Author: Shardul Gaikwad

Business legal services in Silicon Valley

When & Why to Create a Limited Liability Partnership (LLP) in California

Forming the right business entity is one of the most important decisions for any new venture. For certain professional services, a Limited Liability Partnership (LLP) may be the ideal choice. Below, our Fremont business formation attorney explains what an LLP is and when to consider forming one in California.

What is a Limited Liability Partnership (LLP)?

In California, an LLP is a special type of partnership that offers personal liability protection to each partner. It combines the tax flexibility of a general partnership with the legal protections of a corporation—meaning that each partner is not personally liable for the misconduct or negligence of another partner.

However, California limits the types of businesses that can form an LLP. As of today, LLPs are restricted to certain licensed professionals – attorneys, accountants, and architects.

When to Form an LLP in California

LLPs are purpose-built for specific industries, and they offer unique advantages when used appropriately. You should consider creating an LLP if:

You are a licensed professional working with other licensed professionals: In California, LLPs are often used by law firms, accounting firms, and architectural practices.
You want partnership-style management with liability protection: LLPs allow each partner to participate in management while shielding them from personal liability for another partner’s mistakes.
You seek pass-through taxation: Like general partnerships and LLCs, LLPs are not subject to corporate income tax beyond the $800 minimum Franchise Tax (or 1.5% of net income, whichever is greater). Profits and losses pass through to each partner’s individual tax return.
You want flexibility in structure: LLPs allow you to define how profits, decision-making, and responsibilities are shared among partners.

Examples of Why LLPs Work Well for Licensed Professionals in California

LLPs are widely used by attorneys or accountants or architectural firms where there is more than one licensed professional in the company.
The licensed professionals seek to operate with colleagues under a shared name while maintaining personal liability protection from the other partners’ liability
Licensed professionals often use LLPs for their tax benefits
LLPs similar to partnerships can define clear division of responsibilities, percentage ownership, and the percentage of sharing of the profits and losses among the partners

Is an LLP Right for You? Ask a Business Formation Lawyer

Because LLPs are only available to certain professions in California, it’s important to confirm your eligibility and evaluate whether this structure aligns with your goals. The right legal counsel can help ensure your partnership is properly registered and legally compliant.

Contact Our California Business Attorney for LLPs Today

Lynnette Ariathurai is a trusted California business formation lawyer. If you are considering an LLP or have questions about which business entity is best for your professional practice, we are here to help. Contact our Fremont office today for a confidential consultation. We serve professionals and firms throughout the Bay Area.

California LLPs, forming an LLP, licensed professionals, limited liability partnership

When & Why to Create a C Corporation in California

Are you starting or growing a business in California? One of the key decisions you’ll face is choosing the right business entity. While LLCs and S-corps are popular, some entrepreneurs and investors find a C corporation (C-corp) is the best fit. Below, our Fremont business formation attorney highlights when to consider forming a C-corp in California.

What is a C Corporation?

The California Franchise Tax Board describes a C-corp as a legal structure that creates a separate legal entity from its owners. A C corporation provides strong liability protection and allows businesses to issue multiple classes of stock. Unlike S-corps and LLCs, C-corps are taxed as separate entities. This means the business pays corporate income tax on profits at the corporate rate—and shareholders may also pay taxes on dividends at their individual tax rate (commonly referred to as “double taxation”).

Despite this tax structure, C-corps offer significant advantages in certain situations.

When to Create a C-Corp in California

Deciding whether to form a C-corp should be based on your long-term goals, funding needs, and ownership structure. Here are some scenarios where a C-corp makes the most sense:

You plan to raise venture capital or seek investors: Most institutional investors and venture capital firms prefer investing in C-corporations because of their familiarity, predictability, and ability to issue preferred stock.
You want to offer stock options or employee equity: If your business will offer employee incentives like stock options or an Employee Stock Ownership Plan (ESOP), a C-corp is often the best—or only—choice.
You anticipate rapid growth or plan to go public: If your vision includes scaling nationally or listing your company on a stock exchange, a C-corp is generally the standard.
You want perpetual existence: Unlike partnerships or sole proprietorships, a C-corp exists independently of the founders. Ownership can be transferred through stock sales without disrupting business operations.

