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Compensation Structures in Veterinary Practices

Know the Legal Structure of Veterinary Practices in California

As with other types of businesses, veterinary practices must have the right legal foundation to thrive. Under the California Veterinary Medicine Practice Act, veterinarians cannot form their business as a partnership or a limited liability company (LLC). Instead, group veterinary practices should be set up as a professional corporation (PC). The PC structure offers some important legal advantages, including liability protection and the ability to be taxed as an S corporation.

The Most Common Ways to Structure Pay for Veterinary Professionals in Group Practices

Within a group practice that is established as a PC in California, there are a few different approaches for structured compensation packages for veterinarians, including:

Veterinary compensation based on individual collections: One common approach for compensation is to base it on individual collections. With this, veterinarians are paid as a percentage of the revenue that they personally generate.
Veterinary compensation based on group collections: Another prevalent method is compensation based on group collections. With group collections, revenues are pooled and distributed among veterinarians according to predefined criteria.
Hybrid model (compensation based on both): Of course, you do not have to choose between one compensation structure or the other. Many group veterinary practices in California use some form of a hybrid model—with both individual and group collections being used to determine compensation.

What to Know About Veterinarian Compensation and Professional Ethics

The Stark Law and California anti-kickback regulations strictly restrict certain compensation methods for physicians. With limited exceptions, doctors are barred from self-referrals and restricted from receiving “kickbacks” for recommending certain products and services. Veterinarians in California are not subject to the same laws. However, the California Veterinary Medical Board—which regulates professional ethics—could take adverse action against a group veterinary practice that has a compensation structure that violates state law.

Why Rely on a Bay Area Business Law Attorney?

Determining a compensation structure for your veterinary practice is complicated. Our founder and managing attorney Lynnette Ariathurai caters specifically to business owners. We are proactive. Along with other measures, our California business lawyer for veterinary practices will:

Hear what you have to say and answer your questions about compensation structure
Gather and prepare all financial documents, records, and supporting information
Help you determine the best compensation structure for your veterinary practice

Contact Our California Business Lawyer for Veterinarians Today

Lynnette Ariathurai is a business lawyer for veterinarians. If you have any questions about compensation structures for veterinary practices, our legal team can help. Contact us today to arrange your confidential initial appointment. From our Fremont office, we provide business services to veterinary practices across the Bay Area.

To set up a confidential, no obligation consultation with a top-tier California business attorney, please contact us today.

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Legal Structures for Veterinarians in California

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.

California veterinarian practice regulations, professional veterinary corporation, veterinary practice legal advice, veterinary S-corporation

Building a Group Practice Veterinarian Business

According to the most recent information published by the Bureau of Labor Statistics (BLS), California had 7,770 actively licensed veterinarians as of 2022. For veterinarians, there can be significant commercial advantages to operating as part of a group practice. At the same time, building a successful group veterinary practice is complicated. It is imperative that you have the right structure in place. In this article, our Fremont attorney for starting a business highlights the key things to know about building a group practice for a veterinarian business in California.

Develop a Shared Vision to form a Group Veterinary Practice (Business Plan)

Building a successful group veterinary practice starts with getting all major players on the same page. It is generally a best practice to develop a comprehensive business plan. Among other things, your business plan should outline the goals, operational strategies, and financial projections of your practice. It should also include things like a market analysis—which can be used to identify potential clients, competitors, and commercial risks.

Form Your Veterinarian Business – You Need the Right Legal Structure

The right legal structure is essential for your group veterinary practice. In California, a professional veterinary corporation is generally the most sensible structure for group veterinary practices. It provides liability protection while being taxed as an S-corporation. Notably, there are strict ownership requirements for professional veterinary corporations in our state. It should be owned by a licensed veterinarian. To form a professional veterinary corporation, you will need to file articles of incorporation with the California Secretary of State and draft bylaws.

Ensure Your Business is Properly Registered and in Compliance with Tax Regulations

Once your professional veterinary corporation is formed, it is crucial to register your business and ensure compliance with all business regulations and tax laws. Apply for an employer identification number (EIN) from the IRS, which is necessary for tax purposes. California has an annual franchise tax of $800 for all professional corporations. Beyond tax laws, it is also crucial that you ensure that all veterinarians who are part of the group practice are properly licensed.

Find and Lease the Right Commercial Space to Operate Your Veterinary Business

A group veterinary practice in California needs the right commercial space to operate effectively. Finding the right location is a key component to the success of your group practice. Consider factors such as accessibility, parking availability, proximity to a demographic that aligns with your target market, and the potential for growth. As commercial lease negotiations can be complex, you should be ready to consult with a top business start-up attorney.

Contact Our Fremont, CA Business Law Attorney for Veterinarians Today

Lynnette Ariathurai is a top business law attorney with the skills and experience to represent veterinarian businesses. If you have any specific questions or concerns about building a group practice veterinarian business, please contact us today for a fully confidential consultation. With an office in Fremont, we serve veterinary practices throughout the Bay Area.

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