Professional Corporation in California

Professional Corporations (PCs) allow certain kinds of professionals such as doctors, lawyers, accountants, or engineers to do business as a Professional Corporation.

Single Profession Only Requirement

PCs are different from other corporations because all shareholders must be members of the same profession and provide the same service.

A professional service is one that requires a license issued by a California state regulatory licensing board, state court, or similar agency. To provide services, all California Professional Corporations must have a currently effective Certificate of Registration issued by the governmental agency regulating their profession.

Benefits of a Professional Corporation

While there is some limitation on liability surrounding the actions of each partner, the professionals in the firm are generally responsible for their own professional negligence or malpractice. And this is the main reason professionals form this type of corporation. They can enjoy sharing management responsibilities and profits without exposing themselves to malpractice actions against the other owners. Depending on state law, Limited Liability Partnerships (LLPs) may offer the same benefit and may even be more desirable.

Shareholder Requirements

Professional corporations must comply with applicable rules in the California Business and Professions Code. These rules vary by profession. However, they all require that only licensed persons can be shareholders of a Professional Corporation. Check for any other applicable rules for your profession in the California Business and Professions Code.

Name Requirements

The name corporation must comply with rules governing the profession and any name requirements issued by its licensing agency.

Corporate Director Requirements

Officers and Directors of Professional Corporations generally hold a license to perform the professional activity that the corporation engages in. And, unless it has fewer than three shareholders, California PCs must have at least three Directors on their board. If you have only one shareholder, that shareholder can be the Director, President and Treasurer of the corporation. The other officers of the corporation in that situation need not be licensed professionals. A Professional Corporation that has only two shareholders can have those two shareholders also appointed as the only two Directors. Those two shareholders between them can fill the offices of President, Vice President, Secretary, and Treasurer of the corporation.

JV LAW GROUP can set up a Professional Corporation for you, including a consultation on Operating Agreements, Bylaws and other legal documents. For more information, contact JV LAW GROUP today at 714-752-3270 or send us an email info@jvlawgroup.com.