation maintains at least a minor amount of annual business with San Diego Corporate Law (which ensures that we have current contact information if and when process is served for a California Professional Optometry Corporation at our offices).

The main advantage to using a Registered Corporate Agent for Service of Process such as San Diego Corporate Law is to ensure that legal matters are handled quietly and discreetly and not in front of the employees or patients of a California Professional Optometry Corporation.

Share Structure of the California Professional Optometry Corporation

When forming a California Professional Optometry Corporation, the share structure must be stated in the Articles of Incorporation. The California Professional Optometry Corporation must specify the total number of shares of stock it is authorized to issue and, if there are different classes of shares, this must also be delineated along with their respective rights, privileges, and restrictions.

Signing the Articles of Incorporation of a California Professional Optometry Corporation

Once the Articles of Incorporation have been thoughtfully drafted, the Articles of Incorporation for the California Professional Optometry Corporation should be signed. The Articles of Incorporation must be signed by an incorporator, who is the individual initiating the incorporation process. The incorporator can be one of the professionals who will be part of the California Professional Optometry Corporation or an agent acting on their behalf, such as an experienced corporate attorney or an employee of an online service.

The signature of the Articles of Incorporation represents a formal declaration that the information contained within is true and correct, and that the incorporator has the authority to establish the California Professional Optometry Corporation. This act of signing is a legally binding step that effectively brings the California Professional Optometry Corporation into existence once the Articles are filed with, and approved by a document examiner of, the California Secretary of State.

California Secretary of State Form ARTS-PC versus Attorney Drafted Articles of Incorporation for a California Professional Optometry Corporation from San Diego Corporate Law

When initiating the formation of a California Professional Optometry Corporation, prospective incorporators are often confronted with the choice between using the standard California Secretary of State Form ARTS-PC or opting for a set of Articles of Incorporation custom-drafted by an attorney. The choice between these two methods can have lasting implications on the flexibility, legal parameters, and ability of a California Professional Optometry Corporation to protect its shareholders, officers, and directors.

California Secretary of State Form ARTS-PC

The California Secretary of State Form ARTS-PC is a standardized form used by most online services (although we have seen instances of attorneys using these forms as well!) that serves as the template for creating the Articles of Incorporation for a California Professional Optometry Corporation. While this pre-drafted form ensures compliance with the basic registration requirements set forth above and will be accepted by the California Secretary of State to provide a quick and simple means to establish a California Professional Optometry Corporation, it is not tailored to address the specific legal and operational needs that may emerge for a California Professional Optometry Corporation.

Attorney Drafted Articles of Incorporation for a California Professional Optometry Corporation from San Diego Corporate Law

Attorney-drafted Articles of Incorporation for a California Professional Optometry Corporation are customized documents prepared by experienced corporate attorneys. These documents offer a key advantage as they are crafted to include specific provisions that cater to the unique nature of the California Professional Optometry Corporation and the specific profession. Notably, they address the restrictions on who may be a shareholder, ensuring that the California Professional Optometry Corporation is in alignment with California laws mandating that shareholders must be licensed optometrists or other specific persons permitted to be shareholders of a California Professional Optometry Corporation, all of whom must be licensed professionals.

Furthermore, attorney-drafted Articles of Incorporation typically contain indemnification clauses that offer protection to officers and directors of the California Professional Optometry Corporation. This indemnification means that in the event they are sued for actions taken while performing their duties, the California Professional Optometry Corporation can cover their legal costs or damages, provided their actions were in good faith and in the best interest of the California Professional Optometry Corporation. These indemnification provisions are not offered in the standard California Secretary of State Form ARTS-PC, thus more extensive coverage than those provided in the standard California Secretary of State Form ARTS-PC and can be customized to ensure directors and officers receive the maximum protection available under California law.

Additionally, the limits on liability for officers and directors can be specifically defined in attorney-drafted Articles of Incorporation, reinforcing the shield against personal liability of officers and directors and allowing the California Professional Optometry Corporation to indemnify the personal liability of an officer or director to the maximum extent permitted under California law. Such definitions are crucial in governing how and to what extent an officer or director may be held personally responsible for the debts and actions of the California Professional Optometry Corporation.

