Author: Alissa Gutierrez

CA Assembly Bill 890 – What it Means to Nurses and Questions that Remain

Nursing is one of the most important occupations in our region. According to data from the California Board of Registered Nursing, there are nearly 500,000 actively registered nurses (RNs) in the state. In September of 2020, Governor Gavin Newsom signed a law—California Assembly Bill 890—which has important implications for Nurse Practitioners and their employers. Here, our Bay Area business attorney for nurses explains the key things that you need to know about AB 890. 

An Overview of California Assembly Bill 890 (AB 890)

AB 890 is a California state law that is designed to grant Nurse Practitioners additional autonomy to provide services to patients. The law creates two new categories of nursing professionals:

  1. 103 NP (Cal. Bus. & Prof. Code § 2837.103): A Nurse Practitioner who can work in a group setting with at least one physician present.
  2. 104 NP (Cal. Bus. & Prof. Code § 2837.104): A Nurse Practitioner who can work independently in certain circumstances. 

In other words, Bill AB 890 gives Nurse Practitioners in California who meet pre-established professional requirements more authority to practice independently.

Bill AB 890 Imposes Peer Review Reporting Requirements on Many Nurses

Beyond granting additional autonomy to qualified Nurse Practitioners, AB 890 includes a provision that requires these professionals to adhere to the peer review reporting requirements outlined in Section 805 of California law. The bill amends the definition of the statutory term “licentiate” to include nurses. In effect, this means that some mandatory reporting requirements are triggered when a nurse faces professional disciplinary action.

Many Nurses Have Questions About AB 890—Our Legal Team Can Help

If you are a nurse who has questions about the implications of CA Assembly Bill 890, you are certainly not alone. It is a complex piece of legislation. Despite being signed into law more than two years ago, many questions surrounding its interpretation remain, because AB 890 only took full effect on January 1st, 2023. Our law firm provides legal guidance to nurses. Some common questions that you may have include:

  • What types of training are required for Nurse Practitioners to gain additional autonomy to practice independently under AB 890?
  • What additional types of practice are available to Nurse Practitioners since AB 890 has taken effect?
  • How can Nurse Practitioners who have opened their own practice take advantage of new opportunities to provide care while ensuring full AB 890 compliance?
  • What are some business strategies that NP 104 entrepreneurs can implement to develop and grow their professional practice in the new regulatory environment?
  • How can Nurse Practitioners in California effectively start the business?

Contact Our California Business Lawyer for Nurses Attorney Today

Lynnette Ariathurai is an experienced business law attorney for nurses, doctors, and other medical professionals. If you have any specific questions or concerns about CA Assembly Bill 890, please do not hesitate to contact us. We provide legal services throughout the Bay Area.

California nursing categories, Nursing practitioners, registered nurses

Forming a Professional Nursing Corporation in CA

Nursing is one of the most important occupations and the workplace environment is changing rapidly. According to data from the California Board of Registered Nursing, there are more than 487,000 active registered nurses (RNs) in the state. If you are considering starting a nursing company in California, it is crucial that your business has the right legal structure. A nursing corporation is a specialized type of business entity designed for firms offering services within the nursing profession. Here, our Fremont business formation lawyer highlights the key things to know about professional nursing corporations in California.

Know the Law: Professional Nursing Corporations in California

In California, a professional corporation (PC) is a specialized type of legal entity through which certain licensed professionals can conduct their business operations. Under California law (Cal. Corporation Code § 13401(b)), PCs are required to register with the state agency that is responsible for regulating the specific profession in question. A professional nursing corporation is required to register with the Board of Registered Nursing. Notably, not just anyone can form a professional nursing corporation in California. There are strict ownership requirements. At least 51 percent of the corporation must be owned by registered nurses in California. The remaining 49 percent can be owned by other specific licensed professionals in the health care field.

What are the Benefits of Forming a Nursing Corporation? 

