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What Professional Or Nonprofessional Services May Be Provided By A Limited Liability Company In California?

Most states permit professionals to render services through a professional limited liability company.[1] But not California. In California, professional services may be rendered by a professional corporation,[2] but not by a limited liability company (or “LLC”).

The California Revised Uniform Limited Liability Company Act specifically says that nothing in that Act “shall be construed to permit a domestic or foreign limited company to render professional services,” as that term is defined in sections 13401(a) and 13401.3 of California’s Professional Corporation Act.[3] Under sections 13401(a) and 13401.3, “professional services” mean “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, or the Osteopathic Act,[4] or by the Yacht and Ship Brokers Act.[5]

The revised version of California’s LLC Act became operative on January 1, 2014. But the prior version of the Act contained the exact same provision prohibiting the rendition of “professional services” by an LLC.[6] In 2004, California’s Attorney General examined the statutes then in effect to determine whether a business that provides services requiring a license, certification, or registration under the Business and Professions Code could conduct its activities as a limited liability company.[7] The Attorney General concluded that a limited liability company had no authority to perform “professional services.”[8] But the Attorney General noted that “professional” is usually defined to include only a person “engaged in one of the learned professions or in an occupation requiring a high level of training and proficiency.”[9] Not everyone required to obtain a license, certificate, or registration under the Business and Professions Code fits into that category. For example, the Attorney General distinguished veterinarians and psychologists, who are professionals, from vehicle salespersons, who are not professionals but who are still required to be licensed.[10] As a result, the Attorney General concluded that some services that require a license, certification, or registration under the Business and Professions Code are “professional services,” which cannot be rendered by an LLC, while other services requiring only an occupational license are “nonprofessional services,” which can be rendered by an LLC.[11]

Unfortunately, the Attorney General’s opinion did not provide the utmost in clarity for persons required to be licensed, certified, or registered under the Business and Professions Code, the Chiropractic Act, the Osteopathic Act, and the Yacht and Ship Brokers Act who might still have been wondering whether they could form an LLC to provide their services. The Attorney General recognized that there were over 60 “occupational activities” requiring a license, certification, or registration under the Business and Professions Code alone, “including barbers, locksmiths, private detectives, alarm companies, structural pest control operators, electronic and appliance repair shops, and automotive repair dealers.”[12] But the Attorney General said that it was beyond the scope of the opinion to state whether each of those licensed activities involved the provision of “professional” or “nonprofessional” services, which could be determined only on a case-by-case basis by examining the “educational, training, and testing prerequisites” for a particular activity.[13] As a result, it was up to the licensed individuals to figure out for themselves whether they should take the risk of doing business as an LLC or not.

The California legislature seems to have addressed that issue, in part, in the revised version of the LLC Act that became operative on January 1, 2014. The revised Act continues to prohibit an LLC from rendering “professional services,” as defined in sections 13401(a) and 13401.3 of California’s Professional Corporation Act.[14] So an LLC still cannot render services that require a professional license obtained only after satisfying extensive educational, training, and testing requirements.[15] But the revised Act added a new provision stating that

[a] domestic or foreign limited liability company may render services that may be lawfully rendered only pursuant to a license, certificate, or registration authorized by the Business and Professions Code, the Chiropractic Act, the Osteopathic Act, or the Yacht and Ship Brokers Act, if the applicable provisions of the Business and Professions Code, the Chiropractic Act, the Osteopathic Act, or the Yacht and Ship Brokers Act authorize a limited liability company or foreign limited liability company to hold that license, certificate, or registration.[[16]]

Read together, subsections (b) and (e) of section 17701.04 mean that an LLC can render nonprofessional services in California if the Business and Professions Code, the Chiropractic Act, the Osteopathic Act, or the Yacht and Ship Brokers Act specifically authorizes a particular type of licensee to render services through an LLC. This eliminates some of the uncertainty caused by the Attorney General’s opinion. Under the revised Act, licensees can, for the most part, determine for themselves if they can do business as an LLC by examining the relevant California statutes.

As the Attorney General noted, however, there are a lot of occupations covered by the Business and Professions Code. And what the Attorney General did not say is that there are many other occupations that do not require licensure, certification, or registration under the Business and Professions Code, the Chiropractic Act, the Osteopathic Act, or the Yacht and Ship Brokers Act. So the analysis of whether someone can render services through an LLC in California boils down to these three questions:

First, do you have to be licensed, certified, or registered under the Business and Professions Code or one of the other statutes to provide the services legally in California?[17] If not, then you can provide the services through an LLC.

Second, if you are required to be licensed, certified, or registered, then are the services “professional services,” as discussed above? If so, then you cannot provide the services through an LLC.

Third, if you are required to be licensed, certified, or registered but the services are nonprofessional, then you can provide the services through an LLC if the Business and Professions Code or one of the other statutes specifically says you can; otherwise, you cannot provide the services through an LLC.

