What are the advantages of a California Professional Corporation for a medical practice? A California Professional Corporation or “PC” is a unique form of business legal entity which protects its professionally licensed owners from liability while providing extended opportunities to invest in a 401(k) or other retirement vehicles and deduct important benefits. The advantages of a California PC for medical practices are primarily limited liability and additional deductible expenses and benefits.
The California Professional Corporation Must Be Owned by Licensed Professionals
The California PC must be owned by a those with an advanced degree who carry specialized licenses including but not limited to doctors, dentists, engineers, architects, lawyers and certified public accountants. As a medical practice, one of the key issues is malpractice and other sources of risk and liability. The California PC protects each owner from issues of malpractice or liabilities created by other shareholder practitioners due to another professional’s actions or negligence. The PC also limits the liability of its owners if the corporation’s debts cannot be paid.
Additional Deductions Increase Profit Retention
The ability to take additional deductions to increase profit retention is another of the advantages of a California Professional Corporation for a medical practice. This unique form of corporate entity allows your practice to offer and receive tax deductions for various employment and fringe benefits including:
- Dependent Care
- Health Insurance
- Life Insurance
- Disability Insurance
The PC can be structured to elect for the same taxation as an S Corporation. Income flows through the entity to the appropriate shareholders eliminating the type of “double taxation” one would experience from another entity such as a C Corporation.
Continuity is Another of the Advantages of a California Professional Corporation for a Medical Practice
Legal and financial protections and tax advantages are not the only advantages of a California Professional Corporation for a medical practice. Continuity is a major benefit of a California Professional Corporation. The PC ensures the practice survives key life events such as disability, incapacity, divorce, bankruptcy or death of a shareholder. The shareholders’ agreement in a PC establishes how surviving spouses/heirs are to be compensated and how new practitioners can be brought into the group.
The practice and/or its owners may wish to give consideration to a Management Service Organization or MSO to provide additional protections while enhancing the ability to streamline overhead and support services while attracting external investment. The ultimate goal is to maximize the quality of care delivered to your patients as well as the patient experience as they interact with the practice and its people and facilities.
Serving the San Diego and Southern California Medical and Healthcare Community for More Than 40 Years
The experienced medical practice and healthcare business attorneys at the Watkins Firm have served the healthcare community for more than four decades here in San Diego. We have advised and represented individual physicians and healthcare practitioners in contract negotiations and issues with large healthcare organizations. We have represented large national interests as well as local practices. We can help your medical or healthcare business with business formation and all associated employment and regulatory compliance including physicians contracts.
We create, review and update medical employment agreements and all employment related documents. We work to ensure your new medical practice or healthcare business is compliant with all aspects of the Health Insurance Portability and Accountability Act (HIPAA) and compliant with Occupational Safety and Health Administration (OSHA) regulations as well as all federal, state and local legal and regulatory compliance issues. The Watkins Firm represents medical and healthcare business entities in business related litigation and dispute resolution.
If you would like to learn more about the advantages of a California PC for medical practices and how the Watkins Firm can contribute to the success of your medical or healthcare entity we invite you to review our podcast Episode 7 – Medical Practices and Healthcare Businesses, the strong recommendations of our clients and contact the Watkins Firm or call 858-535-1511 for a complimentary consultation today.