Examples of Businesses that Work Well as C-Corps

Technology Startups and SaaS Companies
These companies often seek outside investment and plan for scalability, making the C-corp structure ideal.
Biotech and Medical Device Firms
Due to their high capital needs and long development timelines, these businesses frequently structure as C-corps to attract investors.
Manufacturing and Product-Based Companies
Businesses with significant equipment, inventory, and growth potential may benefit from the structure and formalities of a C-corp.

Every Business is Unique—Get Legal Guidance

Creating a C-corp in California requires more paperwork and compliance—but it can open up valuable opportunities. Make sure it aligns with your long-term vision. An experienced business formation attorney can help you evaluate the pros and cons based on your business model, tax situation, and funding goals.

Contact Our California Business Lawyer for C-Corps Today

Lynnette Ariathurai is a California business formation attorney with deep experience forming C corporations. If you’re considering a C-corp, we are here to advise you. Contact our Fremont office today for a confidential consultation. We assist businesses across the Bay Area.

business structuring, C corporation, forming a C-corp

The Different Types of LLCs

Starting a business in California? You need to be sure that you select the right legal entity. Companies need the best foundation in order to thrive. A limited liability company (LLC) offers several potential advantages. Lynnette Ariathurai is a Fremont business formation attorney who has experience with the full range of LLCs. We can help you find the right one for your company. In this article, you will find an overview of the different types of LLCs in California.

What is a Limited Liability Company (LLC)?

The California Franchise Tax Board explains that an LLC is “a business entity that blends partnership and corporate structures.” It is a business structure that offers favorable liability protection while offering the tax flexibility and relative ease of formation of a partnership or sole proprietorship. In California, LLCs are created by filing Articles of Organization with the Secretary of State. The owners of an LLC are called members. A key advantage is that they are generally not personally liable for the company’s debts or legal obligations. Still, LLCs must comply with specific requirements in the state, including paying an annual franchise tax and filing regular reports.

An Overview of the Three Types of LLCs in California

Single-member LLCs

The most straightforward type of LLC in California is a single-member LLC. It only has one owner (member), but it still offers full personal liability protection while keeping management and tax filing relatively simple. It is a popular choice for solo entrepreneurs, consultants, or freelancers who want legal separation between personal and business assets. The member can elect to be taxed as a sole proprietorship (more common) or corporation (an option). To be clear, there is no need to divide decision-making. The single owner retains full control over daily operations of the business.

Single-member LLCs must still comply with California’s annual franchise tax and filing obligations.

Multi-member LLCs

Multiple parties can own and operate an LLC in California. A multi-member LLC is a company that has two or more owners. Multi-member LLCs offer a collaborative ownership structure with shared responsibilities. This may be the right entity for businesses with multiple partners. Each member has an ownership interest. The LLC will allocate profits, losses, and responsibilities according to an operating agreement. Multi-member LLCs should have a professionally drafted operating agreement. Most multi-member LLCs are taxed as a partnership. With that being said, corporate tax treatment is an option. It provides limited liability for all members. That means that personal assets are protected from business liabilities.

Manager-managed LLCs

Finally, in California, a manager-managed LLC is a type of LLC where the members (owners) designate one or more managers to handle day-to-day business operations. That manager may or may not actually be one of the members. The model is ideal when investors want limited involvement in management or when the business needs professional management. Members retain ownership rights but delegate operational control. That can help to streamline decision-making. Of course, non-manager members must put a great deal of trust into the people who oversee day-to-day business operations. Notably, California allows both member-managers and non-member managers.

