Professional Corporation / PLLC Formation Packet — California

Professional Corporation / PLLC Formation Packet — California

Quick-Reference Summary

Part 1 — Entity Choice in California (PC Only)

FLAG — No PLLC in California. California does not permit Professional Limited Liability Companies. A California LLC may not render professional services requiring a license, certification, or registration (Cal. Corp. Code § 17701.04(b)). Do not attempt to form a "PLLC" for a licensed profession in California — the Secretary of State will not register an LLC to provide professional services. Licensed professionals use a Professional Corporation (PC) under the Moscone-Knox Act. For certain professions (notably law, accountancy, and architecture), a registered limited liability partnership (RLLP) is an alternative limited-liability vehicle; confirm eligibility with your licensing board.

Part 2 — Pre-Filing Checklist

License Verification

☐ All proposed shareholders, directors, and officers (except as allowed by §§ 13403 and 13401.5) hold current, active California licenses in the corporation's profession
☐ For a designated professional corporation using minority related-profession owners, confirmed the § 13401.5 caps: those licensed persons together own ≤ 49% and do not outnumber the same-profession licensees
☐ License numbers recorded and verified with the licensing board
☐ No disqualified person (license suspended/revoked) will hold shares (§ 13401(e))

Licensing-Board Requirements

☐ Confirmed whether your board requires a certificate of registration before practicing (§ 13401(b))
☐ Confirmed your board's name requirements (many require "Professional Corporation," "A Professional Corporation," "Prof. Corp.," or "P.C." — some require the licensee's surname)
☐ Reviewed any board-specific share/ownership and reporting rules (e.g., 16 CCR § 1343 for medical/podiatry corporations)

Articles, Name, and Agent

☐ Name available with the Secretary of State and compliant with board rules (§ 13409)
☐ Articles will include the § 13404 statement that the corporation is a professional corporation under the Moscone-Knox Act
☐ California agent for service of process designated (individual in CA, or corporate agent with Form 1505 on file)

Fees, Tax, and Insurance

☐ Form ARTS-PC filing fee confirmed (commonly $100) and ready to file on bizfile Online
☐ Statement of Information (Form SI-550) calendar set — due within 90 days of filing, then annually
☐ $800 minimum franchise tax (FTB) calendar set
☐ Professional liability / malpractice insurance obtained or confirmed
☐ Federal EIN obtained from the IRS

Part 3 — Articles of Incorporation — Professional Corporation (Fillable)

CALIFORNIA — ARTICLES OF INCORPORATION OF A PROFESSIONAL CORPORATION (Form ARTS-PC)

The undersigned incorporator forms a professional corporation under the Moscone-Knox Professional Corporations Act, Cal. Corp. Code §§ 13400–13410, and the General Corporation Law, and adopts the following Articles:

Article I — Name

The name of the corporation is:

[________________________________]

The name complies with the rules of the [NAME OF LICENSING BOARD] and Cal. Corp. Code § 13409 and includes the required designation:

• ☐ "Professional Corporation" / "A Professional Corporation" ☐ "Prof. Corp." ☐ "P.C." / "PC"
• ☐ Board-required form (e.g., including the licensee's name): [________________________________]

Article II — Professional Corporation Statement (Cal. Corp. Code § 13404)

This corporation is a professional corporation within the meaning of the Moscone-Knox Professional Corporations Act, Cal. Corp. Code §§ 13400–13410.

Article III — Professional Purpose (Single Profession)

The purpose of the corporation is to engage in the profession of [PROFESSION] and any other lawful activities (other than the banking, trust company, or savings and loan business) not prohibited to a professional corporation rendering that service. The corporation is engaged in rendering professional services in the single profession of [PROFESSION], except as authorized by Cal. Corp. Code § 13401.5.

Profession (and regulating agency):

• ☐ Medicine (Medical Board of California) ☐ Dentistry (Dental Board of California)
• ☐ Law (State Bar of California) ☐ Accountancy (Board of Accountancy) ☐ Architecture (Architects Board)
• ☐ Psychology / Behavioral Sciences ☐ Optometry ☐ Chiropractic ☐ Nursing (Board of Registered Nursing)
• ☐ Veterinary Medicine ☐ Other: [________________________________]

Article IV — Agent for Service of Process

The corporation's initial agent for service of process in California is:

Agent: [________________________________]
Address (if an individual; California street address): [________________________________]
☐ The agent is a corporation with a current Form 1505 on file with the Secretary of State.

Article V — Capital Stock and Ownership Restriction

A. The corporation is authorized to issue [________] shares of [common stock].

B. Licensed-ownership restriction (Cal. Corp. Code § 13406). Shares may be issued only to a licensed person in the corporation's profession. Any issuance to a person who is not licensed is void.

C. Designated-PC minority owners (Cal. Corp. Code § 13401.5), if applicable. If this corporation is a designated professional corporation, the additional licensed persons permitted by § 13401.5 may together own no more than 49% of the total shares, and may not outnumber the licensees of the corporation's primary profession.

Article VI — Directors and Officers (Cal. Corp. Code § 13403)

A. Each director, shareholder, and officer must be a licensed person, except as permitted by Cal. Corp. Code §§ 13403 and 13401.5.

