California’s Business and Professions Code, the California Corporations Code, and regulations from the California Board of Chiropractic Examiners impose specific requirements on chiropractic practices. Complying with these laws not only helps you avoid legal trouble but also ensures your corporate entity is set up for success.

1. What Is a California Professional Chiropractic Corporation?

• A Professional Corporation (PC): A special type of corporation formed under the Moscone-Knox Professional Corporation Act that permits licensed professionals (such as chiropractors) to practice their profession within a corporate structure.
• Governed by Multiple Laws: See California Corporations Code §§ 13400–13410, Business & Professions Code §§ 1050–1056, and specific regulations from the Board of Chiropractic Examiners.
• Liability Protection: Generally provides limited liability for shareholders; however, individual professional liability for malpractice still applies.
• Naming Requirements:
  
  • Must contain the **name or last name** of one or more of the shareholders
  • Must include the word “chiropractic”
  • Must include a corporate designation such as “Corporation,” “Corp,” “Incorporated,” “Inc.,” or “Professional Corporation.”

   

2. Who Can Own and Operate a CA Professional Chiropractic Corporation?

California has strict rules regarding who can own shares in a professional chiropractic corporation and who can serve as directors and officers.

A. Permissible Shareholders (The 51/49 Rule)

• Licensed Chiropractors: Under California Corporations Code § 13401.5, licensed chiropractors are allowed to hold shares in a chiropractic PC and must collectively own at least 51% of the outstanding shares.
• Other Licensed Professionals: Certain other professionals (physicians, podiatrists, psychologists, RNs, acupuncturists, etc.) may own up to 49% of the total shares, per § 13401.5(k). However, chiropractor shareholders cannot be outnumbered by these other licensed professionals.

B. Directors and Officers

• Single Shareholder Corporation: If there is only one shareholder, that individual is both the sole director and must serve as president and treasurer (California Corporations Code § 13403).
• Two Shareholder Corporation: Each shareholder must be a director, and the two shareholders among them fill the offices of president, vice president, secretary, and treasurer.
• Multiple Shareholders (3+): Directors must be licensed persons. Certain officer positions (secretary or vice president) may sometimes be held by non-licensed individuals, but the president and treasurer typically need to be licensed if only a small number of shareholders exist.

3. Corporate Formation Steps & Filing Requirements

• Prepare Articles of Incorporation: Must include specific language stating the professional purpose, e.g., “To engage in the practice of chiropractic…,” per California Corporations Code §§ 202(b)(1)(B) and 13404.
• File Articles with Secretary of State: Include the correct corporate name (featuring the required elements) and pay the filing fee. Obtain certified copies for the Board of Chiropractic Examiners.
• Draft Bylaws: These govern internal management (e.g., shareholder meetings, voting, officer duties). Accurate, compliant bylaws help prevent future disputes.
• Hold an Organizational Meeting: This is a legal requirement where you formally adopt bylaws, issue shares, elect officers, and document the corporation’s formation.
• File Statement of Information: Must be filed with the Secretary of State within 90 days of incorporation, listing the corporation’s officers and directors.
• Apply for a Certificate of Registration: Under B&P Code § 1051 and 16 CCR § 367.5, submit an application to the Board of Chiropractic Examiners with the applicable fee (currently $171). Attach certified copies of your Articles of Incorporation.
• Obtain EIN & Address Tax Requirements: Secure an Employer Identification Number (EIN) from the IRS. Decide on your tax election (S-Corp vs. PSC).
• Issue Stock: Comply with securities laws (federal & state) for share issuance to founders, ensuring you respect the 51/49 rule for ownership.

4. Tax Elections: S-Corp vs. Personal Service Corporation

One crucial aspect of starting a California Professional Chiropractic Corporation is choosing its tax structure. Consult a CPA or tax professional to determine which election suits your financial goals.

• S-Corp Election: Avoids double taxation by passing income, losses, deductions, and credits to shareholders’ personal tax returns.
  
  • S-Corp Election Timing: File IRS Form 2553 no later than 2 months and 15 days after the beginning of the tax year in which the election is to take effect.

   

• Personal Service Corporation (PSC): Taxed at a flat 21% federal rate (the current C corporation rate) plus California’s 8.84% corporate tax. A PSC is a corporation where more than 50% of its stock is owned by employees who perform professional services.

5. Avoiding Common Pitfalls

• Naming Errors: Failing to include “chiropractic,” a shareholder’s name, and a proper corporate designation (e.g., “Inc.”) leads to application rejections or disciplinary action.
• Violating the 51/49 Rule: Non-chiropractor professionals can never exceed 49% ownership nor outnumber chiropractors in the PC.
• Missed Regulatory Filings: Neglecting changes in officers/directors or corporate practice address triggers fees and compliance headaches.
• Late or Unfiled S-Corp Election: Failure to meet the 2 months and 15 days deadline means defaulting to C-corp/PSC status by default, with possible higher tax burdens.

6. Why Work with a Professional?

• Expert Guidance: A knowledgeable attorney or professional formation service ensures your documents comply with relevant codes and Board regulations.
• Legal Protection: Proper formation helps preserve the corporate veil, minimizing exposure of personal assets.
• Tax Planning: Professionals can assist in selecting the best structure—whether an S-Corp or PSC—and maintaining compliance.
• Ongoing Compliance: Changes in ownership or addresses require timely filings. An expert on call can help you avoid oversights.

Chiropractic Corporation Formation FAQs

Summary

Incorporating properly paves the way for a compliant, protected, and thriving chiropractic practice.

When forming a California Professional Chiropractic Corporation, keep these key points front and center:

• Meet the 51/49 Rule, ensuring licensed chiropractors retain majority ownership.
• Name your corporation correctly—include a shareholder’s name, “chiropractic,” and a proper corporate designation.
• No DBAs for chiropractic services; it’s explicitly prohibited by the Board’s Certificate of Registration rules.
• Hold your organizational meeting to adopt bylaws, elect officers, and issue shares—this is legally required.
• Choose the right tax classification (S-Corp vs. PSC) and file on time to avoid default status and higher taxes.
• Partner with a legal or tax professional for a stress-free, fully compliant process.

Ready to Form Your Chiropractic Corporation?

A correctly formed California Professional Chiropractic Corporation provides liability protection, ownership clarity, and potential tax benefits. Engaging professionals—legal, tax, or both—maximizes compliance and positions your practice for long-term success.

Let the pros handle the paperwork so you can focus on patient care and practice growth.

Disclaimer

The information in this article is for general informational purposes and does not constitute legal, tax, or professional advice. Laws and regulations change frequently, and application varies by individual circumstances. For personalized guidance on forming a California Professional Chiropractic Corporation, consult an attorney.

Relevant California Laws & Codes

• California Corporations Code: §§ 13400–13410 (Moscone-Knox Professional Corporation Act)
• California Business & Professions Code: §§ 1050–1056 (Chiropractic Corporation & Practice)
• California Code of Regulations: Title 16, §§ 300 et seq. (Board of Chiropractic Examiners regulations)

Conclusion: Setting up a California Professional Chiropractic Corporation properly is the ultimate power move for chiropractors seeking robust legal protection, tax efficiency, and a streamlined practice structure.