One of the first steps you want to take when opening an optometry practice, whether you decide to build or buy a practice, is to decide on the type of business structure you will use. Your business structure is the formalization of your optometry corporation, and there are some things that you need to be aware of in order to choose the right structure.
In the state of California, for instance, optometrists need to form a Professional Optometry Corporation. This is a requirement. You can't simply form an LLC in this state. This highlights something for those who want to form an optometry corporation - your state laws govern the way your corporation can and should be structured. Using a generic type of service or document to start your corporation may not be the best choice. You need a legal service that specializes in optometry and is well versed in the laws governing your own state.
This article will cover basic information on forming your optometry corporation, along with the benefits of different types of structures. Your state may be similar to California, where only corporations can be used, so that's something to consider. We'll also include the role of your shareholders, information about your shareholders, and other information that you need to maintain legal standing as an optometry corporation.
There are tax benefits associated with different types of structures and there are also criteria that you need to meet. It's important that you speak to an experienced CPA or attorney who specializes in optometry so that you can choose the best option for your practice today and in the future.
If you have already begun doing business without forming a corporate entity, you may need to reestablish contracts and other legal documents after the corporation is established. Your optometry corporation will have its own tax ID number and the optometry practice name needs to be exact to be legally binding on any contracts.
As discussed above, the laws of your state may differ in terms of the type of optometry corporation you can form. Your attorney can help in this regard. In some states, you can form a Limited Liability Corporation (LLC). In states like California, an LLC is not permissible for an optometry office. A CPA or attorney can help you in determining the best way to structure using either an S-Corporation or a C-Corporation.
The S-Corporation is often called a "pass through" corporation. This is because you're only taxed once on income. There are other advantages to this business structure, as well. It is the most common structure for most optometry practices.
There are a lot of benefits to forming a corporation for your optometry practice. Most of these advantages will help you structure your financial obligations and maintain the best procedures for your tax responsibilities. Here are a few of the advantages:
In the event of a death, state laws on the estate may also be taken into consideration with regard to the way the corporation settles financially with the family or the way the practice is run according to local and state professional governing bodies.
Your optometry corporation may require that the name of the corporation also includes the first and last name of one or more shareholders and may stipulate verbiage, such as "A Professional Corporation" or an abbreviation to showcase the type of corporation includes optometry.
There are provisions for choosing a fictitious name after the optometry corporation is created. The fictitious business name must be registered with the county clerk’s office.
Filing Articles of Incorporation. In almost all states, Articles of Incorporation must be filed with the Secretary of State. On the website of the state's Secretary of State, you will likely find that your state has a form you may use. You may also choose to submit your own Articles. If you submit your own Articles, they must include:
Establishing Shareholders. In most states, an optometry corporation may have just one shareholder or an unlimited number of shareholders, including people who are licensed in other professions as long as the number of shares held by non-dentists does not exceed the total number of shares held by the dentists.
Many states allow some who are licensed in other professions to be shareholders in the corporation. Your attorney can provide you with more information on the laws of your specific state relevant to permissible shareholders.
Shareholder Meetings. Optometry corporations must hold annual shareholder meetings. Each year, the shareholders elect officers for the next year. Minutes are the be kept for all meetings and all issues presented must be included. The corporation secretary certifies that the minutes are correct.
Choosing Corporation Officers. The requirements covering corporation directors and officers depend on the size of the corporation. The officers needed are:
Forming an optometry corporation is beneficial but complicated. You want to be sure you do it right. There are state monetary penalties for failing to meet the legal requirements. At Dental and Medical Counsel, we have years of experience in assisting practices just like yours. Contact us to schedule a complimentary consultation with Ali Oromchian, so we can assess your optometry practice’s needs.
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