Author: Shardul Gaikwad

Business legal services in Silicon Valley

MSAs for Medical Practices in California: Uncover Hidden Costs and Minimize Risk

Do you own and/or operate a medical practice in California? If so, you may be considering entering into a medical services agreement (MSA). Broadly explained, these are contracts between a professional practice and a third party company that offers administrative/business services. An MSA can be a useful tool for a medical practice in California, but it needs to be properly structured. Here, our Fremont business lawyer for medical practices provides a guide to MSAs in California.

What is a Medical Services Agreement (MSA)?

An MSA is a contract between a licensed medical practice and a third party management and/or administrative services company. The agreement allows the non-medical entity to handle business functions such as billing, human resources, accounting, marketing, facilities management, and technology systems. At the same time, the professional medical corporation (PC) retains control over all clinical decisions.

In California, these arrangements must be carefully structured to comply with the state’s Corporate Practice of Medicine (CPOM) doctrine. The law prohibits non-physicians or unlicensed entities from owning, managing, or influencing medical decision-making. The Medical Board of California enforces strict boundaries to ensure that only physicians direct patient care.

Why Medical Practices in California Enter into MSA

Many professional medical practices in California enter into MSAs. At their best, these agreements can help to make business operations more efficient and reduce administrative burdens. Running a compliant and profitable practice in California requires substantial time and resources unrelated to patient care. A management company can provide economies of scale by handling functions such as insurance credentialing, revenue cycle management, and payroll. MSAs also allow smaller practices to access advanced systems (such as electronic health records (EHR) management) that they may not be able to reasonably afford independently.

Be Prepared: Know the Hidden Costs and Risks of MSAs

Despite their benefits, MSAs carry significant legal and financial risks. The most common problem arises when an agreement crosses the line into impermissible control over medical decision-making. If an MSO sets physician compensation, directs clinical staffing, or influences patient scheduling, regulators may find a CPOM violation. Here are key points to know:

Hidden financial risks: In many cases, MSAs can conceal substantial costs. Flat fees, revenue-sharing provisions, and performance bonuses tied to patient volume may violate federal and state anti-kickback or fee-splitting rules.
Data privacy and HIPAA liability: Because MSAs often manage patient billing and records, they may become business associates under HIPAA (45 C.F.R. §160.103). A proper business associate agreement (BAA) must accompany the MSA.
Unfavorable contract: Some MSAs include restrictive termination clauses or automatic renewal terms that leave the physician practice trapped in a long-term agreement. It is imperative that any MSA is drafted and/or reviewed by an attorney.

Speak to Our Fremont Employment Lawyer for Employers today

Lynnette Ariathurai is a California business attorney who has considerable experience representing medical practices. If you have any questions or concerns about MSAs, we can help. Contact us today for your completely confidential consultation. From our Fremont office, our team provides business law services to medical practices throughout the Bay Area.

business associate agreements, medical services agreements, MSA costs, MSA risk

How California Employers Can Protect Themselves from Wage and Hour Claims

California has some of the most comprehensive wage and hour regulations in the entire country. All businesses and organizations that operate in California must comply with both federal and state wage and hour laws. A proactive approach is one of the keys to preventing claims. Here, our Fremont employment lawyer for preventing claims highlights best practices companies and organizations can use to protect themselves against wage and hour liability.

What Employers Should Know About Wage and Hour Laws in California

Wage and hour laws regulate worker hours, pay, and benefits. A key thing for employers in the Bay Area to know is that California’s wage and hour laws are among the most employee-protective in the country. Employers must comply with the federal Fair Labor Standards Act (FLSA), the California Labor Code, and all applicable Industrial Welfare Commission (IWC) Wage Orders. Here are some of the key requirements:

Employers must meet the state or local minimum wage
Employers must provide required meal and rest breaks
Employers must provide proper overtime compensation

California’s Labor Commissioner (DLSE) actively enforces wage and hour rules. Employees can file administrative wage claims or pursue civil actions for unpaid wages, missed breaks, or overtime violations. The state’s Private Attorneys General Act (PAGA) empowers employees to bring wage and hour claims against employers on behalf of similarly situated workers. Employers found in violation could face liability for unpaid wages, liquidated damages, penalties, and attorney’s fees

Best Practices for Employers to Prevent Wage and Hour Claims

1. Maintain Accurate Time-Keeping Systems

Time-keeping matters. You should use reliable, verifiable systems to record all hours worked, including start and end times, meal breaks, and off-the-clock work. Even small violations of time-keeping regulations can lead to serious liability.