While the California Secretary of State Form ARTS-PC provides a foundation for incorporating a California Professional Optometry Corporation in compliance with the requirements of California law, attorney-drafted Articles of Incorporation provide a tailored, robust framework designed to offer enhanced protections and cater to the specific legal necessities of a California Professional Optometry Corporation to the maximum extent permissible under California law, which exceeds the protections provided for in California Secretary of State Form ARTS-PC.

Filing Articles of Incorporation with the California Secretary of State When Forming a California Professional Optometry Corporation

Filing the Articles of Incorporation is a crucial step in the formal establishment of a California Professional Optometry Corporation. It is at this juncture that the California Professional Optometry Corporation becomes legally recognized. There are various pathways for filing these essential documents, including by mail, online, or using the expedited 24-hour return service.

Filing Articles of Incorporation by Mail

To file the Articles of Incorporation for a California Professional Optometry Corporation by mail, the incorporator must prepare the requisite filing documents, ensure compliance with all specified requirements, and include the statutory filing fee. The Articles of Incorporation and other requisite filing documents, along with a check for the filing fee made payable to the California Secretary of State, should be mailed to the appropriate address provided by the office of the California Secretary of State. It is also wise, but not required, to include a self-addressed stamped envelope for the return of filed documents.

Filing Articles of Incorporation Online

When time is of the essence or convenience is a priority, filing Articles of Incorporation for a California Professional Optometry Corporation online through the online business filing portal of the California Secretary of State provides a streamlined alternative to filing by mail. Online submissions are typically processed more quickly than those sent by mail, making this a favorable option for those who wish to expedite the incorporation process for a California Professional Optometry Corporation.

This method involves creating an account with the California Secretary of State and paying the filing fee using an accepted payment method. However, the drawback to online filing of Articles of Incorporation (at least at the time of this writing in 2024) is that it requires the use of California Secretary of State Form ARTS-PC and inputting the required information into the form online. While the online filing option with the California Secretary of State previously allowed for attorney-drafted Articles of Incorporation to be uploaded, the current format of the online business filing portal has removed this capability without an answer as to when or if the capability would be returning.

For optometrists seeking the speed of online filing but wishing to still end up with attorney-drafted Articles of Incorporation for their California Professional Optometry Corporation, San Diego Corporate Law can establish a California Professional Optometry Corporation with California Secretary of State Form ARTS-PC filed online and submit fully Amended and Restated Articles of Incorporation after formation to provide the speed of online filing with the end result of attorney-drafted Articles of Incorporation.

Filing with 24-Hour Return Service

For those optometrists seeking the fastest possible processing, the California Secretary of State offers a 24-hour return service for the filing of Articles of Incorporation of a California Professional Optometry Corporation with an additional expedited filing fee. The Articles of Incorporation must be submitted online via the online business filing portal and a significant expedite fee must be paid to the California Secretary of State for the service. As with all online filings, California Secretary of State Form ARTS-PC must be used, but San Diego Corporate Law can submit fully Amended and Restated Articles of Incorporation after formation to provide the speed of 24-Hour filing with the end result of attorney-drafted Articles of Incorporation.

Step 2: Draft Corporate Bylaws Specific to the Profession of California Professional Optometry Corporations

Crafting corporate Bylaws that are pertinent to the profession of a California Professional Optometry Corporation is a crucial step that follows the filing of Articles of Incorporation with the California Secretary of State. These Bylaws function as the internal manual governing the operations of the California Professional Optometry Corporation and ensure that business practices align with professional standards and regulatory requirements.