A PC is generally the most efficient and effective way to operate a nursing business in California. Some key advantages of operating a nursing services business as a professional nursing corporation include:
  • Tax savings—a professional corporation can reduce a nurse’s self-employment taxes
  • Liability protection—PCs are designed to provide additional legal liability protection 

Important Considerations When Forming a Professional Nursing Corporation

Are you a registered nurse who is considering forming a business in California? It is imperative that your business is set up properly. Mistakes could cause you serious problems. Here are some of the most important considerations when setting up a professional nursing corporation in California.
  • Name: You need to select a name for your professional nursing practice. California law requires you to include the term “nursing” or “registered nursing” in the official name.
  • Tax implications: Taxes matter. In California, a professional nursing corporation can be taxed as a standard corporation (C Corporation), or it can be taxed as a pass-through business entity (S Corporation).
  • Ownership structure: The ownership structure of your professional nursing corporation must be set up properly. Make sure you have the right documents in place. You must file articles of incorporation with the state. You can also benefit from a comprehensive bylaws. There are several other documents needed to be a professional nursing corporation.
Forming a new business is complicated—especially when you are in a highly regulated industry such as health care. You do not have to have to navigate the business formation process alone. An experienced California business formation lawyer for nurses can help.

Call Our California Business Formation Attorney Today

Lynnette Ariathurai is a business formation lawyer with the skills, knowledge, and legal expertise to help you form a professional nursing corporation in CA. If you have any questions about your rights, responsibilities, or options, please do not hesitate to contact us for a confidential consultation. From our offices in Fremont, near Newark, we serve clients in Hayward, East Bay, Milpitas, Union City, San Leandro, Gilroy, San Jose, Santa Clara, and throughout the entire Bay Area.

Can a Business Steal Your Employee?

Employers invest a tremendous amount of time, money, and other resources into recruiting and training their employees. A competitor targeting your qualified employees could cause harm to your business. This raises an important question: Can another business poach your employees? In California, the answer is “it depends”—poaching employees is generally lawful, but there are limits on what another employer can do. In this article, our Fremont business lawyer highlights the key things to know about another company’s ability to steal your employees in California.

Background: California is an At-Will Employment State

As a starting point, it is important to emphasize that California is an at-will employment jurisdiction. The National Conference of State Legislatures (NCSL) explains that at-will employment is a doctrine whereby either—employer or employee—has the right to end the relationship at any time and for any reason, except for an illegal reason. In other words, in the absence of an employment contract, an individual employee is free to leave your company.

Employee Non-Compete Agreements are Unenforceable in California

Some states allow employees to get their employees to sign non-compete agreements that, at least temporarily, prevent them from working for a direct competitor. Employee non-compete agreements are not enforceable in California. However, non-solicitation agreements may be upheld.

Businesses in California Have Rights and Options for Protecting their Interests

Simply put, California law protects an employee’s right to leave their employer for a competitor. It also protects the right of a business to try to recruit qualified employees—including those actively employed at competing businesses. Poaching of employees is generally lawful in California. However, there are some limitations that prevent competitors from “stealing” your employees. Here are some of the key things that employers in California should understand about their rights and options for keeping competing businesses from poaching their employees:

  • Employees Owe a Basic Duty of Loyalty: A worker who is actively employed at your company owes it a basic duty of loyalty. An employee could announce that they are leaving to join a competing company, but they generally cannot actively solicit their co-workers to join them while still in your employ.
  • Employment Agreements May Offer Protection: One strategy that businesses can use to protect their staff from poaching is an employment agreement. An employee who signs a valid and well-tailored employment agreement could face a breach of contract claim if they do not abide by the terms—such as if they leave for a competitor before the contract ends. Though, it is important to emphasize that non-compete clauses cannot be included in an employment agreement in California.  However, the competitor may be liable for interfering with that employment contract.
  • California Law Prohibits “Workforce Raids”: While general “poaching” of employees is not barred in California, there are some restrictions on “raids.” In effect, the law prohibits competitors from using bad faith practices to intentionally solicit a large number of your employees to damage your business. If your employees are “raided” by a competitor, you could have a tortious interference claim under California law. Generally, an employment contract is required to successfully pursue this type of claim.

How Businesses Can Protect Confidential Information When Employees Leave 

While businesses in California have limited options to prevent their employees from leaving to take a position at a competing company, employers do have options for protecting their confidential information. A properly drafted and well-tailored non-disclosure agreement that protects proprietary business information, including trade secrets, may be enforceable in California.