2. Review Worker Classifications

Workers in California must be properly classified. Employers should confirm that exempt employees meet both the salary basis and duties tests. A company that misclassifies a worker, including improperly classifying them as an independent contractor, could face a wage and hour claim.

3. Implement Comprehensive Written Policies

Many employers in California can benefit from comprehensive written wage and hour policies. You should provide clear, accessible policies regarding overtime authorization, breaks, and other relevant procedures.

4. Train Supervisors and Managers

Proactive training of supervisory employees can help. Supervisors, managers, and the HR department (if there is one) must understand how wage and hour violations occur.

5. Conduct Regular Audits of Wage and Hour Policies

Finally, employers in California can prevent wage and hour claims by conducting regular, comprehensive audits of their wage and hour policies. An employer lawyer for employers can help.

Speak to Our Fremont Employment Lawyer for Employers today

Lynnette Ariathurai is a California business lawyer with extensive experience representing employers. If you have any questions or concerns about how to prevent wage and hour claims, please do not hesitate to contact us today for a fully confidential consultation. With an office in Fremont, we provide legal services to employers throughout the San Francisco Bay Area.

California wage and hour regulations, employer wage and hour policies, worker classification

Employer Guide – Protection and Guidelines

Employment law is complicated. California has among the most comprehensive, worker-friendly employment laws in the entire country. Employers must be in full compliance with the law. A proactive approach to labor and employment compliance can help businesses and organizations reduce their risk of liability. Lynnette Ariathurai is a solutions-focused California employment lawyer. If you have any questions about employment protections or employment guidelines, please do not hesitate to contact us for a fully private, no obligation consultation.

We Provide Legal Protection to Employers in California

Employer Representation

We are committed to representing employers in employment law matters. Our firm can help you develop workplace policies, employee handbooks, required training, and employment contracts to reduce your risk of legal/liability exposure. We also defend employers against federal and state claims, including discrimination, harassment, wage and hour disputes, and administrative complaints. Employers can rely on our proactive legal counsel.

Preventing Employee Claims

The best way to deal with employee claims is for the employer to prevent them from arising in the first place. A proactive approach can make the difference. We help employers in the Bay Area understand the ever-evolving state and federal requirements so that they remain fully compliant. Preventive support limits future lawsuits and preserves resources. If you have any questions about how to develop the right policy to prevent a claim from an employee, our attorney is here as a resource.

Defending Employee Claims

Even if your company does everything the right way, the employer could still face a claim from an employee. California employers face many types of employee allegations, from EEOC and Labor Commissioner complaints to attorney letters and lawsuits. We defend employers against federal and state claims, including discrimination, harassment, overtime, and leave disputes. Facing liability in an employment law claim has the potential to be very costly for an employer. If you have any questions about how an employer can deal with a claim from an employee, our California attorney is here to help.

Handling Discrimination Claims

California strictly enforces anti-discrimination laws. We help Bay Area employers with preventing, responding to, and resolving discrimination claims under federal and California law. Employers must understand Title VII and FEHA obligations to avoid protected-class discrimination legal exposure. Our California employment lawyer can review allegations, conduct impartial investigations, and advise employers on defense strategy.

Termination of Employees

Terminating an employee can be complicated. Even if it is “for cause.” California employers must follow strict rules when terminating employees. Our business law firm advises companies and organizations on lawful termination procedures that reduce risk under state and federal law. Guidance covers documentation, performance records, final pay requirements, wage statements, and timing obligations.

Contact Our Fremont Employment Lawyer Today

Lynnette Ariathurai is an experienced California employment lawyer. If you are an employer with questions about your rights or your options, we are here to help. Contact us today for a completely confidential, no obligation initial consultation. With an office in Fremont, we provide employment law representation throughout the region in California.