Drafting Profession-Specific Bylaws for a California Professional Optometry Corporation

When drafting Bylaws for a California Professional Optometry Corporation, it is essential to take into account the unique aspects of the professional services offered and any applicable professional regulations. Here are some essential steps and considerations:

Consider Professional Conduct Standards for the California Professional Optometry Corporation

Professional standards of conduct and ethics should be integrated into the Bylaws of a California Professional Optometry Corporation to assure that all actions taken are within the legal scope of practice of optometry. This includes adherence to guidelines set forth by relevant licensing boards and professional associations, such as the California State Board of Optometry.

Define the Governing Structure for the California Professional Optometry Corporation

Clearly outline the governing structure of the California Professional Optometry Corporation, including the roles and responsibilities of officers and directors. Stipulate the process for selecting these individuals, their qualifications, and the circumstances under which they may be removed, ensuring these comply with professional practice standards of the California Professional Optometry Corporation.

Establish Voting Rights and Procedures for the California Professional Optometry Corporation

Detail voting rights and procedures for significant decisions affecting the California Professional Optometry Corporation, including amendments to Bylaws. Special attention should be given to ensure that voting rights and shares are restricted to licensed individuals as required by California law.

Include Conflict of Interest Policies for the California Professional Optometry Corporation

Incorporate policies to handle potential conflicts of interest that might impair decision-making or violate professional duties of officers and directors of a California Professional Optometry Corporation.

Address Shareholder Agreements for the California Professional Optometry Corporation

Since California Professional Optometry Corporations often have stringent rules about who can own shares, the Bylaws should delineate specifics about share transfers, buyback provisions, and what happens if a shareholder leaves the professional field or becomes disqualified while a shareholder of a California Professional Optometry Corporation.

Financial Management and Record-Keeping for the California Professional Optometry Corporation

Include procedures for financial decisions, accounting methods, fiscal year designation, and record-keeping requirements to maintain transparency and accountability for the California Professional Optometry Corporation.

Provide for Indemnification by the California Professional Optometry Corporation

As with the Articles of Incorporation, include indemnification clauses to protect directors and officers against personal liability, assuming compliance with their fiduciary duties as officers and directors of the California Professional Optometry Corporation.

Contingency for Professional Licensing Issues

Add provisions outlining the course of action should an optometrist shareholder, officer, or director lose their professional license, including the impact on their status within the California Professional Optometry Corporation.

Seek Assistance from a Corporate Attorney Experienced with California Professional Optometry Corporations

It is recommended that the Bylaws of a California Professional Optometry Corporation be drafted with experienced legal counsel fluent in both corporate and professional law specific to California. The Bylaws of a California Professional Optometry Corporation must be both comprehensive and flexible to accommodate the growth and the changing dynamics of the California Professional Optometry Corporation. Having meticulously drafted Bylaws not only ensures regulatory compliance, but also builds a foundation of operations that secures the integrity, reputation, and long-term success of the California Professional Optometry Corporation.

Step 3: Draft an Action of Incorporator and Minutes for an Initial Meeting of the Board of Directors

Once the Articles of Incorporation are approved by the California Secretary of State and the Bylaws are drafted, the incorporator has to transfer their powers to a Board of Directors and the Board of Directors needs to take control of the California Professional Optometry Corporation. This next step covers both!

Drafting and Executing an Action of Incorporator for a California Professional Optometry Corporation

The Action of Incorporator of a California Professional Optometry Corporation is a written declaration adopting the corporate bylaws, appointing the initial members of the Board of Directors, and provides for the formal transfer of authority from the incorporator to the Board of Directors of the California Professional Optometry Corporation. Essential components of this document include:

1. A statement confirming the successful incorporation of the California Professional Optometry Corporation through the filing of the Articles of Incorporation with the California Secretary of State.

2. The adoption of the previously drafted Bylaws tailored to the professional practice of the California Professional Optometry Corporation.

3. A list of the individuals who will serve as the initial members of the Board of Directors, including information pertinent to their roles within the California Professional Optometry Corporation, if required.

4. The relinquishment of the duties as incorporator of the California Professional Optometry Corporation with the necessary operative language that delegates all corporate powers henceforth to the elected Board of Directors.