Contact Our Fremont, CA Business Law Attorney Today

Lynnette Ariathurai is an experienced, solutions-driven business lawyer. If you have any questions about another company stealing your employees, we are here to help. Contact us today for a strictly confidential consultation. We provide business law representation throughout the Bay Area.

business contracts, Business Formation & Planning, Contracts

Importance of Having an Attorney Advise During the Formation of an LLC

importance of llc formation attorney

Making the decision to start up a new business is exciting. You can build something of real value to support yourself, your family, and your community. A limited liability company (LLC) is a flexible, cost effective legal structure for many different types of businesses. As forming any type of new business can be complicated, it is best to seek guidance from an experienced attorney who can help you put the right foundation in place. Here, our Fremont business formation lawyer highlights five considerations that should be addressed during the formation of a limited liability company (LLC).

1.   Whether an LLC is the proper form (eligibility, needs, etc.)

A limited liability company is a popular way to set up a business. As explained by the California Secretary of State, an LLC “offers liability protection similar to that of a corporation, but is taxed differently.” It combines some of the core advantages of a corporation and a partnership. That being said, an LLC is not the right form for every type of business. Some companies are better served by a different legal structure. Further, certain types of businesses in California—such as a medical, dental, or nursing practice—cannot be set up as an LLC. An attorney will help you determine whether an LLC is the right form.

2.   Selection of State for your limited liability company

When forming an LLC, you also need to decide where you are going to set it up. You may or may not want to make California the home state of your LLC. In some circumstances, setting up an LLC in a different jurisdiction—such as Delaware or Nevada—offers real advantages. In other cases, setting up an LLC outside of California adds complexity with no tangible benefit. A business formation lawyer can help you choose the right state.

3.   The applicability of liability protection

One of the central advantages of an LLC is that it offers liability protection. Simply described, an LLC helps to ensure that the members will not be held personally liable for the debts incurred by the business. Of course, the liability protection associated with an LLC is situation-dependent. It may not, by itself, offer adequate liability protection. Additional precautions may be required.

4.   Drafting and negotiating an operating agreement

Every LLC should have a written operating agreement. While LLCs doing business in California are regulated by California law, the reality is that many of your personal rights and responsibilities related to the business will be derived from your operating agreement. An operating agreement for an LLC should always be negotiated, drafted, and reviewed by an experienced business formation attorney.

5.   Compliance with ongoing requirements for LLCs

Finally, it is important to remember that LLCs must comply with certain ongoing legal requirements in California. In setting up an LLC, an experienced California business attorney can help you understand the ongoing and future requirements so that you are in the best position to comply. 

Get Help from Our California Business Formation Attorney Today

Lynnette Ariathurai is an experienced business formation attorney. If you have any specific questions about setting up a limited liability company (LLC), we are here to help. Contact us today to arrange a confidential consultation. We provide business law services throughout the Bay Area.

business formation, business formation attorney, business structure, limited liability company, LLC formation

Negotiating Managed Care Contracts

Negotiating Managed Care Contracts

The health care industry is one of the largest and most complex in the United States. According to data from the Centers for Medicare and Medicaid Services (CMS), total public and private U.S. health spending exceeds $4.1 trillion. Insurance providers play a huge role in health financing. Here, our Fremont business contract attorney highlights some of the key things to consider when negotiating managed care agreements.

What is a Managed Care Contract?

As a starting point, it is important to understand what a managed care contract is and how it works. A managed care contract is effectively an agreement between a medical provider (doctor, specialist, etc.) and a third-party entity. Through a managed care plan, health plan providers will enter agreements with medical facilities to provide care for members at reduced costs. There are a number of different specific types of managed care arrangements, including:

  • Health Maintenance Organizations (HMOs);
  • Preferred Provider Organizations (PPOs); and
  • Point of Service providers.

A Managed Care Agreement is Not Cast in Stone: You Can Negotiate Key Terms

For doctors and other medical providers, there can be advantages to entering a management care agreement. However, similar to any other type of important commercial contract, the specific terms and conditions always matter. A proposed managed care contract is not set in stone. The terms are subject to negotiation. Negotiating an effective agreement requires understanding your needs and your risks. Some key provisions that are subject to negotiate include:  

