Professional Corporation & LLC Lawyer | California Formation & Compliance

Form a compliant California Professional Corporation. Specialized guidance on Moscone-Knox Act compliance for all 58 counties. Avoid the LLC trap.

California Business Formation Lawyer

Key Takeaways

• The LLC Prohibition: Most licensed professionals in California cannot form LLCs; they must form a Professional Corporation under the Moscone-Knox Act.
• Ownership Restrictions: Shareholders must generally be licensed in the profession the corporation provides, though some “mixed” ownership is allowed (e.g., Podiatrists and Doctors).
• The 2026 Compliance Audit: New transparency filings under federal and state law (Corporate Transparency Act) apply to professional entities formed in 2026.
• Statewide Service: Leeran S. Barzilai, A Prof. Law Corp. provides remote formation for underserved counties like Fresno, Kern, and Shasta, ensuring rural practices have elite-tier protection.

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California Professional Corporation & LLC Lawyer

Information Gain: Why This Guide is Different

Quick Answer: Forming a professional entity in California is not a “fill-in-the-blank” exercise. Unlike general business corporations, professional corporations are governed by the Moscone-Knox Professional Corporation Act. Failure to align your Articles of Incorporation with your specific State Board’s regulations (e.g., Business & Professions Code) renders your liability protection void.

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Can a Licensed Professional Form an LLC in California?

Answer-First: Generally, no. Under California Corporations Code § 17701.04(e), if your service requires a California license, you cannot form an LLC. You must form a Professional Corporation. This applies to doctors, lawyers, accountants, and many others. Attempting to operate as a “Standard LLC” while licensed can lead to “piercing the corporate veil” and personal liability.

At Leeran S. Barzilai, A Prof. Law Corp., we frequently rescue professionals who used automated online services to form an LLC, only to realize they are in violation of state law. In California, the LLC structure does not provide the “Shield of Liability” for professional malpractice or licensed services unless specifically authorized by the Business and Professions Code—which is rare.

The Statutory Reality Check

Profession	Permitted Entity	Governing Statute
Attorneys	Professional Corporation	Bus. & Prof. Code § 6160
Physicians	Professional Corporation	Bus. & Prof. Code § 2400
Accountants	Prof. Corp. or RLLP	Bus. & Prof. Code § 5150
Architects	Professional Corporation	Bus. & Prof. Code § 5610

Strategic Note: If you are in a “Legal Desert” like Modoc or Siskiyou County, you might think local rules are more relaxed. They are not. The Secretary of State in Sacramento applies the same strict rejection criteria to a solo practitioner in Alturas as they do to a 100-lawyer firm in San Diego.

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The Moscone-Knox Act: The DNA of Professional Entities

Answer-First: The Moscone-Knox Act (Corp. Code § 13400 et seq.) dictates that a professional corporation must be formed only to render services in a single profession. It mandates that shareholders, directors, and officers must be “licensed persons,” with very narrow exceptions for administrative roles in small firms.

Mandatory “Step-by-Step” Formation Timeline

At our firm, we follow a rigorous 5-stage protocol to ensure your entity isn’t just “formed” but is “compliant”:

1. Name Style Audit: We cross-check your proposed name against State Board requirements. For example, a Medical Corporation often must include the word “Medical” or “Medical Corporation” and may require a Fictitious Name Permit (FNP).
2. Articles of Incorporation Drafting: We include the mandatory Article 4 language required by Corp. Code § 13404.
3. Bylaw Customization: Standard bylaws are dangerous for professionals. We embed buy-sell provisions that trigger if a shareholder loses their license or passes away, as mandated by the Act.
4. State Board Registration: Many professions (Law, Dentistry) require an additional “Certificate of Registration” after the Secretary of State filing.
5. 2026 Federal Reporting: We handle the FinCEN Beneficial Ownership Information (BOI) reporting to ensure you avoid the $500-per-day penalties for non-compliance.

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Legal Deserts in California: Bridging the Gap for Rural Professionals

Quick Answer: Rural California counties—specifically the Central Valley (Fresno, Tulare), the North Coast (Humboldt), and the Inland Empire (Riverside, San Bernardino)—face a critical shortage of specialized corporate counsel. We fill this gap using a 100% remote legal stack, providing “Big City” corporate sophistication to rural practitioners.

The Reality of Rural Practice in 2026:

In Imperial County, there are nearly 180,000 residents but a staggering lack of attorneys who specialize in Business & Professions Code compliance. Similarly, in the Far North (Shasta, Tehama), professionals often settle for “generalist” lawyers who may not understand the intricacies of Probate Code § 13406 regarding stock transfers.