The Action of Incorporator finalizes the establishment of the governing framework of the California Professional Optometry Corporation, thereby enabling the Board of Directors to commence their governance and oversight of the California Professional Optometry Corporation. The Action of Incorporator document must be signed and dated by the incorporator to be effective and serve as a part of the corporate records of the California Professional Optometry Corporation.

Holding an Initial Meeting of the Board of Directors of a California Professional Optometry Corporation

The initial meeting of the Board of Directors of a California Professional Optometry Corporation is a pivotal event where key decisions are made, and a course for the future of the California Professional Optometry Corporation is set. As such, it should be conducted with comprehensive attention to detail and in compliance with corporate formalities. Below are the vital components and proceedings that should take place and be recorded in the minutes to the initial meeting of the Board of Directors of the California Professional Optometry Corporation.

Waiver of Notice of Meeting

The first order of business is to ensure that all directors of the California Professional Optometry Corporation have been properly notified of the meeting. However, in cases where all directors agree to hold the meeting without formal notice, they may sign a waiver of notice. This waiver confirms that each director of the California Professional Optometry Corporation is aware of the meeting and consents to conduct the business at hand. It is a legal formality that provides evidence of the use of proper corporate procedures and should be filed with the corporate records of the California Professional Optometry Corporation.

Acknowledgment of Articles of Incorporation and Adoption of Bylaws

The Board of Directors presents a certified copy of the Articles of Incorporation of the California Professional Optometry Corporation for review, and although previously adopted by the incorporator, the Bylaws of the California Professional Optometry Corporation should be formally adopted by the Board of Directors. These actions are typically the first actions taken at the initial meeting of the Board of Directors of the California Professional Optometry Corporation.

Selection of Officers

The Board of Directors will elect corporate officers who will manage the day-to-day affairs of the California Professional Optometry Corporation. These typically include a President or Chief Executive Officer (CEO), Secretary, and Treasurer or Chief Financial Officer (CFO), among any other officers deemed necessary for the California Professional Optometry Corporation. Their roles, responsibilities, terms of service, and any compensation should be detailed and agreed upon, if possible.

Ratification of Actions of Incorporator

Although generally not necessary, any actions taken by the incorporator, such as the selection of initial directors or any other provisional decisions, may be ratified by the Board of Directors to confirm their validity and inclusion in the corporate record of the California Professional Optometry Corporation.

Authorization of Issuance of Stock

The Board of Directors should decide and approve the issuance of shares to the initial shareholders, in accordance with the Articles of Incorporation and Bylaws of the California Professional Optometry Corporation, and in compliance with all relevant laws and regulations, and the price per share to be paid for the shares to the California Professional Optometry Corporation.

Opening of a Corporate Bank Account

The authorization for officers to open a corporate bank account on behalf of the California Professional Corporation must be accomplished in order for the officers of the California Professional Optometry Corporation to have authority to establish such accounts. This may require a separate corporate resolution signed by the Board of Directors, depending upon the bank at which the account will be established, but this varies from financial institution to financial institution.

Fiscal Year Determination

The Board of Directors must establish the fiscal year of the California Professional Optometry Corporation for accounting and tax purposes. As most California Professional Optometry Corporations are taxed as S Corporations, the calendar year may serve as the fiscal year for the California Professional Optometry Corporation, which but this is usually advisable even if the California Professional Optometry Corporation will not elect S Corporation status.

Creation of Formal Meeting Minutes

A designated secretary or officer of the California Professional Optometry Corporation should carefully document the proceedings of the meeting, recording decisions made and actions approved and condensing these notes into a form of formal minutes. These minutes must be comprehensive and serve as a legal record of the Initial Meeting of the Board of Directors for the California Professional Optometry Corporation. Once concluded, the minutes should be reviewed for accuracy, approved by the Board of Directors, and then added to the corporate records of the California Professional Optometry Corporation.

