How to Start a Professional Corporation in California
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A California professional corporation is a specific type of corporation that licensed professionals such as physicians, attorneys, dentists, psychologists, and engineers are required to form when incorporating their practice in California.
Governed by the Moscone-Knox Professional Corporation Act (Cal. Corp. Code §§ 13400–13410), a professional corporation differs from a regular corporation in that ownership is restricted to licensed professionals in the same field. Unlike many other states, California does not allow professionals to form a Professional Limited Liability Company (PLLC). The professional corporation is the primary incorporation option available to most licensed professionals in the state.
Table of Contents
Introduction
If you are a licensed professional in California and you want to incorporate your practice, you have probably come across the term "PLLC" in your research. Here is what you need to know upfront: California does not allow PLLCs. State law expressly prohibits licensed professionals from rendering services through a limited liability company, which means the PLLC option that exists in many other states is simply not available here.
For most licensed professionals in California the professional corporation is the correct and required entity type when incorporating.
Understanding what a professional corporation is, who needs one, and how to form one correctly is essential before you start the process, because California's requirements involve two separate tracks: filing with the Secretary of State and registering with your professional licensing board.
What Is a Professional Corporation in California?
A California professional corporation is a corporation formed specifically to provide licensed professional services, governed by the Moscone-Knox Professional Corporation Act under California Corporations Code §§ 13400–13410.
Unlike a regular corporation, which can be formed by anyone for any lawful business purpose, a professional corporation is restricted to licensed professionals in a single field. A group of physicians can form a medical professional corporation. A group of attorneys can form a law corporation. What they cannot do is combine into a single entity. The Moscone-Knox Act limits each professional corporation to rendering one type of professional service.
The Moscone-Knox Act defines "professional services" broadly: any service that can only be lawfully provided under a license, certification, or registration authorized by the Business and Professions Code, the Chiropractic Act, or the Osteopathic Act. If your profession requires a state-issued license to practice, there is a strong likelihood that a professional corporation is the required structure if you choose to incorporate.
One important misconception to clear up early: a professional corporation limits your personal liability for ordinary business debts and the professional errors of your co-owners, but it does not protect you from personal liability for your own malpractice. California courts and licensing boards hold individual professionals personally accountable for their own professional conduct, regardless of the corporate structure they practice through. Incorporating as a professional corporation is still valuable as it provides protection from business creditors and from the negligence of other shareholders, but it is not a shield against your own professional errors.
Learn more about the differences between professional corporations and regular corporations.
Get StartedDo You Need a Professional Corporation in California?
Whether you are required to form a professional corporation in California depends on your specific licensed profession and how you intend to structure your business.
California law requires licensed professionals in most regulated fields to use a professional corporation rather than a regular corporation or LLC when incorporating their practice. The Moscone-Knox Act covers a broad range of licensed fields. Below is an inclusive, but not exhaustive, list of professions that must use a professional corporation structure in California when incorporating:
Healthcare Professions
- Licensed physicians and surgeons
- Licensed podiatrists
- Licensed dentists, registered dental hygienists, registered dental assistants
- Licensed psychologists
- Registered nurses
- Licensed marriage and family therapists
- Licensed clinical social workers
- Licensed professional clinical counselors
- Licensed physician assistants
- Licensed chiropractors
- Licensed acupuncturists
- Licensed physical therapists
- Licensed optometrists
Legal
- Attorneys at law
Financial and Business
- Certified public accountants (CPAs)
Design, Engineering, and Technical
- Licensed architects
- Licensed engineers
- Licensed land surveyors
Other
- Licensed shorthand court reporters
- Licensed speech-language pathologists
- Licensed veterinarians
If your profession is not on this list, you may still be subject to professional corporation requirements — or you may have additional options. The best first step is to confirm with your professional licensing board which entity types are permitted for your field.
What about attorneys and accountants? Attorneys and public accountants have one additional option: the Registered Limited Liability Partnership (RLLP), formed by filing Form LLP-1 with the California Secretary of State. RLLPs offer pass-through taxation and certain liability protections, but they function differently from corporations and are only available to these two professions.
Can You Form a PLLC in California?
No. California does not permit professionals to form a Professional Limited Liability Company (PLLC). California Corporations Code § 17701.04(e) expressly prohibits both domestic and foreign LLCs from rendering professional services in California, and the PLLC entity type exists under California law.
This surprises many licensed professionals, particularly those relocating from other states where they operated through a PLLC. In most states, a PLLC is the LLC equivalent for licensed professionals providing flexible management, pass-through taxation, and some degree of liability protection. California has specifically chosen not to make this structure available.
