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4 • 2010

Attention all Mule Racers and Martial Arts Studios: LLCs Aren’t For Everyone, Maybe Not Even For Anyone

We’re not fans of LLCs.  Mostly because of the exorbitant cost.  See, What is the annual cost of maintaining a LLC?”.   But did you know that LLCs cannot even be used by many types of small businesses.  Many are aware that lawyers, doctors, and accountants cannot use LLCs, but the list covers a lot more ground.

The rule stems from Cal. Corp. Code Sec. 17375, which prohibits LLCs from rendering “professional services”.  “Professional services” are defined in California Corporations Code Sections 13401(a) and 13401.3 as “any type of professional services that may be lawfully rendered only pursuant to a license, certification, or registration authorized by the Business and Professions Code, the Chiropractic Act, the Osteopathic Act or the Yacht and Ship Brokers Act.”    When you read the statutes, this covers a lot of ground.  The following is an informal list of all the covered professions:

Chiropractors (Chiropractic Act)


Research Psychoanalysts

Prescription Lenses


Registered Nursing


Hearing Aid Dispensers

Respiratory Therapy


Veterinary Medicine

Marriage/Family/Child Counseling



Auctioneers & Auctions

Professional Engineers

Home Inspectors

Barbering & Cosmetology

Private Detectives

Protection Dog Operators

Alarm Companies

Geologists and Geophysicists

Structural Pest Control Operators


Cleaning Dying and Pressing


Aircraft Repair

Automotive Repair

Automobile Dealers

Motor Vehicle Replacement Parts

Real Estate Appraisers

Boxing, Wrestling & Martial Arts

Horse Racing

Gaming Clubs

Professional Photocopiers

Alcoholic Beverages

Telephone Equipment

Clinical Laboratory Technology

Medicine (Including Podiatry)

Speech Pathologists/Audiologists

Registered Dispensing Opticians

Occupational Therapy

Physical Therapy

Vocational Nursing


Physicians Assistants

Osteopathic Medicine

Nursing Home Administrators

Psychiatric Technicians


Clinical Social Workers


Landscape Architecture

Interior Designers


Law Libraries

Legal Document Assistants



Guide Dogs for the Blind


Firearm Training

Funeral Directors

Shorthand Reporters

Land Surveyors

Polygraph Examiners


Electronic & Appliance Repair

Tax Preparations

Real Estate

Mineral, Oil, & Gas Brokerage

Home Furnishings

Mule Racing

Process Servers

Ticket Sellers

Foreign Labor

Equipment Dealers

Money Exchange Houses

Cable Television

Although some of the professions have lobbied for other choices (e.g., LLPs for attorneys and accountants), we’re not expecting any legislative solute to the mule racer who wants to be an LLC.