Contact Our California Business Formation Lawyer for LLCs Today

Lynnette Ariathurai is a California business formation lawyer who provides solutions-focused guidance and support to clients. If you have any questions about the different types of LLCs, please do not hesitate to contact us today for a fully confidential consultation. With an office in Fremont, we provide business formation services throughout the Bay Area.

limited liability company, LLC types, manager-managed LLCmedical, multi-member LLC, single-member LLC

When to Create a C Corp

Choosing the right business structure can have major implications for taxes, liability, and long-term growth. A C corporation offers distinct advantages. At the same time, they can be complicated and costly to set up, so it is certainly not the right option for every situation. Here, our Fremont business formation lawyer provides a guide to C corporations, including an explanation of the structure, the advantages and disadvantages, and examples of when to create one.

What is a C Corporation?

A C corporation (C corp) is a legal business structure that is wholly separate and distinct from its owners. It is the most common type of corporation in the United States. A C corp can enter into contracts, own assets, sue and be sued, and is taxed independently of its owners. One key feature is that profits are taxed at the corporate level and again at the shareholder level when distributed as dividends. Indeed, the California Franchise Tax Board explains that a C corp pays taxes on its earnings directly. The shareholders of the C corp are taxed separately from the business.

Know the Advantages and Disadvantages of a C Corp

The Benefits of a C Corp

As a C corp is a fully distinct legal entity, it offers very strong liability protection. Shareholders are shielded from personal responsibility for business debts and lawsuits. Further, a C corp also allows for unlimited shareholders. That makes it an attractive structure for raising capital and attracting investors. C Corps can also issue multiple classes of stock. The flexibility in ownership and fundraising makes them a great business entity for companies that have massive growth potential.

The Drawbacks of C Corp

C corps are not right for every situation. One major drawback of a C Corp is double taxation. Remember, the profits are taxed at both the corporate level and again when distributed to shareholders as dividends. C Corps also face extensive recordkeeping, regulatory compliance, and reporting requirements. That can increase the start-up costs and administrative costs.

Examples of When to Create a C Corp in California

You Plan to Raise Venture Capital

Most venture capital firms require investment in a C corporation because it allows for preferred stock and scalable equity structures. Forming a C corp in California positions your business to raise money from outside investors.

You Intend to Go Public in the Future

C corps are the required structure for companies that want to file an initial public offering (IPO). Establishing a C corp early helps to position a business for going public.

You Want to Offer Stock Options to Employees

C corps can issue stock options and other equity incentives that are attractive to top talent. It is a significant benefit because it can make it easier to recruit and retain employees in California’s competitive business environment.

You Anticipate Substantial Profits That Will Be Reinvested

A downside of a C corp is that it is subject to double taxation. However, an advantage of being taxed separately from their owners is that these businesses can reinvest profits without immediate tax consequences for shareholders. It is a strategy that can help grow the company.

Contact Our California Business Formation Lawyer for C Corps Today

Lynnette Ariathurai is a California business formation attorney who has the knowledge and experience that companies can trust. If you have any questions about creating a C corporation, we are here to help. Contact us today for a strictly confidential consultation. From our Fremont office, our firm works closely with C corps throughout the Bay Area.

When to Create an S-Corp for Your Business?

Are you building or transitioning a business in California? You may be considering structuring it as an S-corporation (S-corp). S-corps can be great businesses—but they are not the right choice for every situation. You need the proper business entity. Here, our Fremont business formation lawyer provides a comprehensive guide for when to create an S-corp in California.

What is an S-Corporation?

The California Franchise Tax Board explains that an S-corp is “a corporation that elects to be taxed as a pass-through entity.” Technically speaking, an S corp is not itself a type of business entity but rather a tax election that eligible corporations can make with the Internal Revenue Service (IRS). When a California corporation (or qualified LLC) elects S corp status, it becomes a pass-through entity for federal tax purposes. That means that profits and losses “pass through” to shareholders and are reported on their personal tax returns.

When to Create an S-Corporation in California

Choosing to operate as an S corporation can be financially advantageous—but only in the right circumstances. For it to be the best choice, you have to qualify for S-corp status and there must be tangible benefits to making the election. The S-corp structure is typically best suited for businesses that have:

Steady profits
All owners are U.S. citizens or green card holders and reside in U.S.
Have overhead expenses, ie: hold inventory, lease commercial space, own valuable assets, etc. and desire tax benefits.

