Examples:

• • Dr. Patel is a licensed dentist in good standing with the Dental Board of California. She wants to incorporate her solo practice for liability protection and potential tax savings. As the only shareholder, she’ll also serve as sole director, president, treasurer and secretary.
  • Drs. Lee and Hernandez are forming a partnership and decide to structure it as a professional corporation for liability and tax reasons. They split shares 50/50 and both serve as directors, with Dr. Lee acting as president/treasurer and Dr. Hernandez as VP/secretary.
  • Dr. Kim is joining Drs. Smith and Johnson’s existing dental corporation as a new shareholder. To comply with ownership rules, they issue Dr. Kim 30% of shares, with Drs. Smith and Johnson each retaining 35%. All three serve as directors, with Dr. Smith as president, Dr. Johnson as treasurer, and Dr. Kim as secretary.
  • Dr. Jones wants to issue 10% of shares in his new dental corporation to his wife, an RDH, and another 5% to a colleague who’s an oral surgeon. Since both are licensed professionals and the total doesn’t exceed 49%, this is permissible as long as Dr. Jones retains the other 85% and is the sole director and officer.
  • When Dr. Garcia unexpectedly passes away, her dental corporation has 6 months to repurchase her shares from her estate. Her business partners, Drs. Lopez and Nguyen, use life insurance proceeds to buy out the shares and redistribute them 50/50, updating the corporate records accordingly.

Action Steps:

• • Confirm all potential shareholders, directors and officers have active, unrestricted licenses in good standing with the Dental Board and any other applicable licensing agencies.
  • Decide on the ownership allocation between dentist shareholders and any other licensed professionals, ensuring dentists retain at least 51% of shares.
  • Determine who will serve as directors and officers based on the number of dentist shareholders (1 shareholder = sole director and officer, 2 = both as directors and split officer roles, 3+ = all as directors and allocate officer positions).
  • Discuss and document each shareholder’s specific roles, responsibilities, and time commitments to the practice, along with compensation and benefits structures.
  • Work with an attorney to draft custom bylaws and a shareholder agreement (buy-sell agreement) detailing onboarding/exit procedures, share valuation and transfer terms, voting rights, dispute resolution, and other key provisions to protect all parties.

FAQs:

• • Q: Can a non-dentist spouse co-own the corporation as a 50/50 shareholder?
    A: No – even if they’re a licensed professional like an RDH, a non-dentist spouse can only own up to 49% of shares. The dentist shareholder(s) must always hold the majority stake.
  • Q: What happens if a dentist shareholder loses their license?
    A: The corporation has 90 days from the date of license suspension/revocation to repurchase the shares. Otherwise, they’re considered a “disqualified person” and can jeopardize the corp’s legal standing. The corp should have enough cash reserves or insurance to facilitate the buyout.
  • Q: Are there any restrictions on the number of dental corporations I can form?
    A: No, you can form multiple dental corporations (e.g. for different locations or specialty practices) as long as you meet the ownership, licensure and control requirements for each one. Many dentists operate separate corps for each office.
  • Q: Can I form a dental corporation with my partner if they’re not a dentist?
    A: Potentially, if your partner is a qualifying licensed professional like a physician or RDH. However, the dental corporation would still need to have at least 51% ownership and control by licensed dentists. A better option may be to form a registered dental hygienist in alternative practice (RDHAP) corporation or a management service organization (MSO) as a separate entity your partner can own.
  • Q: I’m a sole shareholder – do I really need to appoint myself as a director and officer?
    A: Yes, even as a single shareholder corporation, you must follow these formalities. Holding annual meetings and documenting major decisions is crucial to preserving the liability shield. Think of it as wearing your “director” or “president” hat as you manage the corporation.

Examples:

• • “Patel Dental Group, a Professional Corporation” – Includes the dentist shareholder’s surname and an appropriate designation for a multi-practitioner entity.
  • “Johnson Family Dentistry, Inc.” – Uses the dentist’s last name and clarifies the family-friendly nature of the practice. The “Inc.” is sufficient as a corporate indicator.
  • “Sunrise Dental Associates” – A fictitious name (DBA) that doesn’t include a dentist’s surname, so it would require a permit from the Dental Board in addition to the Articles of Incorporation.
  • “Kim Orthodontics, a Dental Corporation” – Allowable if Dr. Kim is a licensed orthodontist per the Dental Board’s records. The name can’t mislead patients about the specialties offered.
  • “South Bay Dental Spa, Inc.” – A unique brand name that would need to be searched for potential trademark conflicts, even if no other CA corps have it.

