More About Professional Corporations

Speech-Language Pathology is about more than stuttering: it is about opening the doors of communication by providing the tools and learning to those looking for it. This career isn’t about fixing people, it is about setting them up for success: that is a big deal.

You knew this when you started on this path, and you are ready to share your passion and skills. With the education, testing, licensing, and shadowing behind you, you’ve decided to open your own practice. And, naturally, now you are looking into how you can open your own speech therapy clinic in California.

The legalities of corporations and practicing Speech-Language Pathology services can at first seem overwhelming, especially in California. But at Incorporation Attorney, we are here to break things down for you and help you help others in your community.

What is a Speech-Language Pathology Corporation?

A Speech-Language Pathology Corporation is a corporation that is registered with the California Secretary of State and engaged in rendering the professional services of Speech-Language Pathology. Essentially, this type of corporation is the correct corporation structure to legally perform Speech-Language Pathology services in California.

Who regulates Speech-Language Pathology Corporations?

Most professional corporations are required by the California Corporation Code §13401(b) to register with their profession’s corresponding government agency. The Department of Consumer Affairs – Speech-Language Pathology & Audiology & Hearing Aid Board focuses on regulating this specific professional field and rendering of services.

What are the California State Laws that regulate the formation of a Speech-Language Pathology corporation?

Below are the three main codes and California State Laws that determine and regulate proper formation to provide services as a Speech-Language Pathology clinic in California:

  1. California Corporations Code – 13401(b)
  2. Business and Professions Code – Speech-Language Pathology Corporations are located in the California Business and Professions Code starting with Section 2536.
  3. California Code of Regulations – Title 16, Division 13.4, Article 9. Speech-Language Pathology and Audiology Corporations

 

Is there an easy place to get access to all of the laws and regulations related to a Professional Speech-Language Pathology Corporation?

Speech-Language Pathology Board Laws and Regulations

 

Who can be a shareholder in a Speech-Language Pathology corporation?

The following licensed persons may be shareholders, officers, directors, or professional employees of the Speech-Language Pathology corporation so long as the sum of all shares owned by those licensed persons does not exceed 49 percent of the total number of shares of the Speech-Language Pathology corporation, and so long as the number of those licensed persons owning shares in the Speech-Language Pathology corporation does not exceed the number of persons licensed by the governmental agency regulating the designated professional corporation. This rule does not limit employment by a Speech-Language Pathology corporation to only those licensed professionals listed.

(1) Licensed audiologists.

Can a Speech-Language Pathologist be a shareholder in more than one Professional Corporation?

Yes, a Speech-Language Pathologist may be a shareholder in more than one Professional Corporation. However, you must take into consideration the type and structure of Professional Corporation you are a shareholder in and ensure you are meeting any necessary requirements.

Naming Your Corporation When Opening a Speech Pathology Clinic or Practice in California

One of the first things you’ll start thinking about as you form your corporation, is what do you name it? When determining how to open a speech pathology clinic, you need to watch that your corporate name falls the standards and guidelines established in the California Laws and codes. Let’s take a look at some common questions about naming your speech pathology professional corporation below:

Do I have to follow any Name style formalities when I form my Speech-Language Pathology Corporation?

There are certain name style formalities that you must follow if you are going to form a Professional Speech-Language Pathology Corporation for your clinic or practice. Essentially, you must include the word “corporation” or a combination of words that indicate you are a corporation, and you much include a word that signifies your services from a particular section of the California legal code.

The name of your corporation must comply with these regulations per the California Business and Professions Code 2537.4, which you can find below:

The name of an speech-Language Pathology corporation under which it may render professional services shall include one of the words specified in subdivision (a) of Section 2530.3 and the word “corporation” or wording or abbreviations denoting corporate existence.

(a) A person represents himself or herself to be a speech-language pathologist when he or she holds himself or herself out to the public by any title or description of services incorporating the words “speech pathologist,” “speech pathology,” “speech therapy,” “speech correction,” “speech correctionist,” “speech therapist,” “speech clinic,” “speech clinician,” “language pathologist,” “language pathology,” “logopedics,” “logopedist,” “communicology,” “communicologist,” “aphasiologist,” “voice therapy,” “voice therapist,” “voice pathology,” or “voice pathologist,” “language therapist,” or “phoniatrist,” or any similar titles; or when he or she purports to treat stuttering, stammering, or other disorders of speech.