In California, S corps must first be formed as a corporation (or LLC) and then file Form 2553 with the IRS. Beyond that, California imposes an annual franchise tax of either $800 or 1.5 percent of net income—whichever one is greater.

Business law tip: The timing of the S corp election is important. Businesses expecting to generate substantial net income—particularly when the owner is actively working in the business—often benefit most. If your business is just launching or not yet turning a consistent profit, the costs and compliance requirements of S corp status may outweigh the tax advantages

Examples of Businesses that Work Well as S-Corps

Professional Services Firms

Accountants, architects, and marketing agencies with high profits and low overhead can use S corp status to reduce self-employment taxes.

Consulting and IT Businesses

Solo consultants or firms with a few employees may find S corp tax treatment efficient once income exceeds a certain threshold.

Marketing and Creative Agencies

These service-based businesses often generate stable revenue and have minimal overhead. For that reason, they can sometimes be ideal candidates for the tax advantages of S corp status.

Every Case is Different: Speak to a Business Formation Lawyer

While S corporation status certainly offers key tax advantages, it is not suitable for every business model. An experienced California business formation lawyer can help you weigh the pros and cons of creating an s corp based on your earnings, industry, and your long-term goals.

Contact Our California Business Attorney for S-Corps Today

Lynnette Ariathurai is a California business formation attorney with the skills and experience to handle S-corps. If you have any questions or concerns about forming an S-corp, we are here to help. Contact us today for a completely confidential, no obligation consultation. From our Fremont office, we handle S-corporation formation throughout the Bay Area.

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When & Why to Create an LLC for Your Business

Are you preparing to start a business in the Bay Area? You may be considering forming a limited liability company (LLC). LLCs offer a number of advantages—but they are not the right option for every situation. Here, our Fremont business formation attorney highlights key things to know about when to create an LLC in California.

What is a Limited Liability Company (LLC)?

The California Franchise Tax Board explains that an LLC “blends partnership and corporate structures.” An LLC offers its owners—called “members” in California—personal liability protection. That means that they are generally not personally responsible for business debts and legal obligations. At the same time, an LLC allows for pass-through taxation. The profits and losses are reported on the members’ personal tax returns.

When to Create an LLC in California

An LLC is one of the most popular business entities in California. Deciding when to form an LLC always depends on the specific goals and risks associated with your business. Here are some of the most notable reasons why it might be the right choice to create an LLC:

You need liability protection: An LLC is a smart choice when you want to protect your personal assets from liability. If your business involves customers, clients, or contracts—or you have employees, equipment, or significant financial exposure—an LLC can shield your home, personal bank accounts, and other assets.
You want ownership clarity: Another good time to form an LLC is when you are entering into a business arrangement with another party. An LLC allows multiple owners to clearly define ownership shares, profit distribution, and decision-making authority. It can be all within an operating agreement.
You prefer a simplified start-up: In comparison to some other business entities that offer liability protection—most notably, traditional C-corporations—LLCs are faster and less expensive to set up. The simplified creation process is a significant advantage.

Examples of Businesses that Work Well as LLCs

Freelance Services and Consulting Services

Independent consultants, designers, or marketing professionals often choose LLCs to separate their personal assets from business risk all while retaining tax flexibility.

Real Estate Investment and Property Management

Real estate investors commonly use LLCs to hold properties and reduce personal liability for tenant issues or property-related claims.

Retail Businesses and E-commerce Businesses

Whether operating a local boutique or an online shop, retail businesses benefit from the liability shield of an LLC and its flexible tax options.

Every Situation is Different: Consult With a Business Formation Lawyer

An LLC may or may not be the right business structure for your specific situation. Every situation involves its own set of facts and circumstances. Your needs and your long-term objectives matter. A business formation lawyer with experience setting up LLCs can help.