The reason comes down to professional accountability. California's Legislature has determined that licensed professionals should remain personally accountable for their professional conduct and should not be able to limit that liability through an LLC structure. The professional corporation achieves a different balance: it provides corporate liability protections for business debts and the errors of other shareholders, while preserving individual professional accountability.
The available alternatives for California licensed professionals are:
- Professional Corporation (PC): Available to the broad range of professions covered by the Moscone-Knox Act. This is the primary option for most licensed professionals..
- Registered Limited Liability Partnership (RLLP): Available only to attorneys and public accountants. Offers pass-through taxation but different governance and liability rules than a PC.
- Sole proprietorship or general partnership: Available but provides no liability protection and is generally not recommended for established practices.
For most licensed professionals in California, the Professional Corporation is the correct path forward.
California Professional Corporation Ownership Rules
California law imposes strict ownership requirements on professional corporations: at least 51% of shares must be held by licensed professionals in the corporation's primary profession, and no unlicensed individuals may hold shares.
This rule comes from California Corporations Code § 13401.5 and is one of the most important distinctions between a professional corporation and a regular corporation. Here is how it works in practice:
The majority ownership rule means that a medical professional corporation, for example, must have at least 51% of its shares held by licensed physicians. The remaining up to 49% of shares may be held by other qualifying licensed professionals listed in the statute — in the case of a medical PC, this can include registered nurses, chiropractors, psychologists, physician assistants, and certain other allied health professionals. The specific allied professions permitted to hold minority shares vary by the PC's primary profession.
No unlicensed (lay) person may hold shares in a California professional corporation. There is one narrow statutory exception: a non-licensee may serve in an assistant secretary or assistant treasurer role under Cal. Corp. Code § 13403, but this does not include share ownership.
What happens if a shareholder loses their license? If a shareholder becomes disqualified by losing their professional license or other disciplinary action, the corporation is generally required to acquire that shareholder's shares within a specified period. Failure to do so can result in administrative consequences from the relevant licensing board.
How to Form a Professional Corporation in California: Step by Step
There are 9 steps to forming a professional corporation in California, spanning two parallel tracks: filing with the California Secretary of State and registering with your professional licensing board.
Step 1: Confirm your profession requires a professional corporation
Review the list of professions covered by the Moscone-Knox Act (Cal. Corp. Code § 13401) and confirm with your licensing board that a professional corporation is the correct — and required — entity type for your field. Some professions have additional board-specific guidance that goes beyond the Corporations Code.
Step 2: Choose and verify your business name
Your professional corporation's name must be distinguishable from all other business entity names on file with the California Secretary of State (SOS). It cannot include words like "bank," "trust," or "trustee" without regulatory approval, and it cannot deceive the public about the nature of the business. Many licensing boards impose additional naming requirements — for example, law corporations must include "A Professional Corporation" or a similar designation, and medical corporations have their own naming conventions. You can check name availability through the SOS bizfile online portal
Step 3: File Articles of Incorporation with the California Secretary of State
File Form ARTS-PC (Articles of Incorporation of a Professional Corporation) with the California SOS. You can file online through the bizfile online portal or by mail. The articles must identify the professional purpose of the corporation specifically and include a statement that the corporation is organized under the Moscone-Knox Professional Corporation Act. Utilizing LegalNature's professional corporation formation service will streamline this step for you.
Step 4: Register with your professional licensing board
This step runs parallel to your SOS filing and is equally required. Under Cal. Corp. Code § 13401(b), professional corporations in California must typically register with the state agency that manages its profession and must maintain a valid certificate of registration from that agency throughout its existence. The Medical Board of California, the State Bar of California, the California Board of Accountancy, and every other relevant board each have their own registration process, timeline, and fee structure. Contact your licensing board directly to initiate this process at the same time as or immediately after your SOS filing.
Step 5: Prepare corporate bylaws
Bylaws are the internal governing rules of your professional corporation. They are not filed with the California SOS, but they are effectively required for your corporation to operate and some licensing boards require that your bylaws contain specific language. Your bylaws should address the roles and responsibilities of directors and officers, procedures for meetings, policies for issuing and transferring shares, and provisions for handling a shareholder's loss of licensure. It is also advisable to adopt a shareholder agreement addressing transfer restrictions and dispute resolution procedures.
Read more about corporate bylaws here.
Step 6: File a Statement of Information
Within 90 days of incorporation, you must file a Statement of Information with the California SOS. The statement includes your corporation's officers, directors, registered agent, business address, and business type.