California employment law, employer liability, employer risk, employment law

Medical Practices – Protection

Building, growing, and operating a successful medical practice in California is complicated. It is imperative that your professional practice has the right legal structure in place. Lynnette Ariathurai is a top-rated business law attorney for medical practices. If you have any questions about legal protections for medical practices in California, we can help. Contact us at our Fremont law office for a fully confidential, no commitment initial case evaluation.

Our Business Lawyer Helps California Medical Practices Protect their Interests

Structuring a New Group Medical Practice

All group medical practices in California need the right legal foundation. Otherwise, they could face serious issues. Setting up a group medical practice requires more than clinical expertise: It demands careful legal planning to protect your investment and define roles. Our Fremont business lawyer for medical practices helps practitioners choose an appropriate business entity, determine ownership shares, and establish compensation and control rights. We also guide clients on exit mechanisms and dispute resolution processes so transitions happen smoothly.

Incorporating a Medical Practice

In California, doctors and medical professionals face unique rules for structuring a practice under the state’s professional entity laws. Incorporation as a professional corporation often provides liability protection for business obligations and may offer tax advantages when qualified for S corporation status. There are strict rules and regulations under state law for professional corporations (PCs), especially related to ownership of the entity.

Buying or Selling a California Medical Practice

If you are considering buying or selling a group medical practice in the Bay Area, it is imperative that you have strong, experienced legal representation. Buying or selling a medical practice is a high-stakes transaction that blends business strategy with legal compliance. Our business law attorney assists clients from initial due diligence to closing, negotiating terms, drafting or reviewing letters of intent, and evaluating whether an asset sale or a stock sale best suits your objectives. We can examine liability exposure, contract terms, continuity of care obligations, and transition requirements such as patient notices and license transfers.

Restructuring a Medical Practice When Adding New Partners

If you are preparing to add another partner to your medical practice in California, you may need to do some restructuring of the business. Adding partners to a medical practice changes the business’s legal and operational dynamics. We help practices clearly define ownership interests, including voting and non-voting classes. That is key so that the equity and control rights align with partners’ contributions. Careful negotiations and documented agreements prevent later conflicts among owners.

Professional Contract Review for Medical Practices

Contracts are essential for the legal protection of medical practices in California. Medical practices rely on a range of contracts that shape daily operations and long-term stability. Our Fremont, CA business law attorney reviews and negotiates business formation agreements, commercial leases, supplier and vendor contracts, employment agreements, and independent contractor arrangements to protect your legal and financial interests. Customized, professionally-drafted contracts give medical practice owners the clarity and legal protection that they need.

Get Help From Our California Business Lawyer for Medical Practices Today

Lynnette Ariathurai is a California business attorney with extensive experience working with medical practices. If you have any questions about protecting a medical practice, we are here to help. Contact us to arrange your completely confidential consultation. From our Fremont office, we provide business law services to medical practices throughout the Bay Area.

medical practice protection, physician practice protection, structuring medical practices

Employer’s Guide to Paid Sick Leave, Family Leave, and Other Mandatory Leaves in California

California law sets strict standards for paid sick leave, family leave, and other forms of mandatory employee leave. Indeed, they are among the most comprehensive in the country. As an employer, you need to be sure that you are in full compliance with leave requirements. Mistakes, even unintentional ones, can expose a company to serious liability. Here, our Fremont employment lawyer provides a guide to paid sick leave, family leave, and other forms of mandatory leave in California.

What Employers Should Know About Paid Sick Leave in California

Under California’s Healthy Workplaces, Healthy Families Act (Cal. Lab. Code § 245–249), all employers must provide paid sick leave to employees who work for 30 or more days within a year. Employees accrue at least one hour of paid sick leave for every 30 hours worked, though employers may cap accrual at 48 hours (or six days) and use at 24 hours (or three days) per year. Accrued time carries over annually (unless an employer adopts a “front-load” policy granting the full leave at the start of each year). Employers can cap the maximum sick leave an employee may take annually at 5 days or 40 hours per year, in a written policy.