  • Rates: Rates matter. As noted previously, managed care agreements generally provided lower cost services to members. When doctors and other medical practices enter these agreements, they need to be sure that the reimbursement rate is in their best interest.
  • Claims Process: The language surrounding all aspects of the claim process should be carefully reviewed. Some key issues to look for include day-of cutoff, downcoding, no take backs, and withholding,
  • Dispute Resolution (Arbitration Provisions): Disputes can happen within the context of a managed care agreement. A well-drafted agreement will generally have some sort of dispute resolution clause. For example, it may call for arbitration.
  • Exit Options (Termination, Expiration): In a managed care agreement, it is also important to look at the exit options of each party. Does either party have the right to terminate the agreement? When will the contract expire? What happens after the date of expiration?
  • Other Unfavorable Provisions: Finally, medical providers should also carefully look for other provisions that may be unfavorable. As an example, some managed care agreements contain language that gives the payor broad (or even unilateral) authority to amend the terms of the contract. This type of language generally needs to be removed.

If you are preparing to negotiate a managed care agreement, there are major advantages to consulting with an experienced attorney. A business lawyer who works closely with medical practices and health care facilities can negotiate, draft, and review your managed care contract to ensure that it is in your best legal and financial interests.

Contact Our California Business Lawyer for Medical Practices Today

A business law attorney with extensive experience, Lynnette Ariathurai works with companies and medical practices in the health care industry. If you have questions about negotiating a managed care contract, please contact our Fremont law office for a strictly confidential initial consultation.

agreements, Contracts, healthcare, managed care

Who Owns a Patients’ Medical Records When a Physician Leaves a Practice?

business lawyer for medical personnel

Physicians have an ethical and professional duty to manage medical records properly. To start, the HIPAA Privacy Rule requires doctors, health care providers, and other parties to protect the confidentiality of sensitive patient medical records. When a doctor moves on from a practice group, it is crucial that all patient medical records are handled in an appropriate manner.

This raises an important question: How should patient medical records be handled when a physician leaves a group medical practice?  The Medical Board of California and the American Medical Association (AMA) provide some important guidance. In this article, our Fremont business lawyer explains the key things to know about who owns a patient’s medical records in California.

Background Ownership of Medical Records in California

Medical record ownership varies by state. In California, medical records belong to a hospital or a doctor. With this ownership comes certain ethical and professional obligations to patients. Patients have the right to access their medical records in certain circumstances. Under California Health & Safety Code 123100, patients have a general right to access their medical records and/or summaries. Further, the AMA Code of Ethics 1.1.3(f) states that patients should have the right “to obtain copies or summaries of their medical records.” To comply with statutory and regulatory obligations, group practices must handle medical records properly.

A Note on Professional Courtesy: California law does not require group practice to transfer records between providers. However, the Medical Board of California considers this a “professional courtesy.” The possible cost of copy and/or clerical fees depend on the specific situation.

Medical Board of California: Patient Records When a Doctor Leaves a Practice

The California Medical Board advises practitioners that patients should be notified regarding certain fundamental changes to the structure of a group medical practice. When a doctor leaves a medical practice in California, their patients should be notified and given a chance to make provisions for their medical records.

The AMA has also issued ethical guidance on this matter. Under AMA Code of Ethics Opinion 7.03, patients should be notified when their doctor is leaving a practice group. Further, they should be given the chance to have their medical records retained or forwarded to the doctor’s new practice group based on their preferences.

Medical Practice Agreements Should Address Patient Medical Records

Medical records should be addressed in agreements between doctors. You are always better off discussing and handling this matter at the beginning of a commercial relationship rather than the end of a commercial relationship. Any contracts that your medical practice relies on should have provisions for who owns patient medical records when a doctor leaves the practice. Agreements should include clear instructions for patient notification, including who is responsible for:

  • Sending out notices to patients
  • Bearing the cost of sending out notices to patients

Schedule a Confidential Consultation with a California Business Lawyer

Lynnette Ariathurai is a business lawyer with extensive experience working with doctors and other medical professionals. Contact us today to set up a confidential initial consultation. From our Fremont law office, we work with medical practices throughout the San Francisco Bay Area.

health care providers, medical practice law, medical record ownership, Medical records law

The Importance of Having an Attorney Draft a Contract (IT Industry)

Professionally Drafted IT Contracts

Information technology (IT) remains one of the fastest-growing large industries. According to data from Statista, the total value of global IT companies now exceeds $5.2 trillion. Similar to other industries, contracts are at the basis of most commercial relationships in information technology. It is crucial that all businesses operating within the space have well-drafted contracts. Here, our Fremont business contract attorney explains why it is so important to have your contract drafted by a lawyer—especially if you are in the IT space.