Action Steps:

• • Brainstorm 3-5 potential corp names that include a dentist shareholder’s surname and an appropriate corporate designator. If you want a fictitious name (DBA), come up with options that reflect your brand identity and desired image.
  • Search the California Secretary of State’s business entity database to rule out any names already in use, including close variations that could cause confusion. Consider adding a geographical reference or descriptor to make your name more distinctive.
  • If you want a fictitious name, apply for a permit with the Dental Board of California. You’ll need to provide a completed application, filing fee, and copy of your Articles of Incorporation (which can be pending if not yet filed).
  • Do a trademark screening search using the U.S. Patent & Trademark Office’s TESS database, as well as state and common law databases, to identify any potential conflicts with your chosen name/logo.
  • Once you’ve settled on an available name, file a name reservation with the Secretary of State to hold it for up to 60 days while you prepare and file your Articles of Incorporation.

FAQs:

• • Q: Can I include my specialty in my corp name if I’m not board-certified?
    A: You can include a specialty designation in your corp name as long as you’re licensed by the Dental Board to practice in that specialty, even if you don’t have a separate board certification. The key is that your corp name accurately represents the services you’re legally authorized to provide.
  • Q: Do I need to file a fictitious business name statement with the county for my corp’s DBA?
    A: No – if you’ve obtained a fictitious name permit from the Dental Board, you don’t need to file a fictitious business name statement with the county clerk as other businesses do. The Dental Board permit serves that purpose.
  • Q: What happens if I use a corp name without getting a fictitious name permit?
    A: The Dental Board can issue a citation, fine, or even take disciplinary action against your license for holding yourself out to the public under a name that’s not permitted. Always get your fictitious name approved before using it in any advertising, signage or patient communications.
  • Q: How can I make sure the corp name I want will be approved?
    A: While there’s no pre-approval process, following the guidelines in the Corporations Code and Dental Practice Act will help ensure a smooth filing. Keep these tips in mind: 1) Use a licensed dentist’s surname or get a fictitious name permit, 2) Include a corporate designator, 3) Avoid misleading or highly similar names, and 4) Don’t imply services beyond your scope of practice.
  • Q: Can I have multiple fictitious names for my dental corporation?
    A: Yes – you can apply for and maintain multiple fictitious name permits from the Dental Board if you want to operate under different trade names. This is common for practices with multiple locations or those offering distinct services (e.g. general dentistry, orthodontics, pediatric). Just be sure to use your official corp name in all legal contracts.

Examples:

• • Dr. Patel is the sole shareholder of her dental corporation. In the Articles, she lists herself as the sole director. At the first board meeting, she appoints herself president, secretary and treasurer, recording this in the meeting minutes.
  • Drs. Lee and Hernandez are 50/50 shareholders in their new corp. They’re both named as directors in the Articles, with Dr. Lee serving as president and treasurer, and Dr. Hernandez as VP and secretary. They sign a resolution formalizing these roles.
  • Dr. Jones (55%), Dr. Kim (30%) and Dr. Patel (15%) are forming a group practice. All three are listed as directors in the Articles, and at the first board meeting, they elect Dr. Jones as president, Dr. Kim as treasurer, and Dr. Patel as secretary. The minutes reflect this vote.
  • After two years of operation, Dr. Smith’s dental corp has grown and she wants to bring on an associate, Dr. Nguyen, as a minority shareholder. They amend the Articles to add Dr. Nguyen as a director and redistribute shares 75/25. The board minutes reflect Dr. Nguyen’s appointment as secretary, with Dr. Smith remaining as president and treasurer.
  • When their VP/secretary Dr. Garcia is suspended by the Dental Board, Drs. Lopez and Nguyen hold an emergency board meeting to remove her as an officer and appoint Dr. Nguyen in her place. They also begin the process of repurchasing Dr. Garcia’s shares since she’s now a disqualified person. All actions are documented in a board resolution.

