Health Care Agencies Articles - The Law Office of Lynnette Ariathurai Fremont, CA Business Law Firm 510-794-9290

Business legal services in Silicon Valley

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.

medical practice sale, minimize liability risk, professional practice sale, selling California medical practice

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.

California medical practice law, physician fee splitting California

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.

buy business assets, buy medical practice, medical practice purchase

Stealing Employees from a Nursing Practice in California

A nursing practice is about its people. It is the type of business that requires skilled, experienced nurses on staff to operate competitively. A great nurse is one that has had a lot of training—and many businesses make big investments into their nurses. This raises an important question: Is it legal to take the nurses from a competing business? The answer is generally “yes”—California law provides limited protections. Here, our Fremont business lawyer highlights the key things to know about our state’s regulations regarding stealing employees from a nursing practice.

California Law Largely Does Not Prohibit “Stealing” of Employees from Nursing Practices

California is an at-will employment state that, for the most part, protects an employee’s ability to move from one job to another. Indeed, there is strong public policy in favor of employee mobility and competition and the medical field, including nursing, is no exception. Indeed, non-compete agreements are largely unenforceable in our state. Further, there is no law that stops the stealing of employees from another medical practice in California.

The exception (workplace raids): There is an exception in California for so-called “workplace raids.” If a competitor engages in unfair practices—such as intentionally targeting another business’s employees with the intent to disrupt or interfere with that business—it may be unlawful. It could give rise to a claim under California Business and Professions Code § 17200.

Nursing Practices Have a General Right to Recruit from Competing Businesses

Like other businesses, nursing practices have a general right to compete in the marketplace. Among other things, this means that they have the right to recruit or “steal” employees from competing firms by offering them better opportunities. It could be higher pay, better benefits, or more favorable working conditions. As long as the recruitment is done without violating the law it is legally permissible in California.

How Nursing Practices Can Protect their Investment in Human Capital

Although a nursing practice cannot stop a competing business from trying to recruit their employees, there are steps that employers in the health care industry in California can take to protect their investment in human capital. Options include:

Employment contracts: To protect their investment in human capital, nursing practices can use employment contracts. A California employment lawyer can help you structure nursing contracts in a manner that helps prevent workers from leaving to take an offer at a competing business.
Non-solicitation agreements: While non-compete clauses are unenforceable in California, non-solicitation agreements that prevent former employees from soliciting the company’s clients or employees may be enforceable if they are reasonable in scope
Trade secret protections: Nursing practices should also safeguard their trade secrets and confidential information. Under the California Uniform Trade Secrets Act, businesses can take legal action against anyone who misappropriated their trade secrets.

Contact Our California Business Lawyer for Nursing Practice Today

Lynnette Ariathurai is a California business attorney with the skills and experience to represent nursing practices. If you have any questions about nursing practice employee stealing/poaching, please do not hesitate to contact us today for a confidential initial consultation. With a law office in Fremont, we represent nursing practices throughout the San Francisco Bay Area including San Jose, San Mateo, Hayward, and Newark.

California workplace raid law, employee poaching, employee stealing

How the New California Privacy Rights Act (CPRA) Compliance Law Impacts Businesses

The California Privacy Rights Act (CPRA) is a state statute that went into effect on January 1st, 2023 and is now officially being enforced. It is imperative that all companies in California understand their responsibilities under the CPRA and its parent law, the California Consumer Privacy Act (CCPA). In this article, our Fremont business attorney provides an overview of the key things that companies should know about compliance with the CPRA.

Background: The CPRA Clarifies a 2018 California Privacy Law

The California Consumer Privacy Act (CCPA) is a state law that was passed to provide consumers with control of the personal information that businesses collect. The California Privacy Rights Act (CPRA) is a law that significantly amends the CCPA. Notably, the CPRA was passed through a ballot initiative in 2020. At that time, it was known as Proposition 24. As noted above, enforcement of the CCPA/CPRA officially started on July 1st, 2023.

Which Businesses are Required to Comply With the CPRA?

