For so many people, their pets are cherished family members. Their local veterinary practice helps to keep dogs, cats, and other animals safe and healthy. It is a competitive and highly regulated industry. Every veterinary practice in the Bay Area needs the right legal structure to thrive. Here, our veterinary business lawyer provides an overview of the key things to know about legal structures for veterinary practices in California.
California Veterinary Practices: You Should Form a Professional Veterinary Corporation
In California, a veterinary practice cannot operate as a limited liability company (LLC), partnership, or general stock corporation. Under the California Veterinary Medicine Practice Act, a veterinary practice should be formed as a professional veterinary corporation. It is a unique type of legal entity that offers several advantages, including compliance with state regulations, limited liability, and tax advantages. A business formation attorney can help you set up your practice. Notably, a professional veterinary corporation may qualify to be taxed as S-corporations (S-corps) in California.
Key Steps to Form a Professional Veterinary Corporation in the Bay Area
Forming a professional veterinary corporation in California requires several key steps to ensure compliance with both state law and the regulations of the veterinary profession. Here are five key things that you should do when forming a veterinary practice in the Bay Area:
- File the articles of incorporation: The first step to establish your professional veterinary corporation is to file the articles of incorporation with the California Secretary of State.
- Appoint directors and draft bylaws: After filing the articles, you must then appoint your corporation’s board of directors and draft bylaws. The bylaws lay the groundwork for how your corporation will operate, including details of meetings, roles, and responsibilities of directors and officers.
- Notify the California Veterinary Medical Board (VMB): The next step involves notifying the California Veterinary Medical Board about your new corporation. The board requires a Notice of Veterinary Corporation and a fee to register your practice.
- File form 2553 for S-corporation taxation: As part of managing your corporation’s financials, you should consider filing IRS form 2553 for S-corporation status. It is a type of business taxation that allows income, losses, deductions, and credits to pass through to U.S. resident shareholders for federal tax purposes, thereby avoiding double taxation.
- Pay the California Franchise Tax Board: Finally, the professional veterinary corporation must register with the California Franchise Tax Board and pay the required minimum franchise tax annually.
Veterinarians do not have to navigate the business formation process alone. An experienced attorney can help you ensure that your professional practice has the right legal structure in place.
Contact Our Bay Area Business Lawyer for Veterinarians in California
Attorney Lynnette Ariathurai has the professional skills and legal expertise to help veterinarians and their partners set up successful professional practices. If you have any specific questions about the legal structure for a California veterinary practice, please do not hesitate to contact The Law Office of Lynnette Ariathurai today. With a legal office in Fremont, we serve veterinary businesses throughout the Bay Area.