With regard to the first question, this is an informal list of the businesses or professions requiring a license[18] in California:

Acupuncture[19]

Aircraft repair[20]

Alarm company operators[21]

Alcoholic beverages[22]

Architecture and building design[23]

Attorneys[24]

Automotive repair dealers[25]

Barbering, cosmetology, and electrolysis[26]

Boxing and martial arts[27]

Cemetery brokers, salespersons, and managers[28]

Cigarettes and tobacco products[29]

Common interest development managers[30]

Chiropractic[31]

Civil, electrical, and mechanical engineering[32]

Clinical laboratory technology[33]

Clinical social work[34]

Contractors[35]

Cremated remains disposers[36]

Crematories[37]

Crematory managers[38]

Dentistry[39]

Dieticians[40]

Dispensing opticians[41]

Educational psychology[42]

Electronic and appliance repair service dealers[43]

Embalmers and apprentice embalmers[44]

Foreign labor contractors[45]

Funeral directors[46]

Funeral establishments[47]

Gambling[48]

Geology and geophysics[49]

Guide dogs for the blind[50]

Hearing aid dispensers[51]

Home furnishings[52]

Home improvement salespersons[53]

Horse racing[54]

Industrial hygienists[55]

Interior design[56]

Land surveying[57]

Landscape architecture[58]

Legal document and unlawful detainer assistants[59]

Locksmiths[60]

Marriage and family therapy[61]

Massage therapy[62]

Medicine[63]

Mineral, oil, and gas brokers[64]

Mule racing[65]

Naturopathic medicine[66]

Nonresident contact lens sellers[67]

Nursing[68]

Occupational therapy[69]

Outdoor advertising[70]

Optometry[71]

Osteopathic medicine[72]

Paralegals[73]

Perfusion[74]

Pharmacies[75]

Pharmacists[76]

Photogrammetry[77]

Physical therapy[78]

Physician assistants[79]

Polysomnographic technology[80]

Private investigators[81]

Private security services[82]

Process servers[83]

Professional clinical counseling[84]

Professional fiduciaries[85]

Professional photocopiers[86]

Proprietary private security officers and employers[87]

Psychiatric technicians[88]

Psychology[89]

Public accountancy[90]

Real estate appraisers[91]

Real estate brokers and salespersons[92]

Repossession[93]

Research psychoanalysis[94]

Respiratory and inhalation care and therapy[95]

Sellers of travel[96]

Shorthand reporting[97]

Speech‑language pathology and audiology[98]

Sterile compounding pharmacy[99]

Structural pest control[100]

Surplus medication collection and distribution intermediaries[101]

Tax preparers[102]

Telephone medical advice services[103]

Telephonic sellers[104]

Ticket sellers[105]

Veterinary medicine[106]

Vocational nursing[107]

Weighing and measuring device service agencies[108]

Weighmasters[109]

Wholesaler and third‑party logistics provider of dangerous drugs or devices[110]

Yacht and ship brokers[111]

With regard to the third question, this is an informal list of the businesses requiring a license in California as to which the Business and Professions Code has addressed whether the license can be held by an LLC:

Alarm companies—yes[112]

Alcoholic beverage licensees—yes[113]

Cemetery authority—yes[114] An LLC may also provide services related to cemeteries and funerals by employing a licensed cemetery broker, cemetery salesperson, cemetery manager, funeral director, embalmer, and/or crematorium licensee,[115] but such a person may not have an ownership interest in an LLC certificated as a cemetery authority without running afoul of section 17701.04(e) of the revised LLC Act.[116]

Contractors—yes[117]

Foreign labor contractors—yes[118]

Gambling enterprise owners—yes[119]

Home improvement salespersons—yes[120]

Horse racing track operators—yes[121]

Outdoor advertising—yes[122]

Private investigators—yes[123]

Repossession agencies—perhaps[124]

Seller of travel—yes[125]

Speech-language pathologists and audiologists—no (only individuals may be licensed)[126]

Structural pest control operators—perhaps[127]

Surplus medication collection and distribution intermediaries—yes[128]

Yacht brokers—no[129]

The first list is obviously much longer than the second list. This means that there are many businesses and occupations that require licensure under California law as to which the Business and Professions Code, the Chiropractic Act, the Osteopathic Act, or the Yacht and Ship Brokers Act do not specifically authorize an LLC to hold the license. There does not seem to be any room to read section 17701.04(b) of the revised LLC Act any way other than that those businesses and occupations that are not specifically authorized to do so by the revised Act may not render nonprofessional services through an LLC.

See our Chart of all services by clicking here.

[1]See, e.g., N.Y. Ltd. Liab. Co. Law §§ 1201–1216.

[2]See Cal. Corp. Code § 13405(a).

[3]Id. § 17701.04(e).

[4]Id. § 13401(a) (emphasis added).

[5]Id. § 13401.3.

[6]See id. § 17375 (repealed) (“Nothing in this title shall be construed to permit a domestic or foreign limited liability company to render professional services, as defined in subdivision (a) of Section 13401 and in Section 13401.3, in this state.”).

[7]See 87 Op. Cal. Att’y Gen. 109, at 1 (July 23, 2004), available at http://oag.ca.gov/system/files/opinions/pdfs/04‑103.pdf.

[8]Id. at 3.

[9]Id. at 4 (internal quotation marks omitted).