Action Steps:

• • Determine who will serve as the initial director(s) based on the number of dentist shareholders, and list their names and addresses in your Articles of Incorporation.
  • Schedule an initial board of directors meeting shortly after filing the Articles to appoint officers, adopt bylaws, and handle other organizational matters. Prepare an agenda and meeting minutes to document these actions.
  • Decide which dentist shareholders will hold the president, VP, treasurer and secretary roles, making sure to meet the minimum requirements for your corp size. Have the directors vote on a resolution appointing the officers.
  • Obtain signed consents from each director and officer agreeing to serve in their role, and file a Statement of Information with the Secretary of State listing your corp’s management structure.
  • Calendar reminders for your annual shareholder and board meetings so elections and appointments stay current. Update your Statement of Information and Dental Board records anytime you have a change in directors or officers.

FAQs:

• • Q: Can non-dentists serve as officers of a dental corporation?
    A: Potentially, but with limits. All directors and the president must be licensed dentist shareholders. However, non-dentists can serve as VP, secretary or treasurer as long as they’re not making clinical decisions. Many dentists appoint a spouse or office manager to these roles, or leave them vacant if not required.
  • Q: How often do we need to hold board of directors meetings?
    A: At a minimum, you should hold an annual board meeting to elect directors, appoint officers, and handle other big-picture items like approving contracts, setting compensation, and reviewing financials. However, quarterly or even monthly meetings can help keep everyone on the same page, especially if you have multiple shareholders. You can also hold special meetings as needed.
  • Q: What if a director or officer wants to resign before their term is up?
    A: They should submit a written resignation letter to the board, which then meets to formally accept it and appoint a replacement (if desired). Be sure to document the resignation and new appointment in your meeting minutes and update your Statement of Information. You can also amend your bylaws to set specific procedures around resignations.
  • Q: Can directors or officers be paid for their service?
    A: Yes, directors and officers can receive reasonable compensation for their work in these roles, as long as it’s approved by the board and reflected in your financial records. Many smaller corps don’t pay separate stipends, but larger ones often do. Just make sure the compensation terms are clearly documented and align with market rates to avoid any impropriety.
  • Q: What happens if we don’t follow these rules for appointing directors and officers?
    A: Failing to properly appoint and maintain your corp’s management team can jeopardize your liability protection if you’re ever sued. A plaintiff’s attorney may try to “pierce the corporate veil” by showing you didn’t observe these formalities. So while it may seem like just paperwork, it’s crucial to get right.

Examples:

• • Dr. Patel’s Articles state: “The name of this corporation is Patel Dental Group, a Professional Corporation. The purpose of this corporation is to engage in the profession of dentistry. The name and address of the corporation’s initial agent for service of process is Anita Patel, DDS at 123 Main St., Sacramento, CA 95814. This corporation is authorized to issue 10,000 shares of common stock. This corporation is a professional corporation within the meaning of the Moscone-Knox Professional Corporation Act.”
  • Dr. Johnson files her Articles online through the Secretary of State’s bizfile portal, opting for the $350 expedited 24-hour processing so she can open her practice right away. She downloads the stamped copy as soon as it’s available.
  • Five years after forming their corp, Drs. Kim and Patel decide to bring on Dr. Nguyen as a new shareholder, necessitating an increase in the number of authorized shares. They file an Amendment to the Articles reflecting the share change, pay the $30 filing fee, and issue new stock certificates.
  • In their bylaws, Drs. Smith and Garcia flesh out the procedures for shareholder and board meetings, officer roles and authority, and dispute resolution. They make sure these governance provisions align with and expand on the basics covered in their Articles of Incorporation.

Action Steps:

• • Gather the information you’ll need for the Articles, including the corp name and statement of purpose, agent for service of process, number of authorized shares, and professional corporation statement. Determine any optional provisions to include.
  • Have an attorney draft the Articles, or use the Secretary of State’s template and fill in the required information. Make sure all incorporators (initial directors) sign the document.
  • File the Articles online at bizfile.sos.ca.gov or by mailing to the Secretary of State’s Sacramento office. Include the $100 base filing fee and any extras for expedited service or certified copies.
  • Once you receive confirmation of filing from the Secretary of State, keep the stamped Articles in your corporate records book. Provide copies to your bank, accountant and other key advisors.
  • If you later need to amend the Articles, prepare and file the amendment form, along with the $30 filing fee. And if your bylaws are ever updated in a way that conflicts with the Articles, be sure to amend the Articles accordingly.