Contact Our California Business Lawyer for LLCs Today

Lynnette Ariathurai is a California business formation attorney who has extensive experience helping clients form LLCs. If you have any questions about when to create an LLC, we are here to help. Contact us today for a fully confidential consultation. With an office in Fremont, we handle LLC formation throughout the Bay Area.

forming an LLC, limited liability company, new business structuring

Attorney for Closing a Medical Practice in California

There are more than 75,000 actively licensed physicians in California who work across thousands of different medical practices (California Health Care Foundation). Of course, medical practices do not always last forever. New practices are being formed every month and many existing practices are being sold or even being closed down.

If you are a doctor in the Bay Area who is preparing to close your medical practice, it is imperative that you have a comprehensive understanding of your responsibilities. Within this article, our Fremont business lawyer for medical practices highlights the key things to know about closing down a medical practice in California.

Know Your Responsibilities When Closing Down Your Medical Practice

You Must Provide Adequate Written Notice to All Current Patients

There are strict rules regarding “patient abandonment” in California. Your practice does not want to be in violation as it closes down. The California Medical Board emphasizes that physicians must give sufficient advance notice—usually defined as somewhere between 30 and 60 days—so patients have time to secure alternate care and obtain their records. Written notices should be sent in writing either or both mail and email, and they should include the closure date and instructions for obtaining records.

You Must Maintain, Transfer, and Retain Medical Records

One of your big responsibilities when closing a medical practice in California is ensuring that medical records are properly handled. California requires physicians to keep medical records at least seven years from the last date of service for adults and, for minors, until age 25. You must either retain the charts yourself or designate a licensed custodian and disclose that custodian’s contact information in the patient‑notification letter.

You Must Safely Dispose of or Transfer Controlled Substances and Return DEA Forms

There are also strict rules for managing controlled substances. You should conduct a final inventory of Schedule II‑V drugs, cancel unused DEA 222 order forms by writing “VOID,” and mail them—along with your registration certificate—to the local Drug Enforcement Agency (DEA) office. Destruction of controlled substances must meet the federal “non‑retrievable” standard.

You Must Coordinate Continuing/Emergency Care as Appropriate

As a best practice, all medical practices in California should set up a proper system for coordinating continuing care and emergency care through their closure date. To do right by your patients, it is crucial that you take a proactive approach—especially if your practice has vulnerable patients.

You Must Notify Licensing Boards, Payers, and Credentialing Entities

Another requirement is to file a change‑of‑status form with the Medical Board, relinquish hospital privileges, and update your NPI profile. Medicare, Medi‑Cal, TriCare, and private plans generally require 30‑90 day’s notice to terminate provider agreements and to redirect electronic funds or capitation payments. Failure to cancel contracts in the proper manner can cause big problems.

You Must Properly Wind Down Business Operations

Finally, you need to develop a plan for the orderly wind down of your business operations. What this entails will depend, in part, on the specific nature of your medical practice. With that being said, there are many employment requirements. You should ensure that you give all employees written notice that meets California Labor Code requirements, pay final wages (including unused PTO) on the last day, and issue COBRA or Cal‑COBRA election forms.

Our California Business Lawyer Can Help You Close Down a Medical Practice

Lynnette Ariathurai is a California business attorney with the skills and experience to help physicians wind down their medical practice. If you have any questions about your responsibilities, please do not hesitate to contact us today. With an office in Fremont, we work with medical practices throughout the Bay Area.

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Legal Services for Medical Practices from Formation through Sale

For physicians, owning and operating their own professional practice can be a great opportunity. At the same time, it is complicated. California physicians face unique challenges throughout the lifecycle of a medical practice. As a small business owner and a California business attorney, Lynnette Ariathurai provides solutions-driven representation to medical practices. Here, our Bay Area business lawyer provides an overview of key things medical practices need to know about business law—from open to close.