What Employers Should Know About Family Leave in California

California’s family leave obligations are primarily governed by the California Family Rights Act (CFRA). It is more comprehensive than the federal Family and Medical Leave Act (FMLA). Covered employers (those with five or more employees) must provide eligible workers up to 12 weeks of job-protected leave in a 12-month period for serious health conditions, bonding with a new child, or caring for a family member. One of several ways in which the CFRA goes beyond FMLA is by covering domestic partners, adult children, siblings, and grandparents. Unlike paid sick leave, family leave under CFRA/FMLA is unpaid. With that being said, employees may substitute accrued paid leave or receive wage replacement through California’s Paid Family Leave (PFL) program which is administered by the Employment Development Department (EDD).

What Employers Should Know About Other Mandatory Leave in California

Beyond sick leave and family leave, California law imposes several other mandatory leave obligations on employers. As an employer, it is your responsibility to be aware of all the different types of leave that apply. Here are some notable examples:

Pregnancy disability leave (PDL): Up to four months of unpaid, job-protected leave for employees disabled by pregnancy or related conditions (Cal. Gov. Code § 12945).
School/childcare leave: Employers who employ 25 or more employees at the same location must provide up to 40 hours annually for parents to enroll their child in school or a licensed child care provider, participate in activities of the school or licensed daycare, and to address school or childcare discipline and emergencies (Cal. Lab. Code § 230.8).
Jury duty and witness leave: Required unpaid leave for service as a juror or witness (Cal. Lab. Code §§ 230–230.1).
Domestic violence, sexual assault, and stalking leave: Unpaid time off to seek medical attention, counseling, or legal protection (Cal. Lab. Code §§ 230, 230.1).
Voting leave: Up to two hours of paid time to vote in a state or federal election if the employee does not have sufficient time outside of working hours to vote at a statewide election (Cal. Elec. Code § 14000).

Contact Our California Employment Lawyer for the Employer Today

Lynnette Ariathurai is a California employment attorney for employers who puts an emphasis on solutions-focused guidance and support. If you have any questions about sick, family, or other mandatory leave requirements in California, we can help. Contact us today for a strictly confidential consultation. From our Fremont office, our firm works with businesses and organizations throughout the Bay Area.

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How to Structure Your Medical Practice for Liability Protection

Are you preparing to form a medical practice in California? It is imperative that you put a structure in place that provides adequate liability protection. Liability is one of the key issues that doctors need to worry about when setting up their own professional practice in California. Here, our Fremont business lawyer for starting a medical practice provides an overview of the key things to know about structure and liability protection in California.

Why Liability Protection Matters

Liability protection matters because one lawsuit or contract dispute can threaten everything a doctor has built. When you set up a medical practice with the proper legal structure, California law makes physicians personally responsible for their own malpractice, but not for ordinary business debts if the practice is properly structured. When you add sufficient medical malpractice insurance, your professional practice will be in the best possible position to reduce liability risk.

You Need to Choose the Right Legal Entity for Your Medical Practice

In California, physicians cannot form a traditional limited liability company (LLC) for the purpose of providing medical services. Instead, the proper legal structure is a professional corporation (PC) under the Moscone-Knox Professional Corporation Act (Cal. Corp. Code § 13400 et seq.). The law governs how licensed professionals (such as physicians, surgeons, and dentists) may incorporate. A properly formed medical corporation separates business obligations from personal assets. Although a PC does not shield a doctor from personal malpractice liability, it does protect against the debts and contractual obligations of the practice itself. That is a key form of liability protection.

Note: To form a professional corporation (PC) for a medical practice in California, ownership is restricted to at least 51% ownership by licensed physicians and surgeons, and the remaining 49% ownership may be by other specific qualified licensed individuals. Under the Moscone-Knox Professional Corporation Act, only people holding valid medical licenses issued by the Medical Board of California may serve as directors, or act as officers of a medical corporation, except a one shareholder (physician) PC may have a Secretary who is unlicensed. Non-licensed individuals, including outside investors or management firms, cannot own or control any part of the professional corporation. Otherwise, you could be denied PC status.