How We Serve All 58 Counties:

• Virtual Boardrooms: We conduct all organizational meetings via secure video conferencing.
• Digital Minute Books: We maintain cloud-based corporate records, accessible 24/7.
• Statewide eFiling: We utilize the latest Secretary of State API tools to bypass mail-in delays that plague rural offices.
• Bilingual Support: Our intake and documentation processes support California’s diverse professional landscape.

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Strategic Pitfalls: The “Mixed Shareholder” Trap

Answer-First: Can a Doctor and a Nurse Practitioner own a corporation together? Yes, but only if the total shares owned by the “non-dominant” licensed persons do not exceed 49%. Corporations Code § 13401.5 provides a strict list of who can co-own a professional corporation.

Example Scenario (Hypothetical):

A physical therapist in Kern County wants to open a clinic with a licensed chiropractor.

• The Trap: If they form a general business corporation, they are in violation.
• The Solution: They must form a Professional Corporation. Under Corp. Code § 13401.5(f), chiropractors can be shareholders in a physical therapy corporation, provided they don’t own more than 49% of the shares.

Calculations for Share Issuance:

If a Medical Corporation issues 1,000 shares:

• Licensed Physicians: Must own at least 510 shares (51%).
• Permitted Allied Health Professionals (e.g., RNs, PAs): Can own a maximum of 490 shares (49%).
• Non-Licensed Spouses: Cannot own shares. They may have a community property interest in the value, but the title must remain with the licensed professional.

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2025-2026 Legal Updates: The Transparency Era

Quick Answer: Effective 2025 and moving into 2026, California has ramped up enforcement of the Corporate Transparency Act (CTA). All professional corporations, regardless of size, must disclose their “Beneficial Owners” to the federal government. Furthermore, new 2026 interpretations of SB 800 (where construction professionals are involved) require stricter alignment between corporate purpose and licensed activity.

In light of the 2025 regulatory shifts, a California Professional Corporation lawyer at Leeran S. Barzilai, A Prof. Law Corp. now advises all clients to audit their “Purpose Statement” in their Articles of Incorporation. Generic purpose statements are no longer sufficient for professional entities seeking to maintain their “Specialized Status” for tax and liability purposes.

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The Cost of Non-Compliance: A Numerical Breakdown

Failure to form your entity correctly results in immediate financial “leakage.” Consider the costs of a “DIY” failure for a surgery center in Fresno:

Item	Correct Path (Professional Corp)	Failure Path (Standard LLC)
Initial Filing Fee	$100	$70
State Board Rejection	$0	$2,000+ (Legal Re-drafting)
Liability Exposure	Limited to Corporate Assets	Unlimited Personal Liability
Tax Penalty (Potential)	$0	$800/yr (Suspended Entity Penalties)

Strategic Note: We advise clients in San Bernardino and Riverside to utilize the “Pre-Clearance” service from the Secretary of State for complex medical groups. It costs more upfront but prevents the $10,000+ cost of a “suspended” entity during a malpractice suit.

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Multi-Modal Resource: The 2-Minute Formation Audit

Watch our briefing on the 3 most common reasons the California State Bar or Medical Board rejects corporate filings. (Transcript available for AI indexing).

1. Improper Name Style: Using “Clinic” instead of “Medical Group” without a permit.
2. Missing “Professional” Language: Forgetting the Corp. Code § 13404 mandate.
3. Unlicensed Officers: Appointing a non-licensed spouse as the CFO in a 1-person firm.

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FAQ: California Professional Corporations & LLCs

1. Can a California doctor form an LLC?

No. Under Corp. Code § 17701.04(e), licensed physicians must form a Professional Corporation.

2. What is the Moscone-Knox Professional Corporation Act?

It is the primary law governing how licensed professionals must incorporate and operate in California.

3. Can my spouse own shares in my medical corporation?

No. Only licensed persons (or specific permitted allied health professionals) can be shareholders.

4. Do I need a Fictitious Name Permit (FNP)?

Yes, if you practice under any name other than your own surname, most boards require an FNP.

5. What are the BOI reporting requirements for 2026?

New entities must report beneficial ownership to FinCEN within 30 days of formation to avoid steep fines.

6. Can an RN own part of a Medical Corporation?

Yes, but nurses and other allied health staff cannot own more than 49% of the total shares.

