Specializing in optometry required a lot of work. You’re now licensed and ready to get your own optometric business started. Just as you dive into business planning, you need to incorporate your company.
Although LegalZoom may appear straightforward, it won’t advise you on the right and proper way to form your company specifically as an optometrist.
Did you know there are specific laws and regulations for Optometric businesses about the formation, entity, naming, shareholder, and more? These details in incorporating a business are often overlooked, sometimes even by lawyers not well versed in forming corporations for optometrists.
At Incorporation Attorney, we wanted to help bring this information together so that you could prevent problems down the road and start your business off with the right entity in California: a professional Optometric corporation.
View this short infographic summarizing everything you need to know in starting your own optometric corporation in California!
What is a Professional Optometric Corporation?
An Optometric professional corporation is a professional corporation that is registered with the California Secretary of State and engaged in rendering the professional services of optometry.
Who regulates Professional Optometric Corporations in California?
Most professional corporations are required by the California Corporation Code §13401(b) to register with the corresponding government agency that manages their specific profession. In California, the State Board of Optometry is the agency that regulates professional optometrists and their practices.
The board is part of the Department of Business, Consumer Services, and Housing Agency.
What are the California State Laws that regulate the formation of an Optometric Corporation?
There are three state laws in California that talk about establishing or forming a professional optometric corporation. They are:
California Corporations Code – §13401(b)
Business and Professions Code – Optometric Corporations is located in the California Business and Professions Code starting with Section 3160
California Code of Regulations – Title 16, Division 15
Is there an easy place to get access to all of the laws and regulations related to a Professional Optometric Corporation?
Because the State Board of Optometry regulates optometrists across the state, they have the best compilation of all the laws and regulations. We recommend checking it out at the Optometric Board Laws and Regulations.
Client Question:
I recently graduated in August and moved down to Fullerton, 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 practice.
I am having a hard time finding an accountant to help me decide on what kind of business entity I want to be, every local optometrist that I have asked has only told me how much they hate their accountant 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 solo optometrist practice 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 optometrists 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, and did you form your company online or through an attorney?
Answer:
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 practice right.
The best decision to make is to work with a corporate attorney that specializes in forming Professional Optometric 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 optometry practice, assist you through the process of forming the Professional Optometric 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 an optometrist setting up a small practice and running it as a one-person optometric 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 the eye works 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 licensed optometrist. 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 out how to do it online. Just to simply avoid the problems that you will run into with the California State Board of Optometry will make the investment in using a professional to form your corporation well worth the money
Who can be a shareholder in an Optometric corporation?
Bringing shareholders into a corporation may be a smart business move for your professional optometric corporation, but there are some guidelines to be aware of when determining who will be a shareholder within the company.
At least 51 percent of the shares in a professional optometric corporation in California must be owned by a licensed optometrist. The remaining 49 percent may be owned by any other licensed person as specified in Business and Professions Code section 13401.5, such as physicians and surgeons, podiatrists, psychologists, registered nurses, chiropractors, acupuncturists, and naturopathic doctors. The number of licensed persons cannot exceed the number of optometrists and cannot exceed a combined share total of 49 percent.
As you can see above, any shareholder must be a licensed individual. Therefore, a lay or unlicensed person cannot own any shares of an Optometric corporation.
Can an Optometric be a shareholder in more than one Professional Corporation?
Yes, an Optometric may be a shareholder in more than one Professional Corporation.
Can anyone serve as an officer or director of an Optometric Corporation?
These offices are dependent on the number of shareholders of the Optometric Corporation.
In general, each director, shareholder, and officer of an Optometric Corporation, except an assistant secretary and an assistant treasurer, shall be a licensed Optometrist.
Here are the exceptions:
- An Optometric corporation that has only one shareholder needs to have only one director who shall be such 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.
- An Optometric corporation that has only two shareholders need 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.
Do I have to follow any Namestyle formalities when I form my Optometric Corporation?
Namestyle formalities differ between various corporations and particularly between various professional corporations. Names of professional optometric corporations must comply with the California Code of Regulations 1546.
Essentially, these regulations state an Optometric corporation is required to use the name of a shareholder coupled with one of the designations for the corporate entity. As well, you can only use a doctoral designation if the name it is associated with has earned a diploma from an accredited optometry school.
Below is the exact language used in the California Code of Regulations 1546:
“The name of the corporation shall contain and be restricted to:
- (1) The name or last name of one or more of the present, prospective, or former shareholders, and (2) One of the following designations denoting corporate existence: “Optometric Corporation,” “Optometry Corporation,” “Corporation,” “Professional Corporation,” “Prof. Corp.,” “Corp.,” “Incorporated,” “Inc.,” “Optometric Corp.,” “Optometry Corp.,” “Professional Optometric Corporation,” “Professional Optometry Corporation,” “Professional Optometric Corp.,” or “Professional Optometry Corp..”
- (b) The letters “Opt.D.” or “O.D.” or the word “optometrist” may be used in the corporate name providing that any person using such designation shall be the holder of a diploma from an accredited school of optometry. Some examples of such usage are: “Doctor John Doe, O.D., Inc.” or “Dr. James Smith, O.D., and Dr. John Doe, O.D., Optometric Corporation.”
Can I Use A Fictitious Name for My Optometric Business?
Yes, professional optometric corporations are permitted to use fictitious names, such as DBAs. There are requirements for permits from the board for utilization of the DBA in advertising.
If I receive my corporate name from the Secretary of State and plan on advertising under that name, which is a fictitious name, do I need to get a Fictitious Name Permit (“FNP”) from the Board of Optometry?
Yes. If it is a fictitious name, approval of the corporate name does not give permission to advertise that name to the public.
Do I need an FNP for my corporate name if I receive a corporate name from the Secretary of State, and will not advertise with that name?
No. An FNP is not required, as long as the corporate name is not seen by the public.
Do I need to inform the California Optometrists Board if I amend my corporate name in the future?
No, there is no need to inform the California State Board of Optometry if you amend your corporate name.
Do I need a Certificate of Registration as an Optometric Corporation?
No. Optometric corporations are not required to register with the state California State Board of Optometry.
What type of corporation is legal for optometrists?
Optometrists can only incorporate in California as Professional Optometric Corporations. No out-of-state, foreign, or general corporations are allowed.
Are limited liability partnerships (LLPs) and limited liability companies (LLCs) allowed?
Although some professional corporations are allowed to practice as an LLP, Optometrists cannot practice optometry as either LLPs or LLCs.
Get with an Expert that Sees All the Legalities of Starting Your Professional Optometric Corporation in California
Bringing the gift of sight is your forte and starting a professional corporation to share that gift with others is the perfect way to use your talents. Don’t get caught up going cross-eyed from the legalese with incorporating your dream. Work with a specialist that makes things easy for you to do what you do best: practice optometry.
As California experts in professional optometric corporations, we see the importance of setting up your career and business for success. Contact us if you have any questions or would like to get started!