Medical Practitioners Need Proper Malpractice Insurance

It is important to remember that California law does not let physicians shield themselves from their own negligence through any business structure. A professional corporation limits business and contract risk, but malpractice exposure remains personal. Proper coverage (which is typically at least $1 million per incident and $3 million aggregate) helps to protect a professional practice against catastrophic verdicts and board complaints. The policy should list employed physicians and other licensed staff. That is consistent with Bus. & Prof. Code § 2052, which prohibits unlicensed practice. In California, medical malpractice insurance is not optional, it is necessary.

Contact Our California Business Lawyer for Medical Practices Today

Lynnette Ariathurai is a top-rated California business law attorney. With a commitment to solutions, Attorney Ariathurai can help you structure your medical practice for the maximum liability protection. Contact us today for a fully confidential, no obligation initial consultation. We work with professional practices throughout the Bay Area.

medical practice liability protection, physician liability protection

How to Combine a Practice with Another Physician

Do you own and operate your own medical practice in California? You may be considering combining your professional practice with another physician. If so, it is crucial that you know how to effectively navigate the process so that you protect your rights and interests and put your new joint practice in the best position to thrive. Here, our California business lawyer provides an overview of key things to know about combining your medical practice with another physician.

Step #1: You Must Confirm Compliance with California’s Practice of Medicine Doctrine

Before merging two practices, physicians must confirm that their proposed structure complies with California’s corporate practice of medicine doctrine (Bus. & Prof. Code § 2400). Under state law, licensed physicians must own at least 51% of a medical practice, and 49% may be owned by certain qualified licensed individuals. Non-physicians, management companies, and investors cannot hold any ownership interest or exercise control over clinical decision-making. When combining practices, physicians owners must hold active California licenses and agree on the governance and management of the new entity.

Note: The transaction must be structured as a merger or stock purchase of a professional corporation (PC) under the Moscone-Knox Professional Corporation Act.

Step #2: Review the Key Structural and Legal Considerations

Every merger of medical practices carries legal and operational implications. The following are essential elements that must be addressed before completing the combination:

Entity form and ownership: As noted previously, you confirm that both existing practices are properly organized as professional corporations.
Valuation and capital contribution: You should also determine how the assets, goodwill, and liabilities of each practice will be valued and how capital will be contributed to the new entity.
Governance/voting rights: Next, you need to define decision-making authority, director and officer roles, and voting thresholds for key matters such as hiring, expansion, or dissolution.
Employment agreements and/or partnership agreements: Be sure to update contracts to ensure consistent compensation structures, restrictive covenants, and dispute resolution provisions.
Regulatory and payor compliance: You also need to notify Medi-Cal, Medicare, and private insurers of ownership changes to avoid billing interruptions or recertification delays.
Medical malpractice coverage: Finally, you should coordinate tail coverage for each physician’s prior entity and ensure the new entity carries sufficient professional liability insurance.

Step #3: Prepare for the Integration of the Professional Practices

Once terms are finalized for combining the two medical practices, you must be prepared to execute the agreement in a proactive, detail-focused manner. It is important to ensure that any and all agreements are consistent with California corporate and medical board requirements. Among other things, you should file updated articles of incorporation, amend bylaws, and submit ownership updates to the Medical Board of California. Operational integration should include merging patient records in compliance with the Confidentiality of Medical Information Act, aligning EHR systems, and reconciling staff employment policies. As a best practice, you and your future partner may want to conduct a joint compliance audit and establish clear clinical governance procedures before the combined entity begins treating patients. Combining professional medical practices in California can be complicated. A top-rated Fremont, CA business lawyer can help.

Call Our California Business Lawyer for Medical Practices Today

Lynnette Ariathurai is a California business lawyer with extensive experience working with medical practices. If you have any questions about combining a practice with another physician, we can help. Contact us today for your strictly confidential, no obligation initial consultation.

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7 Things To Do Before Signing a Commercial Lease

Are you preparing to sign a commercial lease for your company in California? It is a big step. Location matters—as does ensuring that you have a well-drafted lease agreement. Once you have a spot picked out, there are some key things that you need to do before you sign a commercial lease. Here, our Fremont commercial lease attorney highlights seven things to do before signing a commercial lease in California.