Many Companies Need Professionally Drafted IT Contracts

Information technology is an incredibly complex field. Not only regarding the work that is being done, but also in terms of the structure and layering of the business. Along with other types of California companies, your business needs well-drafted IT contracts if:

  • You are an employer who provides on-site IT services for end-user companies
  • You are an employer that provides remote IT services for end-user companies
  • You operate a company that locates and recruits qualified IT professionals

It is especially important to have well-crafted contracts in place if you own and operate a recruiting company that finds IT professionals for end-users for a fee. Likewise, end-user companies that work with IT recruiting firms must ensure that their best interests are properly protected by the terms of the contract.

Companies that provide direct IT services to end-users can benefit from customized contracts. These IT firms may be located within the United States, outside of the United States, or a combination of both. There may be situations in which one company has access to the job opening and another company has access to the IT talent. Contracts govern these commercial relationships.

When Disputes Arise, the Terms of the Contract Matter

There are several reasons why well-drafted contracts are especially important for IT industry companies. When a contract dispute arises, the specific terms of the contract will, in large part, determine your company’s liability risk. A poorly drafted contract could dramatically increase your company’s liability in a dispute. Among other things, IT-related disputes arise over:

  • Serious professional errors by IT professionals
  • Alleged non-payment of fees to one or more companies involved in the chain of workflow
  • Employee is hired directly by the end user or one of the other companies in the many layers

One of the challenges faced by IT industry employers—whether contracting with an end-user for on-site or remote services—is that it can be difficult to stay on the same page. For example, problems could arise if an IT employee puts in overtime hours without the proper authorization. Also, if the employee is hired by the end user or another company to provide services to the end user, you are essentially cut out of the deal. Without a well-drafted contract, an IT employer could end up on the hook for additional costs or loss of income.

IT Companies Without Strong Contracts Risk Higher Costs, Decreased Revenue

Ultimately, it is the contract that will, in large part, determine each company’s liability risk. Imagine that an IT employer is not promptly advised of changes regarding a particular employee’s schedule. Payment for their services could prove to be complicated. The ability to invoice another company for work provided depends on the terms and conditions of the contract.

Another similar situation could arise when an end-user believes that an IT professional was working on the wrong tasks and/or the end-user is dissatisfied with an IT professional’s skills. Each party’s financial responsibility for any work performed will depend on the contract. The right contract puts your company in the best position to get paid (or avoid paying) for certain work.

Disputes over total payment for work provided is one risk that employer companies face in the IT industry. An even greater risk is if another company or the end user steals your employee. It is expensive and time-consuming to locate and retain skilled IT professionals. Employer companies could be stuck with major losses of revenue if they do not have well-drafted contracts in place. 

A Contract Should Be Structured to Meet Your IT Company’s Unique Needs

When a business law attorney drafts a contract, they do so with the rights and interests of their client in mind. As every situation is different, it is crucial that IT companies retain a lawyer who can draft a contract that is well-tailored for their specific circumstances. Information technology companies that don’t understand the importance of having an attorney draft a contract sometimes use formulaic contracts from the internet, taking on significant risk. They may be unknowingly shifting a large amount of liability risk back to their firm or not protecting themselves from other losses. An experienced California business attorney can draft a contract that effectively minimizes liability risks and ensures that your IT business is in the best possible position.

Contact Our Fremont, CA Business Contract Attorney for Help

Lynnette Ariathurai is a business law attorney with extensive experience drafting, negotiating, and reviewing contracts. Call us now or send us a message for a confidential consultation. From our Fremont law office, we help clients with business contracts throughout the Bay Area.

business contract, contract law, information technology, IT, liability

LLPs vs Professional Corporations

business formation attorney

All businesses need the proper legal structure to thrive. For certain professionals that operate a business with more than one owner—attorneys, accountants, and architects—there are two options available: A limited liability partnership (LLP) or a professional corporation (PC). There are advantages and disadvantages to each of these entities. In this article, our Fremont business formation lawyer explains the key things to know about LLPs and PCs in California. 

