Author: Shardul Gaikwad

Business legal services in Silicon Valley

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.

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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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Construction Contracts: What is Required to Be in a Home Improvement Contract for Residential Construction?

According to the data cited within the California Residential Remodeling/Renovation Market Study, home improvement is a multi-billion dollar industry in the state. For contractors, the remodeling and renovation business offers many different opportunities. Home improvement projects in California that exceed $500 in cost require a proper license and a written contract. Within this article, our California business lawyer highlights key things that are required to be in a home improvement contract for residential construction.

California CSLB Regulates Home Improvement Contracts

The Contractors State Licensing Board (CSLB) regulates residential home improvement contracts in California. As a construction company or contractor, it is imperative that you ensure full compliance with all CSLB requirements. A well-drafted contract not only ensures that your company will meet regulations, but it can also protect you if a dispute arises with a homeowner.

Key Requirements for a Home Improvement Contract in California

What does a contract for a residential home improvement project need to include in California? Here is an overview of the most notable requirements from the CSLB:

In writing: Home improvement contracts in California must be in writing to comply with CSLB regulations. A written contract helps to ensure clear terms. If your business is doing a home improvement project for $500 or more, the agreement must be in writing.
Contractor identification: The home improvement contract must include the contractor’s full name, address, license number, and contact information. It is imperative that a contractor accurately identifies itself within the agreement.
Description of materials and work: In California, a contract for a home improvement should also include comprehensive details of the materials and work. It should clarify the specific materials, quantities, and the scope of work.
Permitting information: There should also be terms regarding any permits that will be needed to complete the project. Among other things, this part of the agreement should clarify who is responsible for obtaining the permit(s).
Detailed payment schedule: A payment schedule, including the down payment and installment amounts, must be clearly outlined. All contractors engaged in residential home improvement work should note that California law puts limits on down payments ($1,000 or 10 percent of the contract, whichever is less).
Written change order (modifications): Issues can arise during home improvement projects. It is not uncommon for homeowners to request modifications. Any changes to the original contract must be documented with a written change order.

Note: The above listed requirements for residential remodeling and renovation projects in California apply to all home improvement projects valued at $500 or more.

Contact Our Bay Area Business Law Attorney Today

Lynnette Ariathurai is a business law attorney with extensive experience drafting and reviewing contracts. If you have any questions about a construction contract for a home improvement project, we are here as a resource. Contact us today for a fully confidential consultation. From our Fremont law office, our firm represents contracts throughout the Bay Area.

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Arbitration Clauses in a Contract: Benefits and Pitfalls of Using Arbitration to Resolve Disputes

Arbitration is a private dispute resolution process where parties agree to have a neutral third party (arbitrator) decide, after reviewing the evidence and hearing the arguments. It is not uncommon for commercial contracts to contain pre-dispute arbitration clauses that mandate the arbitration of any dispute that might arise. Here, our Fremont contact dispute lawyer explains how contract arbitration provisions work and highlights the advantages and disadvantages of using arbitration to resolve a dispute.

An Overview of Arbitration Clauses in California

Arbitration clauses in California contracts are provisions that require parties to resolve disputes through arbitration rather than litigation. You may also hear these referred to as a forced arbitration clause or a mandatory arbitration provision. The California Arbitration Act generally upholds the enforceability of pre-dispute arbitration clauses. Indeed, a California court will typically enforce these provisions so long as they are clear, voluntary, and do not unfairly disadvantage one party, except when arbitration clauses are against public policy.

The Advantages of Using Arbitration for a Contract Dispute

A Faster, More Efficient Resolution

One of the primary advantages of using pre-dispute arbitration clauses in contracts is that they promote a faster and more efficient resolution when a dispute arises. In contrast to litigation, arbitration can be completed far more quickly.

Cost Effective

Another advantage of arbitration for contract disputes is that it can save money. Arbitration is generally less expensive than litigation. It avoids many of the procedural complexities (and the costs) that are typically associated with commercial litigation.

Full Privacy

Finally, arbitration is a confidential process. In California, arbitration proceedings are private. As such, they can help businesses protect sensitive information. On the other hand, litigation can become public record in California.

The Disadvantages of Using Arbitration for a Contract Dispute

Very Little Ability to Litigate

As noted, California law (and federal law) strongly favor the enforcement of pre-dispute arbitration contracts that have been voluntarily agreed to by the parties. Mandatory arbitration means that the parties to the contract will generally lose the right to litigate their case.