It is important to emphasize that not every business is required to comply with the CPRA. It applies to all companies that are either based in California or sell products/services in California and meet one of the following three criteria:

The business has gross annual revenue of $25 million or more
The business generates at least 50 percent of its annual revenue from selling or sharing the personal information of consumers
The business buys, sells, or shares the personal information of residents of at least 100,000 households in California during the year

While the first criterion is relatively straightforward—larger businesses ($25 million in annual revenue) must comply—it is the third that could affect many smaller or mid-sized businesses under the scope of the CPRA.

Note: The CPRA does not apply to non-profit organizations or government agencies.

How to Comply with the New California Privacy Rights Act

Is your company covered by the scope of California’s revised consumer privacy law? It is crucial that you are in full compliance with the regulations. Here is the key thing to know about compliance: California businesses that are covered by the new CPRA need to have a comprehensive written privacy policy in place. That policy must meet all the requirements of the law. Among other things, a written privacy compliance policy should address:

The process for disclosing that your business collects personal information about a consumer at or before the point of data collection.
A clear statement that consumers have the right to request that information that you collected about them as well as your CPRA privacy policy.
An acknowledgment of and process for addressing the fact that consumers have the “right to be forgotten” under California’s privacy law—meaning they can request that you delete personal data.
A process for allowing consumers to “opt-out” of having their personal information sold to or shared with third parties.
A statement affirming compliance with the “right to fair treatment”—as California law holds that consumers cannot face unfair treatment for restricting access to their personal data.

Schedule a Confidential Consultation with Our California Business Lawyer Today

Lynnette Ariathurai provides solutions-focused guidance and support to business owners and entrepreneurs. If you have any questions about the new California Privacy Rights Act or CPRA compliance, we are here to help. Contact us today for a confidential consultation. We serve businesses throughout the Bay Area, including in Fremont, Newark, Hayward, East Bay, Milpitas, Union City, San Leandro, San Jose, and Santa Clara.

business attorney, california privacy rights, compliance law, consumer privacy law, privacy policy

Considerations When Buying an In-Home Health Care Company

Home health care is one of the fastest growing industries in California. The Centers for Disease Control and Prevention (CDC) estimates that there are nearly 12,000 home health agencies nationwide. If you are considering purchasing a home health agency, it is crucial that you know how to protect your legal rights and financial interests. Here, our Fremont lawyer for buying a business highlights key considerations to know when buying an in-home health care company in California

Important Issues to Review When Buying an In-Home Health Care Agency in California

Health care is a large, highly regulated industry. There are many unique considerations that you need to be aware of if you are purchasing a home health care business. Here are some key things to keep in mind when assessing an in-home health care company in California:

Accreditation: Review the agency’s current accreditation status and verify whether it’s up to date. Accreditation is essential for reimbursement from Medicare and Medicaid, and it’s a key factor in the agency’s overall credibility. The most common accreditation organizations for home health agencies are The Joint Commission, CHAP, and ACHC.
Employees: In-home health care companies are only as strong as their human capital. Staff matters. Evaluate the current employees and their qualifications. Verify that all staff members are licensed and certified, and, if applicable, review any employment contracts.
Medicare eligibility: Under federal law (42 CFR § 424.550), a home health care agency that has enrolled in Medicare within the last 36 months generally cannot be transferred/sold. If it is sold, the company may be barred from Medicare. This could effectively destroy the business, but there are some exceptions to the federal rule. A business lawyer can help you evaluate any specific situation.
Franchise relationship: Many home health care companies in California are franchise businesses. If you are considering purchasing a home health company and becoming a franchisee, you need to understand the benefits and drawbacks that come from the franchise relationship. The franchise agreement should be reviewed by a lawyer.
Buy-Sale Agreements: A well drafted agreement to purchase or sell the business is critical, to minimize the risks of liability. It should be drafted or reviewed by an attorney.

Of course, all the other issues that you would need to consider when buying a business still apply. For example, it is imperative that you take a careful look at a home health care company’s balances—all assets and all liabilities—before finalizing any purchase agreement.