An Overview of LLPs and Professional Corporations

As a starting point, it is useful to have a basic understanding of the two types of professional business structures. Here is a brief overview of these business entities:

  • Professional corporation (PC): Governed by California’s Moscone-Knox Professional Corporation Act, a PC is a specialized type of business entity that is registered for certain businesses that offer professional services.
  • Limited liability partnership (LLP): As explained by the California Franchise Tax Board, an LLP is a type of partnership business that allows certain eligible professionals to access many of the benefits—liability protection, pass through taxation, etc.—offered by an LLC. 

A Limited Number of Professionals Can Choose Between the Two Options

Not all licensed professionals in California have the option to choose between an LLP and a PC. In fact, you are only allowed to set up your business as an LLP if you are one of the following professions:

  • Licensed attorneys
  • Accountants
  • Architects

California law holds that other professionals are not eligible to operate their business as an LLP. In other words, medical doctors, physicians’ assistants, chiropractors, clinical social workers, dentists, nurses, optometrists, veterinarians, physical therapists, pharmacists, marriage, family and child counselors, and court reporters must operate as a PC.

LLPs Offer Additional Flexibility in Certain Circumstances

As LLPs share many common characteristics with LLCs, they offer several potential benefits to eligible professionals. Most notably, they offer business owners additional flexibility to customize their operations. As a partner in an LLP, you have access to enhanced protection from liability for professional malpractice claims filed against one of your partners, but the license holder for the LLP remains personally liable for all malpractice of the business. This differs from a general partnership where all partners are liable for the malpractice of one partner. Therefore, adequate malpractice insurance coverage is still recommended, as is errors and omissions insurance.

Setting up a well-structured LLP is complex. It is crucial that you have a properly crafted partnership agreement that clearly lays out ownership/operational rights and responsibilities. If you are a lawyer, accountant, or architect preparing to form an LLP in the Bay Area, an experienced California partnership agreement attorney can help. 

Know the Tax Differences: LLP vs. PC

In California, a PC is generally taxed as a C-corporation unless an S-corporation election has been made. LLPs in California are usually taxed as pass-through entities. A 2021 reform passed by state lawmakers (California Assembly Bill 150) created a new pass-through entity elective tax option. If you have any questions about what type of entity offers a more advantageous tax structure for your business, it is best to consult with a licensed certified public accountant (CPA).

Get Help from a Business Formation Attorney in the Bay Area

Lynnette Ariathurai is a California attorney with experience helping entrepreneurs start business. If you have any questions about LLPs vs professional corporations, we can help. Contact us today for a confidential initial consultation. With an office in Fremont, we serve communities throughout the Bay Area.

business attorney, business entities, business structures, limited liability partnership, LLP, PC, professional corporation

Are LLCs the Right Entity for You?

The current economic environment is highly competitive. It is more important than ever that businesses have the right legal structure in place. An LLC might be the right entity for your California business. Indeed, there are many reasons to select an LLC as a business entity. However, an LLC is not the right business entity for every situation. In California, certain types of businesses cannot lawfully operate as an LLC. Here, our Fremont business formation lawyer highlights the key things to know if you are trying to determine if an LLC is the right entity for your company.

Know the Benefits of Forming a Limited Liability Company (LLC)

As explained by the California Franchise Tax Board, a limited liability company is a type of business entity that “blends partnership and corporate structures.” There are a number of different potential advantages to operating as an LLC, including:

  • Ease of set up: It is relatively easy and cost-effective to set up an LLC in California. You will have to select a name for your LLC, complete form LLC-1 and submit it to the Secretary of State and pay California’s annual LLC tax. There are minimal other requirements, including annual compliance costs.
  • Liability protection: Perhaps the primary benefit of an LLC is that it offers strong liability protection. As a member of an LLC in California, your personal assets can be protected from the debts and liabilities of the business. There are limited exceptions, similar to a corporation.
  • Flexibility: A California LLC is a fundamentally flexible business structure. You can effectively structure your company in the way you feel works best—profits, financial obligations, and voting rights can be split however you and the other members desire. 

It is highly recommended that you have a professionally drafted operating agreement for your LLC. A well-crafted agreement will ensure that your rights and interests are properly protected.

California Law: Not All Businesses Can Operate as LLCs

It is important to emphasize that not every type of business can operate as an LLC in California. In fact, most licensed-businesses cannot be structured as an LLC. While there are limited exceptions, you should always consult with an experienced Bay Area business lawyer before moving forward. California law is evolving and certain CSLB, service businesses and home health care businesses can now be structured as LLCs.