Lack of a Comprehensive Discovery Process

Litigation of a contract dispute allows for discovery. In contrast, arbitration limits formal discovery processes. That can save time and money, but it can also make it harder for parties to gather evidence—especially if relevant information is in the control of the opposing party.

Limited Appeal Rights

While it is technically possible to appeal the decision of an arbitrator, that appeal can generally only be brought on very limited, narrow grounds. You do not have full appeal rights in arbitration. Arbitration decisions are usually final and binding.

Contact Our Fremont Business Arbitration Lawyer Today

Lynnette Ariathurai is a California business lawyer with the skills and experience to handle arbitration matters. If you have any questions about arbitration, a contract dispute, or a related matter, please do not hesitate to contact us today for a confidential consultation. With an office in Fremont, we serve clients throughout the Bay Area.

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Selling a Medical Practice (How Sellers can Minimize their Liability)

Do you own and operate a medical practice in California? If you are considering selling your professional practice, it is imperative that you know how to effectively navigate the transaction. Minimizing your liability risk—both before and after the sale of the medical practice—is crucial. In this article, our Fremont lawyer for selling a medical practice provides an overview of strategies sellers can use to minimize their risk of liability with selling a medical practice in California.

How to Minimize Your Liability Risk When Selling a Medical Practice in California

1. Clearly and Accurately Disclose the Financials of the Medical Practice

It is crucial that sellers clearly and accurately disclose the financial position of the medical practice to prospective buyers. If material misrepresentations are made regarding key financial matters, a seller could potentially face liability. Financial transparency is important.

2. Send Timely Notice of the Sale to Active Patients

Active patients should be informed about the sale well in advance to ensure continuity of care. As the seller, you should provide clear communication about how the transition will affect their treatment and how they can access their medical records. Failure to notify patients in a timely manner could result in a liability risk.

3. Obtain Patient Consent Before Transferring Any Records

TheHealth Insurance Portability and Accountability Act (HIPAA) protects the sensitive medical records of patients. You cannot lawfully transfer medical records to another party—even a buyer of your medical practice—without patient consent. Get clear, explicit consent from patients.

4. Disclose Any Known Legal or Regulatory Issues

Sellers need to be prepared to disclose known issues. Indeed, full disclosure of any ongoing or past legal or regulatory issues is crucial to protect yourself against future claims. Buyers have a right to know about malpractice lawsuits, compliance violations, or outstanding investigations.

5. Use a Comprehensive, Professionally Reviewed Purchase Agreement

A detailed and legally sound purchase agreement protects both parties and minimizes misunderstandings. You should ensure the agreement outlines the terms of the sale, responsibilities for liabilities, and any contingencies. The contract should be drafted by a lawyer who has the experience needed to represent the seller of a medical practice in California.

6. Notify the California Medical Board of the Change in Ownership

The California Medical Board must be notified of the sale to comply with state regulations. As the seller, you should be sure to submit all necessary documentation to avoid penalties or delays in the ownership transfer.

7. Review Medical Malpractice Insurance to Confirm Adequate Coverage

Finally, sellers should review their medical malpractice insurance policy to confirm that it provides adequate coverage through and after the sale. You may want to consider purchasing tail coverage to protect against claims arising from events that occurred before the transfer of ownership.

Get Help From a California Business Lawyer for Selling a Medical Practice

Lynnette Ariathurai is a California business lawyer with the skills, knowledge, and experience to help business owners minimize liability in the sale of a medical practice. Contact us today for a completely confidential, no obligation consultation. We represent clients throughout the region, including in Fremont, Newark, Hayward, East Bay, Milpitas, Union City, San Leandro, San Jose, and Santa Clara.

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Fee Splitting Laws for Physicians in California

If you are the owner and operator of a medical practice in California and you are preparing to bring on another physician or a management company, it is imperative to have a comprehensive understanding of our state’s fee-splitting laws. A key point is that California law prohibits doctors from splitting fees with non-licensed individuals and non-licensed entities. Here, our Fremont business attorney provides a more comprehensive guide to the fee splitting laws for physicians in California.

An Overview of Fee Splitting Laws for Physicians in California

California’s fee splitting laws prohibit physicians from receiving or giving compensation solely for referrals. State law bars arrangements where a physician’s primary financial gain stems from directing patients to a particular provider (California Code, BPC 650).

To be clear, a violation of the law is a big deal. It can lead to a medical practice facing fines. Further, under California law Cal. Corp. Code § 13408.5, the violation of fee-splitting laws or anti-kickback regulations “shall be grounds for the suspension or revocation of the certificate of registration of the professional corporation.”