B. One- and two-shareholder rules (§ 13403).

• A PC with only one shareholder needs only one director, who shall be that shareholder and shall also be president and treasurer; the other officers need not be licensed.
• A PC with only two shareholders needs only two directors, who shall be the two shareholders and between them shall fill the offices of president, vice president, secretary, and treasurer.

Article VII — Incorporator

Article VIII — Share-Transfer Restriction and Mandatory Buy-Back (Cal. Corp. Code § 13407)

A. Permitted transferees only; otherwise void. Shares may be transferred only to (i) a licensed person, (ii) a shareholder of the same corporation, (iii) a person licensed to practice the same profession in the jurisdiction(s) in which they practice, or (iv) a professional corporation. Any transfer in violation of this restriction is void.

B. Mandatory acquisition on death or disqualification. Upon a shareholder becoming disqualified, or upon a shareholder's death, the disqualified shareholder (or the deceased shareholder's representative) shall transfer, or the corporation shall acquire, all of that shareholder's shares:

• within 90 days following the date of disqualification, or
• within six (6) months following the date of death.

Failure to do so may result in suspension or revocation of the corporation's certificate of registration by the regulating agency, and the corporation must then cease rendering professional services in California (§ 13407). The corporation may purchase its own shares without regard to repurchase restrictions, provided at least one share remains outstanding.

C. Buy-back price shall be determined by:

• ☐ Book value as of the most recent fiscal year-end
• ☐ Fair market value determined by an independent appraiser
• ☐ Formula set forth in the Shareholders' Agreement
• ☐ Other: [________________________________]

D. All share certificates shall bear a legend reflecting these restrictions and the professional-corporation status.

Article IX — Professional Licensing Covenant

A. Each shareholder, director, and officer required to be licensed shall maintain a current, active California license in [PROFESSION].

B. The corporation shall comply with all rules of the [NAME OF LICENSING BOARD], including any certificate-of-registration and reporting requirements.

Article X — Dissolution and Wind-Down

A. Upon dissolution, all professional obligations and pending matters shall be completed or transferred to another licensed person or professional corporation authorized to render [PROFESSION] in California.

B. The corporation shall give the [NAME OF LICENSING BOARD] any required notice.

Incorporator Signature

IN WITNESS WHEREOF, the undersigned incorporator executed these Articles on [__/__/____].

Part 4 — PLLC Path: Not Available in California

FLAG. No PLLC/professional-LLC formation document is provided because California law does not authorize a professional LLC for a licensed profession (Cal. Corp. Code § 17701.04(b)). An LLC cannot render services that require a license, certification, or registration. Do not file Articles of Organization (Form LLC-1) to provide professional services.

☐ Confirmed that no PLLC is available for this profession in California
☐ For eligible professions (e.g., law, accountancy, architecture), considered a registered limited liability partnership (RLLP) with counsel and the licensing board
☐ Selected the Professional Corporation (PC) path (Part 3) as the limited-liability professional entity

Part 5 — Licensing-Board Approval / Registration Block

☐ Certificate of registration required and obtained — The [NAME OF LICENSING BOARD] requires a certificate of registration before the corporation renders professional services; certificate dated [__/__/____], attached as Exhibit A.

☐ No certificate of registration required — The corporation's profession is regulated by a board listed in Cal. Corp. Code § 13401(b) for which no certificate of registration is required to render services; the corporation will nonetheless comply with all board rules.

☐ Name approval / fictitious name permit obtained (if required by board) — Document dated [__/__/____].

Board / Authority: [________________________________]
Contact / Address: [________________________________]
Reference / File No.: [________________________________]

Final Signature Block

The undersigned, being duly licensed and authorized, certify that the information in this packet is true and correct.

Sources and References

• Cal. Corp. Code § 13401 (Definitions) — https://law.justia.com/codes/california/code-corp/title-1/division-3/part-4/section-13401/
• Cal. Corp. Code § 13401.5 (Designated PCs; 49% related-profession cap) — https://codes.findlaw.com/ca/corporations-code/corp-sect-13401-5/
• Cal. Corp. Code § 13407 (Share transfer; mandatory acquisition on death/disqualification) — https://law.justia.com/codes/california/code-corp/title-1/division-3/part-4/section-13407/
• Moscone-Knox Professional Corporations Act (Cal. Corp. Code §§ 13400–13410) — https://leginfo.legislature.ca.gov/faces/codesTOCSelected.xhtml?tocCode=CORP&tocTitle=+Corporations+Code+-+CORP
• 16 CCR § 1343 (Requirements for medical/podiatry professional corporations) — https://govt.westlaw.com/calregs/Document/IE47E09034C8111EC89E5000D3A7C4BC3
• California Secretary of State — Form ARTS-PC and Business Entities forms — https://www.sos.ca.gov/business-programs/business-entities/forms
• bizfile Online (e-filing) — https://bizfileonline.sos.ca.gov/
• Cal. Corp. Code § 17701.04(b) (LLC may not render licensed professional services) — https://law.justia.com/codes/california/code-corp/title-2-6/article-2/section-17701-04/