Your hopes are high, and your game plan is promising. The products or services that you offer are certain to be a hit and should bring huge profits. Normally, registering as an LLC (Limited Liability Company) is a good start…normally.
You worked with an online firm like LegalZoom to set up your business as a legal entity. You had covered your bases–or so you thought. But now, you have a big problem: you are supposed to be registered as a Professional Corporation.
Many things can go wrong when you are not fully aware of the laws of a business organization. LegalZoom can’t help you out, and you are stuck trying to figure out how to change your legal entity from an LLC to a Professional Corporation in California. Otherwise, the authorities will not allow your business to operate and your dream of becoming a successful entrepreneur in California will quickly vanish.
California’s Business Restrictions – Our Client’s Mistake
True story: Prior to working with us, our client started an LLC company last year through LegalZoom to establish his business in the state of California. LegalZoom promised to provide legal help for his businesses but failed to inform him that the state of California requires certain professionals to operate as a Professional Corporation. In order to pursue the business, he needed to convert his LLC registration to a professional corporation.
At this point, our client contacted us to help make this right. Getting assistance from a company that specializes in business entities like LegalZoom is supposed to make things easier but even these companies can mess things up for you when the laws and answers aren’t as clear cut as a form.
Our client may have assumed that since most states have similar rules that apply to LLCs and corporations, the same would be in California. It is probably due to an insurance application or board inquiry that he found out about the restrictions applied to professional LLCs in the state.
In this instance, our client really needed this critical information before applying for insurance and preparing to take on employees and patients. Had LegalZoom notified him early about this important detail, he would have saved a huge amount of money and a great deal of time.
Professional LLC vs Professional Corporation in a Nutshell
Only certain professionals can form a professional corporation. Specific professions are required to form a Professional Corporation and prohibited from forming an LLC.
California’s business law is unique though when it comes to this issue. As a rule, it only allows certain professional services to form a professional corporation. If you are one of those professional services, that means you cannot operate under an LLC or professional LLC entity–unless they change to a professional corporation.
Those who consider forming a business should refer to a local expert, especially in California, to ensure that the type of legal entity they choose is on point.
How to Change from LLC to Professional Corporation in California
If you are not familiar with the procedures, it can be a complicated task to convert LLC to a professional corporation in California. The daunting process can even discourage you midway as you make one mistake after another due to confusing information. 
There are basically two major steps: (1) prepare a plan of conversion and (2) file the Articles of Conversion with the Secretary of State. The major issues are the things that happen in between. The level of difficulty of this conversion process depends on the level of your expertise in this area, but even the local authorities advise that you seek assistance with the documentation required.
The most effective way to get the job done from day one is to consult an expert in the field. And the conversion process is no joke. It entails a lineup of tasks that requires some specialization. In this case, you do not want to make the same mistake that our client made with LegalZoom.
Documentations
The paperwork requires a huge amount of time to prepare. It also takes legal counsel to do it right. So to speak, this is a job for an expert in professional corporations. When you work with us, we have a detailed plan of conversion in place. For our client, we started by drafting the necessary documentation prior to filing, such as:
- Special Meeting Minutes of the shareholder approving the conversion
- Waiver of Notice
- Special meeting minutes of the board of directors approving the conversion
- Incumbency Certificate
- Corporate Summary
- New Ledger (California)
- New Stock Certificates (California)
- Amended and Restate Bylaws (California)
- Secretarial Certificate
- A new seal
The CA Code 17540.6 requires a statement of approval by the members of the LLC company, so the shareholder meeting is necessary. Additionally, we will help obtain for your company a new EIN (Employer Identification Number) as the IRS will not transfer an EIN assigned to an LLC to a corporation.
New name for your new corporation
Adopting a new corporate name is a prerequisite to changing a business entity in California. Even this involves a strict set of rules depending on the type of corporation that you intend to run.
Article 5 of the Business and Professions Code states that “the name of a licensed clinical social worker corporation and any name or names under which it may be rendering professional services (licensed clinical social workers, physicians, and surgeons, psychologists, licensed professional clinical counselors, licensed marriage and family therapists, registered nurses, chiropractors, or acupuncturists) shall contain the words “licensed clinical social worker” and wording or abbreviations denoting corporate existence. The wording or abbreviation denoting corporate existence shall be limited to “Professional Corporation,” “Prof. Corp.,” “Corporation,” “Corp.,” “Incorporated,” or “Inc.”
Additional requirements
Electing and appointing new corporate officers and directors is part of the required formalities aside from the key elements outlined. Moreover, insurance, licenses, bank documents, leases, and other business contracts must be kept intact during the transition. Make sure that none of these will be invalidated as you convert from LLC to a professional corporation.
How to Change from an LLC to a Professional Corporation: What Incorporation Attorney Offers
Our client let us handle the preparation of all records as well as the entire conversion process for a flat fee of $1987.00. This is a regular fee for the full-service incorporation of a professional corporation.
We also offer a Corporate Records Program with an annual fee of $625.00. This is an ongoing maintenance program designed for small business owners through which they can have access to the following services:
- Resident Agent for Service of Process with the state
- Preparation of the Annual Working Agenda for the Board of Directors
- Preparation of the Notice of the Meeting of the Board of Directors
- Preparation of the Minutes of the Board of Directors
- Preparation of the Annual Working Agenda for the Shareholders
- Preparation of the Notice of the Meeting of the Shareholders
- Preparation of the Minutes of the Shareholders
- Preparation and filing of the Annual Statement of Officers and Directors SI200C
Also included in this package is the “I Just Have Quick Question™” service through our website. This guarantees availability of assistance with questions or concerns regarding their corporations and corporate documents. We will also be available via phone for questions about corporate records at no additional charge.
What You Need to Do Next – Hire an Expert in Professional Corporations
Are you challenged already just by thinking about how to change from LLC to a professional corporation in California? Would you be able to accomplish all the tasks involved in converting your business entity to conform to California’s business laws?
We can help your business go from LLC to a professional corporation. We will assist you with all the paperwork to ensure that your company complies with California business laws and operates legally. Your company doesn’t need to cease functioning due to neglecting this vital aspect.
Save yourself from this cumbersome series of steps and let our team of experts take care of the details. We will help you move your business to the next level so you can focus on rebuilding and achieving your company goals.
Give us a call today to know more information on how we can help you.