Forming a Medical Practice

Starting a medical practice in California requires strict compliance with the state’s professional corporation rules. Physicians must form a Medical Corporation under the Moscone-Knox Professional Corporation Act. A key element of the law is that it only allows licensed professionals to own shares and serve as officers or directors. You will also need to obtain a federal employee identification number (EIN) and provide the registration to the California Medical Board.

Buying a Medical Practice

You may be considering buying a medical practice in California. There are options for structuring the purchase agreement. You could buy the entire medical practice—which means acquiring all assets, liabilities, and operational responsibilities. Alternatively, you could complete an asset purchase. That involves selecting specific assets to acquire—and it can allow you to avoid taking on most of the practice’s liabilities. However, the downside of an asset purchase is that you may lose access to contracts/licenses that could otherwise be transferable through purchasing the whole business.

Structuring a Medical Practice (Compensation for Physicians)

When you set up a medical practice, one of the biggest questions about structure is how the physicians will be compensated. Notably, the fee-splitting laws for physicians in California are strictly enforced. Our state prohibits physicians from engaging in fee-splitting arrangements with non-licensed individuals or entities, particularly when compensation is tied to patient referrals. A violation of the law can result in severe penalties, including fines and even potential suspension or revocation of the professional corporation’s registration. Medical practices must ensure that compensation structures are based on legitimate services rendered, not on the volume of referrals.

Selling a Medical Practice

Selling a medical practice in California is complicated. When doing so, it is crucial that you ensure transparency by accurately disclosing the practice’s financial status to potential buyers, informing active patients about the sale in advance, and properly transferring patient records, which requires explicit consent to comply with HIPAA regulations. A California business lawyer can help you draft a comprehensive sale agreement and notify the California Medical Board of changes in ownership.

Closing a Medical Practice

Preparing to wind down your medical practice? Shutting down a medical practice involves more than simply ending operations—it is a highly regulated process and physicians have clear legal duties. To start, you must give patients adequate written notice, provide them access to their medical records, and ensure continuity of care during the transition. California law also requires retaining patient records for a set period—usually at least seven years. Physicians must also be prepared to notify all relevant agencies and properly dispose of any controlled substances.

Contact Our California Business Lawyer for Medical Practices to Today

Lynnette Ariathurai is a California business attorney with extensive experience working with medical practices. We advise physicians on the full range of business matters related to their medical practice—from open to close. Contact us today for your fully confidential, no obligation initial consultation. With an office in Fremont, we serve clients throughout the Bay Area.

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Arbitration Clauses in a Contract: When Arbitration Can and Cannot be in a Contract in California

Arbitration is a private dispute resolution process where parties agree to have a neutral third party (the arbitrator) hear their case and make an (often) binding decision. It is not uncommon for business contracts—but commercial agreements and employment agreements—to contain mandatory pre-dispute arbitration clauses. You may be wondering: Is an arbitration clause enforceable in California? The answer is presumptively “yes”—but there are certain requirements that it must meet. Here, our Fremont business lawyer explains the key things to know about when an arbitration clause can and cannot be in a contract in California.

Arbitration Clauses are Generally Enforceable in California

A pre-dispute arbitration clause is a contractual provision requiring parties to resolve future disputes through arbitration instead of litigation. It is commonly included in consumer, employment, and commercial contracts. California lawmakers have long viewed mandatory arbitration provisions with skepticism. In 2019, Assembly Bill 51 (AB 51) was passed in the state to prohibit employers from requiring employees or applicants to sign arbitration agreements as a condition of employment. However, its enforcement was challenged. On January 1st, 2024, a federal court issued a permanent injunction. The court determined that the Federal Arbitration Act (FAA) preempts AB 51. As such, arbitration clauses for employment contracts are still lawful in California.

