Are you a licensed medical doctor and have considered transferring or extending your medical practice to California? Or are you in the plans of qualifying your medical corporation to do business in California? Can doctors practice their profession across state lines?
We recently had a doctor who was based in Texas and was looking into moving to California. This doctor contacted our team because he wanted to find out if he could continue operating his medical corporation in California and utilize his professional license for the practice. Our team of experts answered all his questions and helped him establish a professional medical corporation in California.
First Off…What is a Professional Medical Corporation in California?
A professional medical corporation is a legal business entity that consists of licensed medical doctors who practice their profession in the State of California. If a private medical clinic is not legally registered with the California Secretary of State as a professional corporation, it is not allowed to operate in the state. It is also important to note that only professionals with a medical license are allowed to operate and be shareholders of the corporation.
Can an LLC from Another State Qualify as a Professional Medical Corporation in California?
Adversely, a professional limited liability company from another state cannot qualify and cannot extend its business entity in the State of California. There are a number of strict limitations and regulations governing professional medical corporations and it also applies to various businesses. California’s State Limited Liability Act, for one, prohibits such transfer in the state.
In the case of our doctor from Texas, he wasn’t looking to exclusively perform services in California, rather qualify his business there and then hire out other licensed doctors to work there. Such as in his case, even if you plan on hiring other medical doctors to perform the services offered in your corporation under your business, the California Professional Medical Corporation bylaws have restrictions regarding that.
Why is it Important to Know About Professional Medical Corporations?
Professionals such as doctors, dentists, chiropractors, certified public accountants, and lawyers cannot conduct their business in California if they are operating out of a limited liability company (LLC). California law prohibits doctors from forming an LLC and must operate and register as a Professional Corporation.
It is important to know more about this because if done incorrectly, your corporation established in the State of California may be declined by the Secretary of State and will incur fines to be paid and lawsuits to face.
So, How is a Professional Medical Corporation Formed in California?
A professional medical corporation in California typically starts with filing professional articles of incorporation with the Secretary of State. You should also create your bylaws by which the corporation operates and articles regarding the shares of the corporation are also needed as additional information.
What are the California State Laws that regulate the formation of a Professional Medical Corporation?
The following codes regulate the formation of professional medical corporations:
- The California Corporations Code – §13401(b) states that every professional corporation should be registered and operate under the corresponding government agency that is in charge of handling and managing their profession.
- Every professional medical corporation should also be acknowledged by and officially registered under the Medical Board of California and abide by the Title 16 of the California Code of Regulations.
What are the Qualifications to be a Shareholder of a Professional Medical Corporation?
The primary requirement to be a shareholder of a professional medical corporation is to be a licensed medical professional. In the same way, officers and directors must also hold professional medical licenses.
However, in cases where there is only one member in the professional medical corporation, that shareholder will automatically hold and assume the position of director. Other office positions like assistant secretary, assistant treasurer, and other additional positions may be taken apart by someone without a professional medical license.
Back to the Client’s Question: Can Doctors Practice Across State Lines? I’m Moving to California from Texas.
Our client came to us, stating he was already a licensed medical physician currently based in Texas. He wanted to start a medical practice in California.
Our first question was, “Do you have a medical license explicit to the State of California?”
His response? “Currently, I don’t have a medical license that permits me to practice my profession in California. However, I have been thinking of using my existing professional medical corporation to qualify my business in California.”
The plan was to hire other licensed medical professionals based in California to work under his business and provide medical services under our corporation. He saw no problem with this, as he had been doing this type of transaction with other states and it worked very well for the business. And so, he was eager and ready to move into California and do a similar thing.
Being familiar with the professional corporation laws and codes and understanding of the legalities around professional services in California, we knew his plan wasn’t going to work like that.
Can Doctors Practice Across State Lines? Incorporation Attorney Answers!
The short answer: yes, but not by simply transferring their license or corporation to California. They’d have to go through an entirely different process to become legally licensed and ready to operate in California. This varies from state to state, so checking local laws is important
But Why Can’t I Just Transfer My Company Over As With Other States or Professions?
Professional corporations can be very complicated with all their legalities and limitations—particularly in California. Every state holds different laws and regulations that is why it is important to always do some research and ask for legal advice before making final decisions for your business.
In California, there are a number of limitations on the regulation of professional corporations and it may vary depending on your profession. In the case of licensed medical professionals, it is not possible for them to conduct business and practice their license when they already have existing ones outside the State of California. Therefore, our client was not able to undergo legal qualification processes, in order for them to work out and make use of their license.
Unlike the case of other professions, such as accountants and lawyers, licensed medical professionals are not allowed to move their existing corporation to California. Medical doctors, according to the bylaws in California, are not allowed to continue their practice across state lines. That is one of the tricky parts of dealing with professional corporations—the laws are not the same for all the various professional corporations.
Can Doctors Practice Across State Lines? Incorporation Attorney Can Help You Move Your Business to California! 
Can doctors practice across state lines, simply moving their corporation to California? The answer is no. The practitioner will need to be licensed within the state they practice in, and follow the licensing boards’ rules and regulations.
This was one of the concerns of a medical doctor who wanted our help in moving his private medical clinic to California. If you have similar concerns and questions about moving to another state, like using your medical license in practicing in California, our team can help you. Call us now at +1 (714) 634-4838!