Comprehensive Due Diligence is a Must When Buying a Bay Area Business

When buying a business in the Bay Area, it is imperative that you conduct thorough due diligence to avoid potential pitfalls. Among other things, due diligence should include a review of legal, financial, and operational aspects of the business. An in-home health agency is no exception to the rule. As this is a complex industry, comprehensive due diligence is especially important. You do not have to figure everything out alone. Buyers should be prepared to work with an experienced business lawyer.

Get Help from a California Business Lawyer for In-Home Health Care Companies

Lynnette Ariathurai is a top business lawyer with deep experience working with home health companies. If you have questions about buying an in-home health business in California, we can help. Contact us now for a confidential consultation. Our firm works with home health companies in Fremont, Newark, Hayward, East Bay, Milpitas, Union City, San Leandro, San Jose, Santa Clara, and throughout the region.

health care company, home health care, home health care agency, in-home health care agency

CA Assembly Bill 890 – What it Means to Nurses and Questions that Remain

Nursing is one of the most important occupations in our region. According to data from the California Board of Registered Nursing, there are nearly 500,000 actively registered nurses (RNs) in the state. In September of 2020, Governor Gavin Newsom signed a law—California Assembly Bill 890—which has important implications for Nurse Practitioners and their employers. Here, our Bay Area business attorney for nurses explains the key things that you need to know about AB 890.

An Overview of California Assembly Bill 890 (AB 890)

AB 890 is a California state law that is designed to grant Nurse Practitioners additional autonomy to provide services to patients. The law creates two new categories of nursing professionals:

103 NP (Cal. Bus. & Prof. Code § 2837.103): A Nurse Practitioner who can work in a group setting with at least one physician present.
104 NP (Cal. Bus. & Prof. Code § 2837.104): A Nurse Practitioner who can work independently in certain circumstances.

In other words, Bill AB 890 gives Nurse Practitioners in California who meet pre-established professional requirements more authority to practice independently.

Bill AB 890 Imposes Peer Review Reporting Requirements on Many Nurses

Beyond granting additional autonomy to qualified Nurse Practitioners, AB 890 includes a provision that requires these professionals to adhere to the peer review reporting requirements outlined in Section 805 of California law. The bill amends the definition of the statutory term “licentiate” to include nurses. In effect, this means that some mandatory reporting requirements are triggered when a nurse faces professional disciplinary action.

Many Nurses Have Questions About AB 890—Our Legal Team Can Help

If you are a nurse who has questions about the implications of CA Assembly Bill 890, you are certainly not alone. It is a complex piece of legislation. Despite being signed into law more than two years ago, many questions surrounding its interpretation remain, because AB 890 only took full effect on January 1st, 2023. Our law firm provides legal guidance to nurses. Some common questions that you may have include:

What types of training are required for Nurse Practitioners to gain additional autonomy to practice independently under AB 890?
What additional types of practice are available to Nurse Practitioners since AB 890 has taken effect?
How can Nurse Practitioners who have opened their own practice take advantage of new opportunities to provide care while ensuring full AB 890 compliance?
What are some business strategies that NP 104 entrepreneurs can implement to develop and grow their professional practice in the new regulatory environment?
How can Nurse Practitioners in California effectively start the business?

Contact Our California Business Lawyer for Nurses Attorney Today

Lynnette Ariathurai is an experienced business law attorney for nurses, doctors, and other medical professionals. If you have any specific questions or concerns about CA Assembly Bill 890, please do not hesitate to contact us. We provide legal services throughout the Bay Area.

California nursing categories, Nursing practitioners, registered nurses

Forming a Professional Nursing Corporation in CA

Nursing is one of the most important occupations and the workplace environment is changing rapidly. According to data from the California Board of Registered Nursing, there are more than 487,000 active registered nurses (RNs) in the state. If you are considering starting a nursing company in California, it is crucial that your business has the right legal structure. A nursing corporation is a specialized type of business entity designed for firms offering services within the nursing profession. Here, our Fremont business formation lawyer highlights the key things to know about professional nursing corporations in California.