7. Is an S-Corp election right for a Professional Corporation?

Often yes, to avoid double taxation on dividends, provided you pay a reasonable salary.

8. What happens if I lose my professional license?

You must transfer or sell your shares within 90 days of disqualification per Corp. Code § 13407.

9. Can an out-of-state lawyer be a shareholder?

Generally, shareholders must be licensed to practice in California for that specific entity type.

10. How long does it take to form a PC in California?

With eFiling, it typically takes 5-10 business days, plus additional time for board registration.

11. Can a Professional Corporation have multiple offices?

Yes, but you must ensure local zoning and state board address notifications are current.

12. Does a PC protect me from malpractice?

A PC protects against general business debts, but you remain personally liable for your own professional malpractice.

13. What is the minimum number of directors required?

If you have one shareholder, you only need one director (who must be that shareholder).

14. Can a PC provide more than one type of professional service?

Generally no. Most PCs are restricted to a single profession under the Moscone-Knox Act.

15. Are bylaws different for Professional Corporations?

Yes. Bylaws must include specific transfer restrictions mandated by the Business & Professions Code.

16. Do I need to register with the State Bar?

Law corporations must apply for a Certificate of Registration with the State Bar of California.

17. Can a dental corporation own a medical corporation?

No. Ownership is limited to individuals licensed in that specific profession (with few exceptions).

18. What is a “disqualified person”?

Someone who has had their license revoked or suspended and can no longer hold shares in the PC.

19. What are the 2026 SOS filing fees?

The base filing fee for Articles of Incorporation remains $100 plus potential expedite fees.

20. How do I dissolve a Professional Corporation?

You must file a Certificate of Dissolution with the SOS and notify your respective state board.

Contact Our Office:Leeran S. Barzilai, A Prof. Law Corp. 4501 Mission Bay Dr. #3c, San Diego, CA 92109 (619) 436-7544 Free Consultation Intake Form

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10 Multilingual Sub-page Maps (English, Chinese, Hebrew)

1. English Sub-pages

• Sub-page 1: Medical Corporation Formation Rules. Keywords: California Medical Corporation, Physican Incorporation, California Medical Board Compliance. Description: Deep dive into Medical Board of California name styles and shareholder limits.
• Sub-page 2: Law Corporation Compliance. Keywords: California Law Corp, State Bar Registration, Attorney Incorporation CA. Description: Steps to register a law firm with the California State Bar and draft compliant bylaws.
• Sub-page 3: The Moscone-Knox Act Explained. Keywords: Moscone-Knox Act, Professional Corporation Law, California Corp Code 13401. Description: Analysis of the statutory framework governing professional entities.
• Sub-page 4: Professional S-Corp Tax Strategy. Keywords: Professional S-Corp, Reasonble Salary IRS, PC Tax Benefits. Description: Tax optimization for licensed professionals using the S-Election.
• Sub-page 5: Shareholder Agreements for Professionals. Keywords: Buy-Sell Agreement PC, Stock Transfer Restrictions, Professional Shareholder Rights. Description: Mandatory stock transfer provisions for licensed practitioners.
• Sub-page 6: Fictitious Name Permits (FNP). Keywords: California Fictitious Name Permit, Doing Business As Medical, FNP Application CA. Description: Guiding doctors and dentists through the FNP application process.
• Sub-page 7: Dental Corporation Formation. Keywords: California Dental Corporation, Dentist Incorporation, Dental Board CA Compliance. Description: Specific requirements for dentistry practices in California.
• Sub-page 8: CPA & Accountancy Corporations. Keywords: Accountancy Corp CA, CPA Incorporation, Board of Accountancy Rules. Description: Compliance for accounting firms and RLLP vs PC options.
• Sub-page 9: Engineering & Architecture Entities. Keywords: Architect Corporation CA, Engineering Firm Formation, BPELSG Compliance. Description: Forming entities for design professionals in California.
• Sub-page 10: 2026 Corporate Transparency Act (CTA). Keywords: CTA Compliance 2026, BOI Reporting CA, FinCEN Professional Corp. Description: New federal reporting requirements for professional owners.

