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)
Dentistry
Research Psychoanalysts
Prescription Lenses
Dieticians
Registered Nursing
Psychologists
Hearing Aid Dispensers
Respiratory Therapy
Pharmacies
Veterinary Medicine
Marriage/Family/Child Counseling
Accountants
Architecture
Auctioneers & Auctions
Professional Engineers
Home Inspectors
Barbering & Cosmetology
Private Detectives
Protection Dog Operators
Alarm Companies
Geologists and Geophysicists
Structural Pest Control Operators
Photogrammetry
Cleaning Dying and Pressing
Crematories
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
Optometry
Physicians Assistants
Osteopathic Medicine
Nursing Home Administrators
Psychiatric Technicians
Acupuncture
Clinical Social Workers
Advertisers
Landscape Architecture
Interior Designers
Attorneys
Law Libraries
Legal Document Assistants
Paralegals
Locksmiths
Guide Dogs for the Blind
Repossessors
Firearm Training
Funeral Directors
Shorthand Reporters
Land Surveyors
Polygraph Examiners
Cemeteries
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.