In California, there may be legal benefits to setting up and operating as a professional dentistry corporation instead of a sole owner or dental partnership. However, forming a professional organization is a challenging process that must strictly adhere to all applicable state and federal laws. Contacting an Anaheim Dental Attorney is beneficial in such cases.
What is a dental hygiene organization?
Under California state law, a dental hygiene corporation is established to engage in dental practice. The Moscone-Knox Professional Corporation Act, the broad laws of the California Corporations Code, and standards promoted by the Dentistry Board of California apply to professional dental corporations in California.
Which benefits do Professional Dental Corporations have?
- Legal Defense
By separating personal assets from company assets, a professional dentistry corporation limits an individual’s exposure to litigation and creditors. A professional company can shield a dentist’s personal belongings from claims resulting from the negligence of coworkers, some corporate claims, or lawsuits involving employees, even if it is set up and run properly. It cannot shield a dentist from medical malpractice. This is crucial for a dentist who has their own dental office.
- Business Credit
Establishing business credit through a professional dental firm might be helpful if you ever decide to sell your company or enter a partnership. It also does away with the requirement for personal guarantees.
By choosing your professional dentistry firm to be an S-Corp, you can avoid double taxes by having both profits and losses go through to shareholders. Additionally, stockholders who take distributions pay fewer self-employment taxes because of the S-Corp choice.
- Fringe Benefits:
A competent dental firm offers medical treatment as well as retirement programs.
Poor Formation -What could go wrong?
The following are the effects of founding a professional corporation incorrectly:
- Establishing a business that does not provide the protection or advantages you require.
- Failure to file an S Corp election before the deadline
- Losing the protection for which you established the corporation and slipping out of compliance
- Financial Sanctions
- Establishing whether the company is a de facto organization
Being a Professional Dental Organization and Doing Business:
A dental corporation must maintain separate accounts from the ones of its owners in order to guarantee that the shareholders maintain liability protection if the dental corporation cannot pay its creditors or is sued. Additionally, all payments must be paid to the dental organization, not its stockholders, with all paychecks made directly to the corporation. The dental organization ought to perform all commercial work in the corporate identity and not under the name of any chairman, manager, or shareholder for the same purpose as stated in the preceding point.