Legal compliance checklist for a veterinary corporation
By Matt Dickstein
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In my last article, I ask the threshold question, Should you incorporate your veterinary practice? In this article, I give you a legal compliance checklist for your veterinary corporation. Incorporating a veterinary practice can feel overwhelming. There are so many unknowns to cause you anxiety. I write this checklist to fill in the unknown. This checklist gives you a bird’s eye view of legal compliance for your start-up veterinary corporation.
Let’s start at the beginning – incorporation.
Form the Veterinary Corporation. Your basic choices are a C corporation or an S corporation (you may not use an LLC for a veterinary practice). The law is tricky for veterinary corporations, so use an attorney who knows veterinary corporation law to draft your corporate documents (articles, bylaws, stock certificates, etc.).
Fictitious Name Permit. The name of a veterinary corporation must include the words “veterinary corporation” or similar corporate abbreviation, for example, “Smith Veterinary Corp.” You might want a name that sounds better for advertising purposes – this would be your practice’s fictitious name. A fictitious name is a dba or some name other than the veterinary corporation’s legal name, for example, “Love your Pet Vets.” In this case, make a fictitious name filing in your local county recorder’s office.
Shareholders / Buy-Sell Agreement. If your practice has more than one owner / veterinarian, seriously consider getting a shareholders / buy-sell agreement to govern your relationship with your partners. These agreements save you a lot of money if partner relations go bad. A buy-sell agreement resolves disputes between the partners, including exit provisions if the partners can’t work together anymore. I call this the partners’ economic divorce. For more info, see Shareholder buy-sell agreements for veterinary corporations.
Get a Federal Employer Identification Number (EIN). You can call the IRS for your EIN or get it from the IRS’ website.
Bank Accounts. Once you have the articles of incorporation plus EIN, you can open bank accounts.
Choose a Location. First decide on a general location, then check local zoning requirements to be sure you can operate a veterinary practice there. Visit your local planning / permits department for this and other local requirements for your location.
Real Property Lease. One of the most important contracts you’ll sign is the lease for your offices. The lease will bind you for years to come, and you’ll have to continue paying rent even if the practice doesn’t perform well. This is another area where you need a lawyer.
Trademarks. If your veterinary practice will rely on a special business name or trademark, find out if anyone else has prior rights to use the business name. Search the internet to see if anyone is using your name for a veterinary practice within your geographic scope. Your geographic scope relates to how far you look for clients. If your internet searches come up clean, consider getting a trademark on your name. If your searches show problems, talk to a lawyer about what to do next.
Local Business License. Get a license to do business from your city.
Seller’s Permit. If you sell merchandise, get a seller’s permit from the California State Board of Equalization.
Employer Filings and Withholdings. If you have employees, file form DE-1 with California EDD. This starts the never-ending process of employment law compliance. Hire a payroll company to handle your employee wage withholdings. Read Classifying a veterinarian as an employee or a contractor for more on this aspect of legal compliance.
Workers Compensation and Other Insurance. Once you have employees, get an insurance broker for workers compensation insurance. Workers comp is required by law. Use an experienced broker to purchase your professional malpractice insurance.
Finally, read Reduce your personal liability from your business to learn how to protect your personal assets from business risks.
That’s it for this bird’s eye view of the start-up of your veterinary corporation. I hope this checklist has been helpful to you.