FAQs:

• • Q: Who can serve as the agent for service of process?
    A: Any California resident with a physical street address can be the agent, or you can use a professional registered agent service. The agent’s role is to accept legal notices and lawsuit papers on behalf of the corp. Most dentists list themselves or their practice address, but some opt for a third party for privacy or convenience.
  • Q: How many shares should I authorize in the Articles?
    A: There’s no set rule, but most small corps start with 10,000+ shares. This gives you flexibility to allocate stakes among initial shareholders and sell more later as needed. You’ll list the total authorized shares in your Articles, but you don’t have to issue them all at once. Your board decides when and how many shares to issue over time.
  • Q: Can I form my corporation in a state other than California?
    A: If you are a California licensed dentist or orthodontist, you are legally required to incorporate your practice in California. Q: What’s the difference between my Articles of Incorporation and my practice’s fictitious name permit?
    A: The Articles legally create your corporation as a business entity with the state. If your corp will operate under a different name than the one in your Articles, you’ll also need to get a fictitious name permit from the Dental Board. So most practices have both – the Articles for the underlying corp, and the fictitious name permit for their DBA.
  • Q: Do I have to publish my Articles anywhere?
    A: No, unlike some other states, California doesn’t have a publication requirement for corporations. Once your Articles are filed with the Secretary of State, that’s it – they become public record and you’re not obligated to publish them in a newspaper or elsewhere.

Examples:

• • Dr. Patel’s Articles authorize 10,000 total shares. At the first board meeting, she decides to issue all 10,000 to herself at $1 per share. This is recorded in a resolution, and a stock certificate is prepared showing Dr. Patel as the owner of 10,000 shares.
  • Drs. Lee and Hernandez authorize 100,000 shares, but initially issue 30,000 to Dr. Lee and 20,000 to Dr. Hernandez at $10 each. The stock ledger shows $300,000 and $200,000 capital contributions respectively, with 50,000 shares left to issue later.
  • After Dr. Garcia passes away, Drs. Smith and Johnson’s corporation has 6 months under the bylaws to repurchase her 25% stake (5,000 out of 20,000 total shares) from her estate at fair market value. They have the shares appraised, get a loan to cover the buyout, then retire those 5,000 shares.
  • Dr. Nguyen’s bylaws lay out detailed procedures for shareholder meetings, including quorum requirements (a majority of shares), advance notice periods (30 days), and the items that can be voted on (director elections, bylaw amendments, major corp actions). The bylaws also cover indemnification of directors and officers.
  • After 10 years in business, Dr. Roberts’ dental corp has seen strong growth. He wants to bring on an associate and offer them shares. The board meets and approves an increase to 200,000 total authorized shares. Dr. Roberts files an amendment to the Articles, then issues 30,000 new shares to the associate.

Action Steps:

• • Make sure your Articles of Incorporation authorize enough shares for all initial shareholders, with some cushion for later issuances. If needed, amend the Articles to increase the authorized share number before issuing.
  • At your initial board meeting, decide how many shares to issue to each shareholder and at what price. Have the board adopt a resolution approving the issuance, and record it in the meeting minutes.
  • Prepare stock certificates for each shareholder, with the corp name, shareholder name, number of shares, and any transfer restrictions. Have the president and secretary sign the certificates.
  • Record each stock issuance in your corp’s official stock transfer ledger, including the date, shareholder name, and number of shares. Keep this ledger updated with any future stock transfers or repurchases.

FAQs:

• • Q: What’s the best price per share to use when issuing stock?
    A: For most small dental corps, it’s simplest to use a nominal price like $1 or less per share, paid in cash. This keeps your initial shareholder capital contributions proportionate to the ownership split.
  • Q: Do I have to issue physical stock certificates?
    A: Issuing official signed stock certificates is a best practice to clearly document ownership and transfer rights. They also give shareholders something tangible to represent their stake in the practice.
  • Q: How do I handle it if a shareholder wants to sell their shares?
    A: First, check your articles, bylaws and any buy-sell agreement for restrictions on share transfers. Typically, the shareholder needs to offer the shares to the corp first, then to other shareholders. If neither exercises this right of first refusal, then the shares can be sold to another licensed dentist at an agreed price. The sale should be approved by the board and recorded in your stock ledger.
  • Q: What should be included in my corporation’s bylaws?
    A: At a minimum, your bylaws should cover the roles and authority of shareholders, directors and officers; meeting and voting procedures; restrictions on share ownership and transfers; and more.
  • Q: Can I just use a generic bylaw template I find online?
    A: It’s risky to rely solely on a generic template, as it may not account for the specific legal requirements for dental corps or your particular ownership structure and practice needs. It’s worth investing in a dental attorney to draft bylaws and other key docs to ensure full compliance and maximum protection.