Can I Use A Fictitious Name for My Business?

The Speech-Language Pathology Board does not prohibit using a fictitious name or a “DBA”. So, yes, you may use a fictitious name.

Do I need a Certificate of Registration as a Speech-Language Pathology Corporation/Clinic?

No, any professional corporation or foreign professional corporation rendering professional services by persons duly licensed by the Department of Consumer Affairs – Speech-Language Pathology & Speech-Language Pathology & Hearing Aid Board shall not be required to obtain a certificate of registration in order to render those professional services.

Can anyone serve as an officer or the director of a Speech-Language Pathology corporation?

These offices are dependent on the number of shareholders of the Speech-Language Pathology corporation.

In general, each director, shareholder, and officer of a Speech-Language Pathology Corporation, except an assistant secretary and an assistant treasurer, shall be a licensed Speech-language pathologist.

 

Here are the exceptions:

  • A Speech-Language Pathology corporation that has only one shareholder needs to have only one director who shall be such a shareholder and who shall also serve as the president and treasurer of the corporation. The other officers of the corporation in such a situation need not be licensed persons.
  • A Speech-Language Pathology corporation that has only two shareholders needs to have only two directors who shall be such shareholders. The two shareholders between them shall fill the offices of the president, vice president, secretary, and treasurer.

 

Is there a great resource to find the California Laws and Regulations relating to the Practice of Speech-Language Pathology in a professional Speech-Language Pathology Corporation?

Yes, you can find the 2018 guide here:

Speech-Language Pathology Board Laws and Regulations

Client Question:
I recently graduated in August and moved down to San Francisco, California (greater LA area). I tried to find a suitable associate position but have found that to be close to impossible I am in the process of starting my own small clinic.

I am having a hard time finding a small business attorney to help me decide on what kind of business entity I want to be, every local speech-language pathologist that I have asked has only told me how much they hate their attorney and are looking for a new one.

I think it is best to limit my liability by going for a PC (or professional corporation, the California version or an LLC) or an S-Corp since I will hope to be taking out a small business loan to start out. I just don’t know which will be better for me as a single speech-language pathologist clinic starting out. I know there are different tax implications for each form but even after researching online, I couldn’t really figure out what they were. The only disadvantage I have heard on in an S-Corp is that you have to have yearly documented board meetings in order to maintain legitimacy, which I think would consist of me sitting in a room talking to myself saying “same plan as last year guys? Yeah, that sounds good”.

A few speech-language pathologists have recommended that I do all the paperwork and incorporation online rather than through an attorney as it is faster and saves a lot of money, has anyone been burned by this before?

What corporation is best for a small startup clinic, and did you form your company online or through an attorney?

These are a ton of questions, and it’s quite understandable why you have all of these running around in your mind. After all, you want to make sure that you start your small clinic right.

 

The best decision to make is to work with a corporate attorney that specializes in forming Professional Speech-Language Pathology Corporations in California. By working with an experienced lawyer, you can be sure that all your questions will be answered.

 

A dependable corporate lawyer will help you understand how a professional corporation is the correct entity for your Speech-Language Pathology service, assist you through the process of forming the Professional Speech-Language Pathology Corporation in California, and be available for you when you need legal and corporate advice.

 

The short answer to your question is the best option for a speech-language pathologist setting up a small clinic and running it as a one-person Speech-Language Pathology operation would be to form a professional Corporation making the S election for tax purposes. There are a lot of complexities in the forming of a professional corporation. You need to satisfy not only state law but the specific requirements of your particular board. Though I suppose it would be possible to learn how to make diagnosis for certain medical conditions and then inserting needles into the body by studying some online service like YouTube or Google, the most reasonable thing for a person to do is turn it over to a professional like a Speech-language pathologist. The same is true when it comes to practicing law. It is far better to allow the professionals to guide you through the complicated process, rather than to try to figure it out how to do it online. Just to simply avoid the problems that you will run into with the Department of Consumer Affairs – Speech-Language Pathology Board will make the investment in using a professional to form your corporation well worth the money.

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How do You Open Your Speech-Language Pathology Clinic on the Right Foot?

The best first step you can take for your new business is ensuring your corporation is formed correctly and completely. Like any legal situation, working with a professional who specializes in your field is the best bet to making sure you’ve got things right.

Find an attorney who specializes in forming professional corporations for Speech-language pathologists looking into LLCs in California. Click here!