Step 4: Issue Shares of Stock to Shareholders of the Professional Optometry Corporation in California

Issuing shares of stock to shareholders is a fundamental process in establishing the ownership structure of a Professional Optometry Corporation in California. This step signifies the exchange of capital for ownership rights within the California Professional Optometry Corporation, granting shareholders a stake in the success of the professional practice. The issuance must align with regulations set forth in the Articles of Incorporation and Bylaws, and be conducted with strict adherence to federal and California securities laws to ensure legality and legitimacy.

How to Issue Shares in a California Professional Optometry Corporation

To issue shares in a California Professional Optometry Corporation effectively, the California Professional Optometry Corporation must follow a series of legal and procedural steps to ensure compliance with all applicable laws and regulations.

Determine Share Allocation

The Board of Directors must determine the number of shares authorized for issuance as specified in the Articles of Incorporation of the California Professional Optometry Corporation. They must decide on the number of shares to be distributed to each shareholder, and the types of shares (such as common or preferred).

Set Share Value

The Board of Directors must also establish the price of each share based on the financial needs of the California Professional Optometry Corporation. This may require consulting with financial experts to set the fair market value of any non-cash contributions that will be made to the California Professional Optometry Corporation by the shareholders.

Prepare Share Certificates

Prepare and issue share certificates to the shareholders of the California Professional Optometry Corporation. These certificates should include key details about the issuance like the professional corporation’s name, shareholder’s name, the number and type of shares issued, and any pertinent restrictions on the shares of stock of the California Professional Optometry Corporation.

Execute a Shareholders’ Agreement

If applicable, have all shareholders enter into a shareholders’ agreement, often called a Buy-Sell Agreement. This document outlines the rights and obligations of the shareholders and provisions for the transfer of shares.

Adopt a Corporate Resolution

The Board of Directors of the California Professional Optometry Corporation must adopt a corporate resolution that authorizes the issuance of shares. This resolution should be recorded in the minutes of the meeting where the decision was made.

Ensure Securities Law Compliance

Ensure adherence to relevant federal and California securities laws. If necessary, file appropriate exemptions or registrations with the Securities and Exchange Commission (SEC) and the California Department of Financial Protection and Innovation.

Record in the Stock Ledger

Provide an updated stock ledger for the California Professional Optometry Corporation to reflect the new issuance of shares. The ledger should record the names of all shareholders, the number of shares issued, the issuance date, and any transfers of shares of stock of the California Professional Optometry Corporation.

Completing these steps in accordance with the law is crucial for the legitimacy and legal function of the corporation. It is advisable to consult with a corporate attorney to navigate the complexities of securities law and to ensure all corporate actions are valid and binding.

Federal Securities Exemptions from Registration

Federal securities laws require the registration of securities offerings unless an exemption applies. For a California Professional Optometry Corporation, using an exemption can streamline the share issuance process. Under Regulation D of the Securities Act, Rule 504 and Rule 506 are common exemptions for small businesses and private companies.

Section 4(2) of the Securities Act

The most widely used exemption from registration for original issuances of shares of stock to the founders of a California Professional Optometry Corporation is provided by Section 4(2) of the Securities Act. This section exempts transactions by an issuer not involving any public offering. The California Professional Optometry Corporation and shareholders must meet specific criteria to qualify.

Rule 504 of Regulation D

Rule 504 of Regulation D allows certain issuers, including California Professional Optometry Corporations, to offer and sell up to $5,000,000 of securities in a 12-month period without registering with the SEC. This exemption is attractive for California Professional Optometry Corporations when Section 4(2) of the Securities Act cannot be relied upon.

Rule 506 of Regulation D

Rule 506 is a safe harbor for the private offering exemption of securities. Rule 506(b) allows California Professional Optometry Corporations to raise an unlimited amount of money provided they meet certain non-general solicitation criteria and sell only to accredited investors and a limited number of sophisticated non-accredited investors. Rule 506(c) permits general solicitation or advertising to market securities, but sales must be restricted to accredited investors only.