Know the Law: Professional Nursing Corporations in California

In California, a professional corporation (PC) is a specialized type of legal entity through which certain licensed professionals can conduct their business operations. Under California law (Cal. Corporation Code § 13401(b)), PCs are required to register with the state agency that is responsible for regulating the specific profession in question. A professional nursing corporation is required to register with the Board of Registered Nursing. Notably, not just anyone can form a professional nursing corporation in California. There are strict ownership requirements. At least 51 percent of the corporation must be owned by registered nurses in California. The remaining 49 percent can be owned by other specific licensed professionals in the health care field.

What are the Benefits of Forming a Nursing Corporation?

A PC is generally the most efficient and effective way to operate a nursing business in California. Some key advantages of operating a nursing services business as a professional nursing corporation include:

Tax savings—a professional corporation can reduce a nurse’s self-employment taxes
Liability protection—PCs are designed to provide additional legal liability protection

Important Considerations When Forming a Professional Nursing Corporation

Are you a registered nurse who is considering forming a business in California? It is imperative that your business is set up properly. Mistakes could cause you serious problems. Here are some of the most important considerations when setting up a professional nursing corporation in California.

Name: You need to select a name for your professional nursing practice. California law requires you to include the term “nursing” or “registered nursing” in the official name.
Tax implications: Taxes matter. In California, a professional nursing corporation can be taxed as a standard corporation (C Corporation), or it can be taxed as a pass-through business entity (S Corporation).
Ownership structure: The ownership structure of your professional nursing corporation must be set up properly. Make sure you have the right documents in place. You must file articles of incorporation with the state. You can also benefit from a comprehensive bylaws. There are several other documents needed to be a professional nursing corporation.

Forming a new business is complicated—especially when you are in a highly regulated industry such as health care. You do not have to have to navigate the business formation process alone. An experienced California business formation lawyer for nurses can help.

Call Our California Business Formation Attorney Today

Lynnette Ariathurai is a business formation lawyer with the skills, knowledge, and legal expertise to help you form a professional nursing corporation in CA. If you have any questions about your rights, responsibilities, or options, please do not hesitate to contact us for a confidential consultation. From our offices in Fremont, near Newark, we serve clients in Hayward, East Bay, Milpitas, Union City, San Leandro, Gilroy, San Jose, Santa Clara, and throughout the entire Bay Area.

Regulatory Compliance for Medical Practices

Health care is a highly regulated industry. It is crucial that all medical practices are in full compliance with applicable federal and state regulations. Any violation could lead to significant problems—potentially even financial sanctions.

Lynnette Ariathurai is an experienced business lawyer for medical practitioners. Attorney Ariathurai helps all types of medical practice with regulatory issues. To set up a confidential consultation with an experienced business attorney, please contact our Fremont law office today.

An Overview of Federal and State Regulations for Medical Practices in California

Moscone-Knox Professional Corporation Act

California has specific rules and regulations in place regarding the formation and ownership of medical practices. Medical practices must be structured as professional corporations (PCs) under the Moscone-Knox Professional Corporation Act. If you have any specific questions about forming or structuring a medical practice in California, an experienced business attorney for doctors, nurses, and medical personnel can help.

Anti-Kickback Laws

There are federal and state laws in place prohibiting “kickbacks” for medical referrals. The federal Anti-Kickback Statute (AKS) and the California Anti-Kickback Statute largely prohibit the offer of anything of value in exchange for a referral for a patient who participates in a federal or state health program.

Stark Law

Also known as the physician self-referral law, the Stark Law is a federal statute that bars physicians from referring patients that receive service paid by Medicare, Medicaid, or another federal health program to an entity with which the physician or their family member has a financial relationship. There are some limited exceptions to the law.

Regulations against Billing Fraud

Both California and the federal government have strict rules and regulations in place for billing fraud. Notably, the Office of Inspector General (OIG) can bring civil charges for health billing fraud even if the conduct is deemed to be accidental. Medical practices need to understand billing regulations, including the California state prohibition on “surprise medical bills.”