Step 7: Appoint a registered agent
Your professional corporation must designate a registered agent: a person or company who agrees to accept service of process and other legal notices on behalf of the corporation in California. The registered agent must have a physical street address in California (not a P.O. box). You can serve as your own registered agent or use a professional registered agent service. LegalNature's registered agent service is available across all 50 states and the District of Columbia.
Read more about using a professional registered agent service here.
Step 8: Obtain an Employer Identification Number (EIN)
An EIN is your corporation's federal tax identification number, the business equivalent of a Social Security number. You will need it to open a business bank account, hire employees, and file tax returns.
Step 9: Consider an S corporation tax election
By default, your professional corporation will be taxed as a C corporation. However, professional corporations that meet IRS eligibility requirements can elect S corporation status by filing IRS Form 2553 with the Internal Revenue Service. When a federal S corp election is made, California automatically recognizes it and no separate California election form is required.
Learn more about the difference between C corp and S corp tax treatment.
Get StartedLegalNature's business filing and formation services can combine several of these steps into a single service, streamlining the professional corporation formation process and saving you time.
Ongoing Compliance Requirements for California Professional Corporations
Once formed, a California professional corporation must meet ongoing compliance requirements with both the California Secretary of State and its professional licensing board to remain in good standing.
The key annual and recurring obligations are:
- Annual Statement of Information. After the initial 90-day filing, your professional corporation must file a Statement of Information annually.
- Annual franchise tax return. Corporations in California are required to file specific forms depending on their tax structure (C corp or S corp) in order to comply with the annual California franchise tax.
- Licensing board compliance. Your licensing board registration must remain current throughout the life of the corporation. This includes renewing your individual professional license, completing any required continuing education, meeting ethical standards, and satisfying any board-specific corporate compliance obligations.
- Ownership compliance. Any change in shareholder composition must keep the corporation in compliance with the 51% licensed-ownership rule. Transfers of shares to unlicensed individuals are generally prohibited.
This list is general and non-exhaustive. Each professional required to form a professional corporation may be subject to additional compliance requirements. LegalNature's Compliance Guard service monitors your business's compliance requirements so you can focus on running your day to day operations.
Frequently Asked Questions
What is a professional corporation in California?
A professional corporation in California is a type of corporation that licensed professionals — such as physicians, dentists, attorneys, psychologists, and engineers — are required to form when incorporating their practice. It is governed by the Moscone-Knox Professional Corporation Act (Cal. Corp. Code §§ 13400–13410) and differs from a regular corporation primarily in its ownership restrictions: all shareholders must be licensed professionals in the same field, and no unlicensed individuals may hold shares.
Can I form a PLLC in California?
No. California does not allow Professional Limited Liability Companies (PLLCs). California Corporations Code § 17701.04(e) expressly prohibits both domestic and foreign LLCs from rendering professional services in California, and no PLLC entity type exists under California law.
What professions require a professional corporation in California?
The Moscone-Knox Act covers a broad range of licensed professions, including physicians, surgeons, dentists, psychologists, registered nurses, marriage and family therapists, licensed clinical social workers, chiropractors, acupuncturists, optometrists, attorneys, CPAs, architects, engineers, land surveyors, veterinarians, speech-language pathologists, and others. The complete list is found in Cal. Corp. Code § 13401 and related Business and Professions Code sections.
How much does it cost to start a professional corporation in California?
As of 2026, the primary state filing fee for a California professional corporation is $100 for the Articles of Incorporation (Form ARTS-PC), plus $25 for the Statement of Information filed within 90 days of incorporation. Your professional licensing board will also charge its own registration fee, which varies by profession.
Can a California professional corporation elect S corporation status?
Yes. A California professional corporation that meets IRS eligibility requirements can elect S corporation tax treatment by filing IRS Form 2553 with the IRS. California automatically recognizes the federal S corp election. No separate California filing is required. However, California still imposes an entity-level franchise tax on S corporation net income.
Conclusion
Forming a professional corporation in California is a two-track process: you must satisfy both the California Secretary of State's incorporation requirements and your professional licensing board's registration requirements before your corporation can legally render professional services. The Moscone-Knox Professional Corporation Act governs the structure, ownership rules, and ongoing compliance obligations that apply throughout the life of your corporation.
The most important threshold fact to keep in mind: California does not allow PLLCs. For most licensed professionals in this state, the Professional Corporation is not just the best option — it is the only incorporated option. Understanding that reality upfront saves time and prevents the frustration of pursuing an entity structure that California law simply does not provide.
LegalNature offers the guidance to navigate the nuances of professional corporation formation across all 50 states and the District of Columbia.