California Securities Exemptions from Qualification

California Professional Optometry Corporations should also be aware of state-level compliance, often referred to as “blue sky” laws, which may impose additional requirements even when a federal exemption is utilized. It is highly recommended to engage experienced legal counsel to ensure proper adherence to both federal and state securities laws when using exemptions for the issuance of stock.

California Corporations Code Section 25102(f)

For California Professional Optometry Corporations, the most common exemption from qualification (the California term for registration) when issuing shares is California Corporations Code Section 25102(f). This California exemption allows the issuance of shares of stock to a limited number of persons (35 or fewer) in California, provided that all of the purchasers have a pre-existing relationship with the California Professional Optometry Corporation or its shareholders and are buying for investment purposes without the intention of resale.

Other State Securities Exemptions from Registration

If the California Professional Optometry Corporation is planning to issue shares of stock to professionals who reside outside of California, it may need to satisfy securities laws in those states as well. It is essential to consult with a corporate attorney familiar with the securities laws where the issuance will take place. Each state has unique requirements for exemptions from registration.

Step 5: Draft and File Federal Tax Documents with the Internal Revenue Service

After completing the necessary steps for share issuance, it is crucial to ensure proper taxation of the California Professional Optometry Corporation and its shareholders. Every California Professional Optometry Corporation will need to obtain an Employer Identification Number (EIN) from the Internal Revenue Service and most California Professional Optometry Corporations should elect to be taxed as S Corporations to avoid being a California Professional Optometry Corporation taxed as a personal service corporation (a C Corporation status for California Professional Optometry Corporations subjecting income to double taxation, traditionally at a high flat tax rate).

Obtaining an Employer Identification Number (EIN)

Before a California Professional Corporation can legally operate, it must obtain an EIN from the Internal Revenue Service. An EIN, also known as a Federal Tax Identification Number, is required for a California Professional Optometry Corporation to pay federal taxes, hire employees, open a business bank account, and conduct other vital business operations. The process of applying for an EIN is straightforward and can be done online through the Internal Revenue Service website or by mail or fax using Internal Revenue Service Form SS-4.

Electing S Corporation Status

For California Professional Optometry Corporations looking to benefit from pass-through taxation (as opposed to double taxation, traditionally at a high flat-tax rate), making an election to be treated as an S Corporation is necessary and advisable. This is accomplished by filing IRS Form 2553, Election by a Small Business Corporation, no more than two months and 15 days after the beginning of the tax year the election is to take effect. The election changes how the California Professional Optometry Corporation is taxed at the federal level, allowing it to pass income directly to shareholders and avoid the double taxation typically associated with C Corporations and the traditionally high flat-tax rate for personal service corporations (the Internal Revenue Code description of a professional corporation). It is crucial to meet the IRS requirements for S Corporation status, including limitations on the number and type of shareholders, which should be considered in tandem with state-specific requirements.

Step 6: Draft and File a Statement of Information with the California Secretary of State

All California Professional Optometry Corporations must file a Statement of Information (Form SI-200) with the California Secretary of State within 90 days of registering with the California Secretary of State and every year thereafter. This statement provides essential information about the California Professional Optometry Corporation, including its officers, directors, and registered agent. Failure to file a Statement of Information may result in late fees or even suspension of the California Professional Optometry Corporation’s status. The filing fee for this form is $25 at the time of this writing in 2024.

Step 7: Draft and File FinCEN Beneficial Ownership Information Report

Commencing January 1, 2024, all business entities, including California Professional Optometry Corporations, are required to report information about their beneficial owners to the Financial Crimes Enforcement Network (FinCEN). Beneficial owners are individuals who own 25% or more of the California Professional Optometry Corporation’s equity interest, serve as officers or directors, or otherwise exert control over the California Professional Optometry Corporation. The purpose of this reporting is to prevent money laundering and other illegal activities.

Failure to comply with this requirement may result in civil penalties of $500 per day of non-compliance and/or criminal penalties of up to $10,000 and/or two (2) years imprisonment.

The California Professional Optometry Corporations should consult with a corporate attorney to ensure proper reporting of beneficial owners and compliance with FinCEN requirements.