Legal Needs in Setting Up a Successful Nursing Company in California
Nursing is one of the most high-demand professions in the Bay Area. CalMatters estimates that there is currently a shortage of 36,000 nurses in our state—and that number is growing. If you are considering setting up your own nursing company in California to help address the need, it is imperative that you have the right structure in place. Here, our Fremont business law attorney discusses your legal needs when setting up a successful nursing company in California.
A California Nursing Business Needs a Strong Legal Foundation
Nurses are licensed, regulated professionals and a nursing company must be established with the proper legal structure. Notably, in California you cannot form a nursing business as a limited liability company (LLC), a partnership, or a corporation. Instead, you must form a Nursing Professional Corporation. You may hear this referred to as a PC.
A PC for nursing is a specialized type of entity that allows registered nurses (RNs) to provide their professional services through a corporation structure. It offers some key advantages, including liability protection and the ability to elect to be taxed as an S-corporation (pass-through taxation). Several types of medical professionals may own a stake in a nursing business in California. However, licensed nurses must always have a minimum 51 percent total ownership share.
Requirements to Form a Professional Nursing Corporation in California
A group nursing business will generally be set up as a PC in California. There are specific legal requirements that must be met to form a valid professional nursing corporation. More specifically, you and any co-owners in the nursing company must be sure to do the following:
- Select a name (which must include “nursing”)
- Draft and file articles of incorporation
- Develop corporate bylaws for the PC
- Register the PC with the Nursing Board
Developing the Right Strategy for a Successful Business in the Nursing Field
Meeting the basic legal requirements to set up a PC for a nursing company in California is certainly not sufficient to build a successful business. You need a comprehensive strategy. Here are other important legal/business issues that must be addressed when forming a nursing PC:
- Ensure that you and any partners have the right ownership structure in place
- Develop a compensation plan for your nursing PC
- Secure and Employer Identification Number (EIN) from the IRS
- Obtain adequate professional liability insurance coverage
- Consider what types of contracts your PC will need to draft/enter
- Proactively comply with all regulations from the California Board of Registered Nursing
- Consider tax implications (may be taxed as S-corporation or C-corporation)
Contact Our Bay Area Business Attorney for Nursing Companies Today
Lynnette Ariathurai is a business lawyer with more than three decades of experience. If you have any questions about the legal needs of a nursing company in California, we are here as a resource. Call us now or contact us online for your confidential initial appointment. With an office in Fremont, we provide business law services to nursing companies throughout the Bay Area.