Health Insurance Portability and Accountability Act (HIPAA)

The Health Insurance Portability and Accountability Act (HIPAA) requires medical practices to strictly protect the confidentiality of sensitive patient information. It is imperative that all medical practices operating in California have a well-developed system in place for protecting the privacy of patient records.

Sharing Office Space

It is not uncommon for medical practices—especially smaller medical practices—to share office space. Such an arrangement can be advantageous for all parties involved. Though, in doing so, medical practices must ensure that their conduct is consistent with their lease. A violation of the lease for improper share could lead to problems. Medical practices also need to ensure that patient records are protected as required by HIPAA. In 2019, the Centers for Medicare and Medicaid Services (CMS) released draft guidelines on medical practice share space arrangement. A key principle is that each medical practice should keep its business clearly separate and that proper disclosures should be made to patients.

Get Help from a California Business Lawyer for Medical Practices

Lynnette Ariathurai is a Bay Area business law attorney committed to providing forward-looking legal advice and cost-effective solutions for medical practices in Fremont CA, near Newark, or Hayward, East Bay, Milpitas, Union City, San Leandro, Gilroy, San Jose, or Santa Clara. If you have any questions about regulatory compliance for medical practices, please contact our Fremont office for a strictly confidential consultation.

health billing regulations, health care regulations, HIPAA, medical practice regulations, structuring a medical practice

Importance of Having an Attorney Advise During the Formation of an LLC

Making the decision to start up a new business is exciting. You can build something of real value to support yourself, your family, and your community. A limited liability company (LLC) is a flexible, cost effective legal structure for many different types of businesses. As forming any type of new business can be complicated, it is best to seek guidance from an experienced attorney who can help you put the right foundation in place. Here, our Fremont business formation lawyer highlights five considerations that should be addressed during the formation of a limited liability company (LLC).

1. Whether an LLC is the proper form (eligibility, needs, etc.)

A limited liability company is a popular way to set up a business. As explained by the California Secretary of State, an LLC “offers liability protection similar to that of a corporation, but is taxed differently.” It combines some of the core advantages of a corporation and a partnership. That being said, an LLC is not the right form for every type of business. Some companies are better served by a different legal structure. Further, certain types of businesses in California—such as a medical, dental, or nursing practice—cannot be set up as an LLC. An attorney will help you determine whether an LLC is the right form.

2. Selection of State for your limited liability company

When forming an LLC, you also need to decide where you are going to set it up. You may or may not want to make California the home state of your LLC. In some circumstances, setting up an LLC in a different jurisdiction—such as Delaware or Nevada—offers real advantages. In other cases, setting up an LLC outside of California adds complexity with no tangible benefit. A business formation lawyer can help you choose the right state.

3. The applicability of liability protection

One of the central advantages of an LLC is that it offers liability protection. Simply described, an LLC helps to ensure that the members will not be held personally liable for the debts incurred by the business. Of course, the liability protection associated with an LLC is situation-dependent. It may not, by itself, offer adequate liability protection. Additional precautions may be required.

4. Drafting and negotiating an operating agreement

Every LLC should have a written operating agreement. While LLCs doing business in California are regulated by California law, the reality is that many of your personal rights and responsibilities related to the business will be derived from your operating agreement. An operating agreement for an LLC should always be negotiated, drafted, and reviewed by an experienced business formation attorney.

5. Compliance with ongoing requirements for LLCs

Finally, it is important to remember that LLCs must comply with certain ongoing legal requirements in California. In setting up an LLC, an experienced California business attorney can help you understand the ongoing and future requirements so that you are in the best position to comply.

Get Help from Our California Business Formation Attorney Today

Lynnette Ariathurai is an experienced business formation attorney. If you have any specific questions about setting up a limited liability company (LLC), we are here to help. Contact us today to arrange a confidential consultation. We provide business law services throughout the Bay Area.

business formation, business formation attorney, business structure, limited liability company, LLC formation