For certain types of licensed professionals (lawyers, accountants, architects, etc.), an alternative type of business entity called a limited liability partnership (LLP) is an option. If you have any questions about forming an LLP, our Fremont, CA business formation lawyer can help.

LLCs are Not the Right Entity for Every Business

Even if your specific type of company can operate an LLC in California, it may still not be the best option for your needs. While LLCs offer some strong advantages—low administrative costs, liability protection, flexibility, etc.—there are also some downsides.

Most notably, an LLC operates as a pass-through entity for tax purposes. There will be a self-employment tax for LLC members. For this and other reasons, LLCs are generally not the best option for companies holding significant inventory, leasing expensive commercial space, or that have high overhead costs.

Consult With a Business Lawyer in the Bay Area

Lynnette Ariathurai is an experienced, solutions-driven business formation lawyer. If you have any questions about whether an LLC is the right entity for your business, please contact us today. We serve communities throughout the area, including Fremont, Newark, Union City, East Bay, Milpitas, San Leandro, Santa Clara, Hayward, and San Jose. 

business entity, business formation, business planning, business structure, liability protection, limited liability partnership

How to Buy or Sell a Medical Practice

legal issues for medical offices

Buying or selling a medical practice is complicated. Beyond the complexities that come with any major commercial transaction, there are also specialized legal considerations for the owners and operators of medical practices in California. In this article, our Fremont business law attorney discusses some of the most important things to know about buying or selling a medical practice in Northern California. If you have any specific questions, please do not hesitate to call our law office.

Due Diligence: Make Sure Your Counterparties are Reliable

You should never buy or sell any business without conducting thorough due diligence. Broadly defined, due diligence is an investigation, inquiry, and general exercise of care that a person should take before entering into an agreement.

Due diligence is essential when buying a medical practice. You must have a full understanding of the financial position of the business, including its assets and potential liabilities. Due diligence is no less important when selling a practice. Make sure your counterparties are reliable.

The Structure and Components of the Deal

The structure and components of a purchase agreement matter. Of course, this starts with determining the appropriate purchase or sale price for the medical practice. Parties should also pay very close attention to the structure of the transaction. You may be best off with a stock sale, whereby the entire medical practice is purchased. Alternatively, the parties may prefer an asset sale in which the buyer purchases specific assets held by the practice. It is always the best practice to have a medical practice purchase agreement reviewed by an experienced business lawyer.

Unique Concerns for Buying or Selling Medical Practices

Doctors and other medical professionals who are buying or selling a practice in California should be aware of some of the unique federal and state regulations that will impact their rights and responsibilities. Among other things, these include:

  • Restrictions on ownership: Any transfer of ownership of a medical practice in California must conform to the requirements of the state’s Moscone-Knox Professional Corporation Act. Medical practices are generally structured as PCs (professional corporations) — there are restrictions on who can own these business entities.
  • Patient notice: The Medical Board of California has regulations in place regarding patient notice when a practice is sold to another party or intends to close. Make sure that patients are notified of the transaction as soon as possible.
  • Medical records: The Health Insurance Portability and Accountability Act of 1996 (HIPAA) requires medical professionals (and medical practices) to protect sensitive medical records. HIPAA’s privacy requirements must be followed through all aspects of the sale.
  • Controlled substances: If the medical practice has access to any controlled substances, it is imperative that these highly-regulated drugs are handled properly in accordance with the applicable federal and state laws.

Finalizing the Sale of a Medical Practice 

Before the medical practice sale can be finalized, there are several issues that need to be addressed. Once the final structure of the business purchase agreement is in place, be sure to attend to future-focused issues, such as tail insurance and whether there will be a non-compete agreement in place. An experienced California business lawyer can help you secure, organize, and complete all the legal and commercial documents that you need to finalize the transaction.

Consult With Our Bay Area Business Law Attorney Today

Lynnette Ariathurai is a top business lawyer with the skills and experience to represent medical practitioners with buying or selling a medical practice. Contact us today for your fully confidential initial consultation. We serve communities throughout the Bay Area, including Fremont, Newark, East Bay, Union City, Hayward, Santa Clara, Milpitas, San Jose, San Leandro, and Gilroy.

commercial lease, medical practitioners, navigating medical practice lease, negotiating medical practice lease

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