SOLE - The International Society of Logistics is a non-profit international professional society composed of individuals organized to enhance the art and science of logistics technology, education and management. SOLE was founded in 1966 as the Society of Logistics Engineers "to engage in educational, scientific, and literary endeavors to advance the art of logistics technology and management." There are over 90 SOLE chapters in more than 50 countries throughout the world. Chapters conduct technical meetings, symposia and workshops, all designed to provide the SOLE member with opportunities for professional advancement. Chapters and districts also sponsor regional technical meetings.
The Legal Department articles are not intended to serve as legal advice and are offered for educational purposes only. The information provided should not be used as a substitute for independent legal advice and it is not intended to address every situation that could potentially arise. Please be aware that laws, regulations and technical standards change over time. As a result, it is important to verify and update any reference or information that is provided in the article.
As a licensed mental health professional in California, you may organize your private practice as either a sole proprietorship or a professional corporation.
Learn about forming a professional corporation and its advantages.
If you are a licensed mental health professional who wants to establish a private practice, an essential first step is to choose which business structure would be most suitable for your business. In California, licensed professionals are not permitted to form limited liability companies for the purpose of rendering professional services.1 As a licensed mental health professional in California, you may organize your private practice as either a sole proprietorship or a professional corporation. In order to set up a sole proprietorship, a licensed professional is typically engaged to file a business license with the city or county (check with your city or county to see if this step is necessary). In addition to the business license, the county usually requires a nominal filing fee. Once you have your business license, you can rent office space, circulate advertisements, and start practicing. Incorporating, in comparison, involves relatively more work and yet, many licensed professionals choose to organize their businesses as professional corporations as it provides several advantages that a sole proprietorship does not.
What is a Professional Corporation?
California law defines a professional corporation as a corporation organized under the General Corporation Law that engages in rendering professional services.2 The term "professional services" is defined as any type of professional service that may be lawfully rendered only pursuant to a license, certification, or registration authorized by the Business and Professions Code, the Chiropractic Act, or the Osteopathic Act.3 Thus, a licensed marriage and family therapist, a licensed clinical social worker, and a licensed psychologist may set up their private practices as California professional corporations.
Advantages of Incorporating
One of the main advantages of incorporating is that a corporation can shield you and any other owners, officers, and professional employees from personal liability against claims that are unrelated to the rendering of professional services. A professional corporation is treated as if it were a person. In other words, it can enter into contracts, incur debt, own property, engage in business, sue, and be sued. Because it is treated as a person, the corporation will be responsible for its losses, debts, and obligations. Creditors and claimants may only look to the corporation and its business assets for compensation. For instance, if a party brings an action against the corporation for breach of contract, and the corporation loses, the party cannot take your home, your car, and your personal assets. However, a corporation does not protect you from liability claims arising from your professional services. If a client files suit against you alleging professional negligence, the professional corporation will not deflect that claim of malpractice. Rather, you will be held personally liable in the event a judgment is rendered against you.
Another advantage of forming a professional corporation is that the corporation may take an income tax deduction for the payment of health insurance premiums for its employees, and the employees will not be required to pay tax on the benefits.
Who Can be Owners, Directors and Officers?
California requires that a professional corporation consists of directors and officers. If you are the sole owner of your professional corporation, you must also be the director, and serve as both the president and the treasurer of the corporation. The other officers of the corporation, such as the secretary, do not have to be licensed professionals.9 If you and one other colleague establish a professional corporation, you two will then serve as directors, and between the two of you, fill the offices of president, vice president, secretary and treasurer of the corporation.10 If there are more than two owners, the owners must meet and elect directors for the corporation. The owners can also elect officers or have the directors choose who will serve as officers.11
If you decide to establish your private practice with other licensed professionals, the law limits who can actually be the owners, directors, or officers of the professional corporation. Even the employees you hire to render professional services are restricted to the following limitations: An marriage and family therapy corporation and a licensed clinical social worker corporation may have for their owners, directors, officers, or professional employees the following licensed professionals: licensed marriage and family therapists, licensed clinical social workers, licensed physicians and surgeons, licensed psychologists, registered nurses, licensed chiropractors, licensed acupuncturists, and naturopathic doctors.4 An MFT must own at least 51 percent of the outstanding shares of a marriage and family therapy corporation and the remaining 49 percent may be owned by licensed physicians and surgeons, licensed psychologists, licensed clinical social workers, registered nurses, licensed chiropractors, licensed acupuncturists, and naturopathic doctors. The number of these licensed persons cannot exceed the number of MFTs in the corporation and cannot surpass a combined share total of 49 percent.5 Similarly, an LCSW must own at least 51 percent of the outstanding shares of a licensed clinical social worker corporation and the remaining 49 percent may be owned by licensed marriage and family therapists, licensed physicians and surgeons, licensed psychologists, registered nurses, licensed chiropractors, licensed acupuncturists, and naturopathic doctors. The number of these licensed persons cannot exceed the number of LCSWs in the corporation and cannot surpass a combined share total of 49 percent.6 A psychological corporation may be comprised of licensed psychologists, licensed physicians and surgeons, licensed doctors of podiatric medicine, registered nurses, licensed optometrists, licensed marriage and family therapists, licensed clinical social workers, licensed chiropractors, licensed acupuncturists, and naturopathic doctors.7 A psychologist must own at least 51 percent of the outstanding shares of a psychological corporation and the remaining 49 percent may be owned by licensed physicians and surgeons, licensed doctors of podiatric medicine, registered nurses, licensed optometrists, licensed marriage and family therapists, licensed clinical social workers, licensed chiropractors, licensed acupuncturists, and naturopathic doctors. The number of these licensed persons cannot exceed the number of psychologists in the corporation and cannot surpass a combined share total of 49 percent.8
Some Disadvantages
A disadvantage of forming a professional corporation is that incorporating entails a number of formalities and organizational expenses. To incorporate as a professional corporation in California, you must file the Articles of sIncorporation with the Secretary of State.17 A sample, which meets the minimum statutory requirements, can be found on the California Secretary of State website.18 The sample should only be used as a guide in preparing the Articles of Incorporation. The Articles of Incorporation of a professional corporation must contain a specific statement that denotes the corporation as a professional corporation.19 Documents can be hand delivered to a regional office location or mailed to the Sacramento office. The office locations can also be found on the Secretary of State website. The fee for filing the Articles of Incorporation is $100. There is an additional $15 fee for processing a document delivered in person to the Sacramento office or the regional offices. The Secretary of State will certify up to two copies of the filed document without charge, provided that the copies are submitted to the Secretary of State with the document to be filed. The corporate existence begins upon the filing of the articles and continues perpetually, unless otherwise expressly provided by law or in the Articles of Incorporation.20
To conclude, you should determine your particular business needs before making the decision to form a sole proprietorship or a professional corporation. Choosing the right business structure will contribute largely to the profitability and success of your business.
Most readers would probably give a lot for this scenario to describe them. I would even do so myself, though more for being young again since I already have had plenty of prestigious, well-paying jobs.
AI improves the productivity of professionals by anything from 33% to 66% (with the current generation of fairly poor tools). It also improves the quality of deliverables by 40% or better and supports vastly better and faster creativity. Therefore, the more you use AI, the better your current work will be. Better work gives you more recognition (and hopefully a few bonuses) in your current job and also makes your portfolio more impressive.
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