Note: The California Physician Ownership Referral Act (PORA) restricts physician self-referrals within the state. It prohibits physicians from referring patients for certain designated health services to entities in which they or their immediate family members have a financial interest—unless a specific exception applies. All referrals should be based on medical need.

The Dos and Don’ts When Hiring Another Physician

DO Ensure the Compensation Structure is Lawful

Medical practice owners should confirm that any salary, bonus, or other compensation is based on legitimate work performed—not simply on referrals. Compliance with fee-shifting is a must.

DO Use Written Contracts for Physicians

Documentation is key. Medical practices should use clear, professionally drafted contracts outlining responsibilities, compensation terms, and the services provided.

DO Be Ready to Seek Professional Guidance

Physician compensation is complicated. It is also highly regulated. Medical practices should not hesitate to seek guidance from an experienced California business lawyer.

DON’T Tie Payment to Patient Referrals

Medical practices must strictly avoid incentives or percentage-based payments exclusively linked to patient volume or referrals. That could violate California fee-splitting laws.

DON’T Assume Federal Compliance is Sufficient in California

California law for fee-splitting and physical referrals is more strict than federal requirements. Meeting federal Anti-Kickback or Stark Law standards does not automatically satisfy our state law.

Know the Difference: Employees and Independent Contractors

A physician may be classified by a medical practice as either an employee or an independent contractor in California. The proper classification depends on case-specific factors, including their workplace responsibilities. Doctor-employees typically work under direct supervision, while independent contractors maintain substantial autonomy over their schedules and practice methods. Independent contractors must also have a written contract, a business license, and also provide their services to other medical practices.

Contact Our Fremont 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 fee splitting laws for physicians, we can help. Call us now or connect with us online for a fully confidential consultation. Our firm provides business law services across the region, including in Fremont, Union City, San Jose, Santa Clara, Newark, and Hayward.

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Buying a Medical Practice in California? Know the Difference Between Purchasing the Business and Purchasing the Assets

The California Health Care Foundation reports that approximately 75,000 physicians are in active practice in our state. Are you a doctor who is considering buying a group medical practice? It is crucial that you ensure the transaction is structured properly. You could buy the entire business or, potentially, you could purchase its assets. Here, our California business law attorney explains the key points to understand about the differences between purchasing the company and purchasing the company’s assets.

What Does it Mean to Purchase a Business?

Purchasing a business means acquiring the entire company, including all its assets, liabilities, and operational responsibilities. As the buyer, you effectively step into the shoes of the previous owner. You get the medical practice and its existing contracts, but you also take on its debts, and legal obligations. Comprehensive due diligence is especially important when buying an entire medical practice.

What Does it Mean to Purchase the Assets of a Business?

Purchasing the assets of a business involves buying specific assets without acquiring the company itself. In an asset purchase, you select which assets to acquire—such as medical equipment, patient relationships, and intellectual property—while generally avoiding the company’s liabilities. However, you cannot assume the company’s contracts or the goodwill it has built.

Choosing the Best Option for Buying a Medical Practice in California

Pros of Buying a Business

Seamless transition: Acquiring the entire business allows for uninterrupted operations, minimizing disruptions for patients and staff.
Retention of contracts: Existing agreements—such as insurance provider contracts and leases—run with the business itself.
Established reputation: Goodwill matters. You inherit the practice’s brand identity and patient goodwill.

Cons of Buying a Business

Assumption of liabilities: You take on all the business’s debts and legal obligations, including any undisclosed or contingent liabilities.
Complex due diligence: Thorough investigation is required to uncover financial, legal, and regulatory issues, which can be time-consuming and costly.
Regulatory compliance challenges: Navigating California’s healthcare regulations for ownership transfer can be complex.

Pros of Buying the Assets of a Business

Selective acquisition: You can choose specific assets to purchase, allowing you to exclude unwanted equipment or obligations.
Reduce liability risk: As a rule, you can avoid assuming the seller’s liabilities, reducing your exposure to potential legal and financial risks.

Cons of Buying the Assets of a Business

Operational disruption: Transferring assets may necessitate re-establishing contracts, obtaining new licenses, and renegotiating insurance provider agreements.
Patient continuity concerns: You may face major challenges in retaining patients, as transferring medical records requires patient consent under privacy laws.

Speak to Our California Business Lawyer Today

Lynnette Ariathurai is a business attorney with extensive experience working with owners of medical practices. If you are considering buying a medical practice, we are here to help. Call us now or contact us online to arrange your confidential, no obligation consultation. From our Fremont office, our firm works with medical practices throughout the Bay Area.

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