Source: https://sdcorporatelaw.com/business-entity/professional-corporation/professional-dental-corporation/
Timestamp: 2019-07-16 04:01:49
Document Index: 700922817

Matched Legal Cases: ['§ 13401', '§ 13403', '§ 13403', '§ 200', '§ 12186', '§ 210', '§ 204']

Dental Corporation - San Diego Corporate Law
Dental CorporationCorporate Attorney Michael J. Leonard, Esq.2018-09-06T20:39:50-07:00
California Professional Dental Corporation Summary
Practicing as a California professional dental corporation may have several distinct advantages over practicing as a sole proprietor or partnership. In California, professional dentistry practices may only operate in the form of a corporation by forming a California professional dental corporation under the Moscone-Knox Professional Corporation Act. Among the many benefits of incorporating a professional practice as a California professional dental corporation are the ability to:
All California professional dental corporations formed by San Diego Corporate Law include attorney-drafted articles of incorporation and bylaws, federal EIN application, corporate records book with stock certificates, and minutes for the organizational meeting of the board of directors.
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California Professional Dental Corporation Details
A California professional dental corporation is a corporation formed under the Moscone-Knox Professional Corporation Act whose articles of incorporation, bylaws, and other corporate documents contain language in compliance with both the Moscone-Knox Professional Corporation Act and the general provisions of the California Corporations Code.
Only a professional licensed to practice dentistry may be a shareholder of a California professional dental corporation. However, the following other licensed professionals may also hold shares, or be officers, directors, or professional employees as long as shares owned by these other licensed professionals do not total more than 49% of all shares in the corporation, pursuant to California Corporations Code §§ 13401(b), (d), 13401.5:
• Registered dental assistants;
• Registered dental assistants in extended functions;
• Registered dental hygienists;
• Registered dental hygienists in extended functions; and
• Registered dental hygienists in alternative practice.
These other licensed persons may also be employed to render professional services by a California professional dental corporation.
A California professional dental corporation with only one shareholder need have only one director, who also must be the sole shareholder, and the sole shareholder must also serve as president and treasurer of the California professional dental corporation; in general, other officers need not be licensed professionals. California Corporations Code § 13403. A California professional dental corporation with only two shareholders need have only two directors, who also must be the two shareholders, and those two sole shareholders must also serve as president, vice-president, secretary, and treasurer of the California professional dental corporation. California Corporations Code § 13403.
A California professional dental corporation is formed by filing articles of incorporation with the Secretary of State. California Corporations Code § 200(c). In addition to the formation procedure of a regular corporation, additional language is added to the articles of incorporation to create a California professional dental corporation. The filing fee for articles of incorporation is currently $100.00. California Government Code § 12186(c). Bylaws, which dictate how the corporation operates, must be adopted.
Shareholders may enter into an optional, separate agreement restricting the sale or transfer of shares of the stock of the California professional dental corporation, a formula for determining the value of shares upon transfer, voting provisions, and other clauses.
A shareholder of a California professional dental corporation is not liable for the debts and obligations of the California professional dental corporation unless: (1) the shareholder personally guarantees a debt or obligation; (2) the shareholder engages in tortious conduct; (3) the shareholder receives improper distributions of the professional corporation’s assets; (4) the shareholder intermingles personal and corporate matters (alter ego; piercing the corporate veil); or (5) the shareholder breaches a duty owed to other shareholders.
A shareholder in a California professional dental corporation who acts as a corporate director and/or officer may have increased liability stemming from his or her actions as a director and/or officer of the professional corporation.
Shareholders in a California professional dental corporation have the right to inspect the books and records of the professional corporation, thereby learning the names of fellow shareholders. The names of shareholders of California professional dental corporations also may be subject to public record and disclosure by the state governing body. The names of officers and directors of a California professional dental corporation are a matter of public record.
Unless otherwise named in the articles of incorporation, the incorporators appoint the initial directors of a California professional dental corporation. California Corporations Code § 210. After shares of stock in a California professional dental corporation have been issued, the shareholders vote annually to elect a board of directors, and the elected directors then elect officers to handle the day-to-day operational management of the California professional dental corporation. A California professional dental corporation must have a president, a corporate secretary, and a treasurer/chief financial officer. Other officers may also be elected in addition to the three required.
Shareholders in a California professional dental corporation exercise no management in a California professional dental corporation based upon shareholder status alone. When shareholders do exercise control of management, the California professional dental corporation risks losing its limited liability protection.
Shareholders contribute assets to the California professional dental corporation in exchange for shares of stock. If the assets contributed are non-cash, the fair market value of the assets establishes the price of the stock.
Shares of stock in a California professional dental corporation are securities.
Federal securities laws should be considered when issuing stock in a California professional dental corporation. Regulatory filings may be required either to qualify an offering and sale or to receive an exemption.
The net income of a California professional dental “C” corporation is taxable by both the federal and state governments at personal service corporation tax rates. The federal personal service corporation tax at the time of this writing is a 35% flat federal tax and an 8.84% California franchise tax.
If a California professional dental corporation distributes dividends to shareholders, the shareholders must report the dividends received as income. This income will be subject to both federal and state income taxes. Taxation of dividends is commonly referred to as “double taxation” because the net income of the California professional dental corporation is taxed twice: first at the corporate level and again if distributed as dividends to the shareholders. Dividend payments made to shareholders are not treated as an expense of the California professional dental corporation.
California professional dental corporations must pay a minimum annual franchise tax of $800 to the State of California’s Franchise Tax Board for the privilege of doing business as a limited liability entity. Employment taxes and workers’ compensation insurance must be paid on employees’ wages.
Net income, loss, and tax credits of a California professional dental “S” corporation are not taxed at the corporate level and are instead “passed through” to the shareholders.
If not restricted by shareholder agreements or securities law requirements, a shareholder in a California professional dental corporation may readily transfer stock to a new owner, provided the transfer is made only to another licensed professional permitted to own such shares of stock.
Change of ownership does not dissolve or terminate a California professional dental corporation.
A California professional dental corporation can be dissolved by a vote of 50% or more of the voting power of the professional corporation’s shareholders and the subsequent filing of a certificate of election with the Secretary of State. California Corporations Code §§ 204(a)(4), 1900(a), 1901.
The organization of a California professional dental corporation for the pricing listed on this page assumes a single class of stock and the issuance to founders domiciled in California valued at US$25,000.00 or less. More complex organizations and share issuance available by quotation. Filings required by applicable federal and blue sky securities laws available for additional fees and with additional costs.
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