1. Visit the City’s Planning Department

You need to be sure that your business can operate in the location in which you are interested. With that in mind, you should start by confirming that your intended use of the property is legally permitted. In California, every city has zoning laws that regulate what type of business can operate in a specific location. If your business requires a zoning permit, learn how long the approval process will take. You should also ask about building permits, occupancy permits, and any other requirements specific to your area.

2. Review the Timeline for Permits and Approvals

Even if your business type is allowed under zoning rules, you may still need construction or occupancy permits before opening. These processes can take weeks or even months, especially if inspections or modifications are required. You should ask the planning department for an estimate of the timeline. If approvals will delay your ability to open, that knowledge becomes valuable during negotiations with the landlord. It is important because you may need rent abatement or other concessions while you wait on permits.

3. Inspect the Property With a Licensed Contractor

Is the property in as good of shape as it looks? You need to be sure. A professional inspection by a local, licensed contractor is an invaluable resource. The contractor can identify potential ADA compliance issues, the scope and cost of any necessary buildout, and the condition of critical systems such as plumbing, electrical, HVAC, and the roof. Commercial spaces can hide expensive problems that only an expert will recognize.

4. Estimate Buildout Costs and Timelines

Most commercial spaces are not “plug and play.” There are exceptions, but even with second generation spaces where a similar business was the tenant in the recent past, some work will likely be required. Your business may need new walls, lighting, flooring, or accessibility upgrades. Understanding the cost and time associated with buildout allows you to evaluate whether the space is financially viable.

5. Be Ready to Negotiate With the Landlord

Once you have all the relevant information, you will be in a strong position to negotiate. Seek concessions such as free rent during construction, reimbursement for buildout, or landlord-funded improvements. Do not be afraid to push for terms that protect your business, especially if the landlord is eager to fill the space. A lawyer can represent you to negotiate for a more favorable commercial lease.

6. Have a California Commercial Law Attorney Review the Lease

Commercial leases are complex legal contracts. Before signing, have a qualified attorney review the lease to advise you on your rights and responsibilities. An attorney can propose amendments that address important tenant protections, such as limits on personal guarantees, fair allocation of maintenance responsibilities, and options to renew or expand.

7. Always Plan for the Long-Term

Finally, commercial tenants in California should think beyond the immediate move-in. You must consider how the lease terms will affect your business growth, exit strategy, and liability in the future. For example, does the lease allow subleasing if you outgrow the space? Are rent increases capped or tied to market conditions? Does the lease require you to restore the property to its original condition at the end of the term? A long term plan is best.

Contact Our California Commercial Lease Agreement Lawyer Today

Lynnette Ariathurai is a California business attorney with the knowledge, skills, and experience to handle commercial lease agreements. If you have any questions about what you need to do before signing a commercial lease, we can help. Contact us today for a fully confidential consultation. We draft and review commercial lease agreements throughout the Bay Area.

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Business Formation: LLCs

Forming a limited liability company (LLC) in California is one of the most popular choices for entrepreneurs and small business owners. Common questions include: “What protections does an LLC provide?” “How is it taxed compared to a corporation?” and “What variations of LLCs are available in California?” The truth is, LLCs offer flexibility, liability protection, and certain tax advantages. Whether an LLC is right for your needs (and which type of LLC makes the most sense) is highly case-specific. Lynnette Ariathurai is a California business formation attorney who has extensive experience with limited liability companies (LLCs). In this article, you will find an overview of LLCs in California.

What is an LLC?

A limited liability company (LLC) is a flexible business structure that combines liability protection with more simplified management. In California, an LLC shields its owners (members) from being personally responsible for business debts or legal claims. However, unlike corporations, LLCs typically avoid double taxation because profits and losses can pass directly through to members’ personal tax returns. An LLC is a great option for many small businesses.