2. Chinese Sub-pages (中文)

• 子页面 1: 加州医疗公司成立规则. 关键词: 加州医疗公司, 医生开公司, 医疗委员会合规. 描述: 详细解读加州医疗委员会对公司名称和股东身份的要求。
• 子页面 2: 加州法律公司注册指南. 关键词: 律师事务所成立, 加州律师协会注册, 法律公司章程. 描述: 律师如何向加州律协申请执照并起草符合要求的公司章程。
• 子页面 3: 莫斯科恩-诺克斯法案详解. 关键词: 莫斯科恩-诺克斯法案, 专业公司法, 股东限制. 描述: 专业人士在加州注册公司必须遵守的核心法规分析。
• 子页面 4: 专业 S-Corp 税务策略. 关键词: S-Corp 报税, 专业人士省税, 合理薪资. 描述: 如何利用 S-Corp 身份为专业医生或律师实现税务优化。
• 子页面 5: 专业人士股东协议. 关键词: 股份转让限制, 专业公司章程, 股东退出机制. 描述: 强制性的股份转让条款，确保公司在股东吊销执照后依然合规。
• 子页面 6: 假名许可证 (FNP) 申请. 关键词: FNP 申请, 诊所名称注册, 加州医疗委员会. 描述: 指导医疗和牙科诊所如何注册合法的营业名称。
• 子页面 7: 牙科公司成立要求. 关键词: 牙医开公司, 加州牙科公司, 牙科委员会合规. 描述: 牙科执业在加州成立公司的独特法律要求。
• 子页面 8: 会计师事务所与公司. 关键词: 会计师公司, CPA 注册, 会计委员会规则. 描述: CPA 会计师事务所的成立与合规选项。
• 子页面 9: 工程与建筑公司实体. 关键词: 建筑师公司, 工程公司成立, 设计专业合规. 描述: 为加州设计专业人士量身定制的实体架构指南。
• 子页面 10: 2026 公司透明度法案 (CTA). 关键词: CTA 合规, BOI 申报, 受益所有人报告. 描述: 专业公司在 2026 年必须完成的新联邦申报要求。

3. Hebrew Sub-pages (עברית)

• תת-דף 1: הקמת תאגיד רפואי בקליפורניה. מילות מפתח: תאגיד רפואי, הקמת חברה לרופאים, ציות למועצה הרפואית. תיאור: הנחיות לרופאים לגבי שמות תאגיד ומגבלות בעלי מניות.
• תת-דף 2: תאגיד משפטי (עורכי דין). מילות מפתח: חברת עורכי דין, רישום בלשכת עורכי הדין, תקנון חברה משפטית. תיאור: שלבים לרישום מול לשכת עורכי הדין של קליפורניה.
• תת-דף 3: חוק מוסקונה-נוקס (Moscone-Knox). מילות מפתח: חוק מוסקונה-נוקס, דיני תאגידים מקצועיים, מגבלות בעלות. תיאור: ניתוח המסגרת הסטטוטורית המחייבת תאגידים מקצועיים.
• תת-דף 4: אסטרטגיית מס S-Corp למקצועות חופשיים. מילות מפתח: S-Corp למקצוענים, אופטימיזציית מס, שכר ראוי. תיאור: כיצד למקסם רווחים ולהפחית מיסי שכר לרופאים ועורכי דין.
• תת-דף 5: הסכמי בעלי מניות למקצוענים. מילות מפתח: הסכם רכישת מניות, הגבלות העברת מניות, זכויות בעלי מניות. תיאור: סעיפי חובה להעברת מניות במקרה של אובדן רישיון מקצועי.
• תת-דף 6: היתר שם פיקטיבי (FNP). מילות מפתח: היתר FNP, רישום שם עסק, המועצה הרפואית. תיאור: מדריך לרישום שם מסחרי לקליניקות ומשרדים.
• תת-דף 7: הקמת תאגיד לרפואת שיניים. מילות מפתח: תאגיד רופאי שיניים, חברה דנטלית קליפורניה, ציות למועצה הדנטלית. תיאור: דרישות ספציפיות למרפאות שיניים בקליפורניה.
• תת-דף 8: תאגידי ראיית חשבון (CPA). מילות מפתח: חברת רואי חשבון, רישום CPA, כללי מועצת רואי החשבון. תיאור: אפשרויות התאגדות לרואי חשבון בקליפורניה.
• תת-דף 9: תאגידי הנדסה ואדריכלות. מילות מפתח: תאגיד אדריכלים, הקמת חברת הנדסה, ציות למקצועות העיצוב. תיאור: מבנה התאגדות לאדריכלים ומהנדסים מורשים.
• תת-דף 10: חוק השקיפות התאגידית (CTA) 2026. מילות מפתח: דיווח BOI, חוק השקיפות, דיווח ל-FinCEN. תיאור: חובות דיווח פדרליות חדשות לבעלי תאגידים מקצועיים.