While Permissible, Arbitration Clauses Must Meet Certain Standards in California

Even though AB 51 never took effect, mandatory arbitration clauses must meet certain criteria to be lawful in California. The California Supreme Court set the standard in the case of Armendariz v. Foundation Health Psychare Services, Inc. Here are five key elements:

Arbitrator must be neutral: In California, arbitration clauses must ensure that the arbitrator is impartial and free from any conflicts of interest.
More than minimal discovery must be allowed: While arbitration does not include a full discovery process, it cannot be limited to only “minimal” discovery.
Fees for the arbitration cannot be unreasonable: Businesses and employers cannot impose excessive arbitration costs on customers and employees.
All forms of relief available in court must be possible remedy: Arbitration agreements must not limit the types of damages or remedies that a party could otherwise seek in court.
The arbitration must be decided in writing: Finally, the arbitrator must make his or her decision in writing with a basic explanation of the basis of the ruling.

Beyond that, a mandatory arbitration provision in California may also potentially be considered invalid and unenforceable if it is substantively unconscionable. For example, a contract arbitration clause that requires an employee to waive all PAGA claims rights has been previously deemed overly broad and substantively unconscionable by courts.

Speak to Our California Arbitration Attorney for a Confidential Consultation

Lynnette Ariathurai is a California business lawyer who has the experience to help companies and employers with the full range of arbitration cases. Contact us today for a fully confidential, no obligation initial consultation. With an office in Fremont, we serve business throughout the region, including in Union City, San Leandro, San Jose, and Santa Clara.

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Forming a Medical Corporation

Are you considering forming a medical corporation in the Bay Area? It is crucial that you have the knowledge and resources to put the best structure in place for your business. There are special rules and regulations for the formation of professional medical corporations in California. Here, our Fremont attorney for starting a business highlights the dos and the don’ts for forming a medical corporation in California.

The Dos and Don’ts for Forming a Medical Corporation in California

DO Ensure Full Compliance With California Ownership Regulations

There are special requirements for the ownership of medical corporations in California. The Moscone-Knox Professional Corporation Act mandates that medical corporations in California must be owned by licensed professionals. Further, licensed physicians must hold at least 51 percent of shares. The remaining (minority) ownership may be limited to certain allied health professionals. Unauthorized ownership can lead to serious regulatory sanctions.

DO Follow California Naming Conventions for Medical Corporations

California imposes strict naming requirements for medical corporations to prevent misleading or deceptive business identities. The corporation’s name must include “Medical Corporation” or a similar professional designation. It should reasonably align with the physician’s licensed name.

DO Clearly Separate the Clinical Practice from Administrative Matters

A well-structured medical corporation should maintain a clear distinction between clinical decision-making and business operations. Physicians must retain full control over medical judgments and patient care. Administrative staff and even third party companies can handle other matters, such as finances, billing, marketing, and human resources (HR).

DO File a Statement of Information Within 90 Days of Incorporation

When you form a medical corporation in California, you should file a Statement of Information with the California Secretary of State within 90 days of incorporation. Be proactive: Make sure all the required business formation paperwork is filed in a timely manner. You can use Form SI-550.

DON’T Violate California Licensing Requirements

Physicians who form a medical corporation should always be in full compliance with our state’s licensing requirements. Every shareholder, director, and officer of a medical corporation must hold a valid license in their respective field as per the California Business and Professions Code.

DON’T Neglect Corporate Record-Keeping Requirements

Medical corporations in California are subject to strict record-keeping requirements. Maintaining accurate and up-to-date corporate records is a legal requirement under California corporate law. A medical corporation must document meeting minutes, bylaws, stock issuance, tax filings, and financial records.

DON’T Mishandle Sensitive Patient Medical Records

A patient’s medical records are protected under the federal Health Insurance Portability and Accountability Act (HIPAA) and the California Confidentiality of Medical Information Act (CMIA). Mishandling medical data—whether through improper storage, unauthorized access, or insecure disposal—can lead to serious penalties.

Contact Our California Medical Corporation Formation Attorney Today

Lynnette Ariathurai is a California business formation lawyer with extensive experience helping clients navigate the dos and don’ts of forming medical corporations. Contact us today for a fully confidential, no obligation initial consultation. With an office in Fremont, we help entrepreneurs form medical corporations throughout the region, including in Newark, Hayward, East Bay, and Milpitas.

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