Understanding the Different Types of LLCs

Are you considering setting up an LLC for your business in California? If so, it is imperative that you select the right option for your specific needs. There are a number of different types of LLCs in California. Here is an overview:

Member managed LLCs: A member managed LLC allows the owners themselves to handle the daily operations of the business. In California, this structure is common for smaller businesses where all members want direct involvement. It avoids the complexity of appointing managers, and the relationship between members and managers. Active participation by the members is generally required.
Single manager LLCs: In California, a single manager LLC has only one person or entity that manages the business but may have one or more owners (members). The member(s) vote for the manager who is the only one to operate the business, and the member(s) receive the profit and/or losses. The structure provides liability protection. It ensures that the owner’s personal assets are separate from business liabilities.
Multi manager LLCs: A multi manager LLC involves two or more managers who share control and responsibilities and may have one or more owners (members) who share the profits or losses. In California, the operating agreement is especially important to define the manager’s role, and each member’s voting and other rights, as well as profit and loss shares.

How to Know if an LLC is the Right Option

Starting a business in California often raises the question of whether to form an LLC. A limited liability company offers strong personal asset protection, flexible ownership structures, and pass-through taxation, making it one of the most popular entities in the Bay Area. LLCs work especially well for consultants, real estate investors, and small retail or e-commerce businesses. One drawback of an LLC may be the self-employment tax on the gross income similar to a sole proprietorship. That said, the right choice always depends on your goals and risks. The question of when to create an LLC can be challenging to answer. Our California business formation lawyer can help.

Contact Our California Business Formation Lawyer for LLCs Today

Lynnette Ariathurai is a California business formation who puts clients first. If you have any questions about forming an LLC, please do not hesitate to contact us today for a fully confidential initial consultation. With an office in Fremont, our firm serves clients across the Bay Area.

California LLCs, forming an LLC, limited liability company

Business Formation: Corporations

Starting a business in California comes with a major decision: choosing the right type of corporation. Entrepreneurs often ask, “What are my options for business formation?” and “Which structure best protects my interests?” Each type of corporation in California comes with advantages, disadvantages, and legal requirements. Lynnette Ariathurai is a California business formation lawyer with extensive experience working with corporations. In this article, you will find an overview of the corporate forms in California.

An Overview of the Difference Types of Corporations in California

C Corporation

If you hear the term “corporation” used broadly, the speaker is often referring to a C corporation. It is the standard corporate business structure in California. Business owners choose this type when they want strong liability protection and the ability to raise capital from investors. A C corporation exists as a separate legal entity. Why does that matter? It means that shareholders are not personally responsible for a company’s debts or other liabilities. Further, the structure allows for unlimited shareholders. That makes the C corporation form attractive for businesses planning to grow, issue stock, or to someday go public. On the other hand, C corporations do face double taxation. They are taxed first at the corporate level and then at the shareholder level when profits are distributed as dividends. Further, overall compliance is more complex than other entities, requiring annual meetings, minutes, and formal record-keeping. If you have any questions about creating a C corporation, our California business formation attorney can help.

S Corporation

The S corporation is another corporate form. It offers many of the same liability protections as a C corporation but provides a different tax structure. Business owners in California often choose this type to avoid double taxation. An S corporation allows profits and certain losses to “pass through” directly to shareholders, who report them on their personal tax returns. There are some cases in which setup can lower overall tax burdens. That is especially true for some small and medium-sized businesses. However, unlike a C corporation, an S corporation comes with strict eligibility requirements. Shareholders must be U.S. citizens or legal residents, and the number of shareholders cannot exceed 100. Further, only one class of stock may be issued. An S corporation still requires formalities such as board meetings, record-keeping, and annual reporting. It can be more expensive to maintain than an LLC. If you have questions about creating an S corporation, our California business formation lawyer can help.

Professional Corporation

A professional corporation in California is a specialized entity designed for licensed professionals such as doctors, lawyers, accountants, architects, and other regulated fields. The state requires many licensed service providers to form professional corporations instead of LLCs or standard corporations. By forming a professional corporation, owners protect themselves from liability for business debts and obligations, while maintaining accountability for their own professional conduct. A professional corporation has similar formalities to a C or S corporation, but the owners (shareholders) and operators (officers and directors), as well as the transferability of the shares are limited to qualified people.

Contact Our California Business Formation Lawyer for Corporations Today

Lynnette Ariathurai is a top business formation attorney. If you have any questions about corporations, we can help. Contact us today for a fully confidential, no obligation initial consultation. With an office in Fremont, we provide corporation formation services throughout the Bay Area.

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