[10]Id. at 4-5 (discussing Mann v. Dep’t of Motor Vehicles, 76 Cal. App. 4th 312, 90 Cal. Rptr. 2d 277 (1999)).

[11]Id. at 1, 6 (“We conclude that a business that provides services requiring a license, certification, or registration pursuant to the Business and Professions Code may conduct its activities as an LLC if the services rendered require only a nonprofessional, occupational license.”).

[12]Id. at 3 (citing eight different sections of the Business and Professions Code).

[13]Id. at 5 & n.2.

[14]Cal. Corp. Code § 17701.04(e).

[15]Mann, 76 Cal. App. 4th at 319, 90 Cal. Rptr. 2d at 282.

[16]Cal. Corp. Code § 17701.04(b).

[17]It is a misdemeanor offense for any person to practice, offer to practice, or advertise any “business, trade, profession, occupation, or calling” for which a license, registration, or certificate is required by any California law without holding a current and valid license, registration, or certificate. Cal. Bus. & Prof. Code § 16240.

[18]The term “license” is defined to include any “license, certificate, registration, or other means to engage in a business or profession regulated by” the Business and Professions Code. Id. § 23.7. The list does not include businesses that may be regulated under the Business and Professions Code but do not require a license, certificate, or registration to engage in the business. See, e.g., id. §§ 22440 et seq. (regulating the business of acting as an immigration consultant but imposing no licensing requirements).

[19]Id. §§ 1260 et seq.

[20]Id. § 9792.

[21]Id. § 7592.

[22]Id. §§ 23300, 23320.

[23]Id. § 5536.

[24]Id. § 6126.

[25]Id. §§ 9884.6, 9887.1.

[26]Id. § 7317.

[27]Id. §§ 18640–18642, 18653, 18870.

[28]Id. §§ 9676, 9681, 9723.2.

[29]Id. §§ 22972, 22975, 22979.

[30]Id. §§ 11502, 11505.

[31]Id. § 1000‑5.

[32]Id. § 6704.

[33]Id. § 1208.

[34]Id. § 4996.

[35]Id. §§ 7065 et seq.

[36]Id. § 9740.

[37]Id. § 9780.

[38]Id. § 9787.4.

[39]Id. §§ 1625 et seq.

[40]Id. § 2585.

[41]Id. § 2550.

[42]Id. § 4989.20.

[43]Id. § 9840.

[44]Id. §§ 7641, 7661.

[45]Id. § 9998.1.5.

[46]Id. § 7622.2.

[47]Id. § 7617.

[48]Id. §§ 19850 et seq.

[49]Id. § 7872.

[50]Id. § 7210.

[51]Id. §§ 2538.20, 2539.1.

[52]Id. § 19049.

[53]Id. § 7153.

[54]Id. §§ 19480, 19510, 19520.

[55]Id. § 20704.

[56]Id. § 5801.

[57]Id. § 8725.

[58]Id. § 5640.

[59]Id. § 6402.

[60]Id. § 6980.10.

[61]Id. § 4980.

[62]Id. § 4604.

[63]Id. § 2052.

[64]Id. § 10519.

[65]Id. § 19704.

[66]Id. § 3660.

[67]Id. § 2546.5.

[68]Id. § 2795.

[69]Id. § 2570.3.

[70]Id. § 5301.

[71]Id. § 3040.

[72]Id. § 2099.5.

[73]Id. § 6450.

[74]Id. § 2590.

[75]Id. § 4110.

[76]Id. § 4200.

[77]Id. § 8775.

[78]Id. § 2635.

[79]Id. § 3519.

[80]Id. § 3575.

[81]Id. § 7520.

[82]Id. § 7582.

[83]Id. § 22350.

[84]Id. § 4999.30.

[85]Id. § 6530.

[86]Id. § 22450.

[87]Id. §§ 7574.10, 7574.12.

[88]Id. § 4510.

[89]Id. § 2903.

[90]Id. § 5050.

[91]Id. § 11320.

[92]Id. § 10130.

[93]Id. § 7502.

[94]Id. § 2529.

[95]Id. §§ 3760, 3761.

[96]Id. § 17550.20.

[97]Id. § 8016.

[98]Id. §§ 2532, 2538.7.

[99]Id. § 4127.

[100]Id. § 8550.

[101]Id. § 4169.5.

[102]Id. § 22251.3.

[103]Id. § 4999.

[104]Id. § 17511.3.

[105]Id. § 22500.

[106]Id. § 4825.

[107]Id. § 2885.

[108]Id. § 12532.

[109]Id. § 12703.

[110]Id. § 4160.

[111]Cal. Harb. & Nav. Code § 708.

[112]Cal. Bus. & Prof. Code §§ 7593.5, 7599.34.

[113]Id. §§ 23405.2, 23953(d).

[114]Cal. Health & Safety Code § 7018.

[115]Cal. Bus. & Prof. Code § 9653.5(a).

[116]Id. § 9653.6.

[117]Id. §§ 7065(b), 7071.6.5, 7071.19, 7076.2.

[118]Id. §§ 9998.1(a), 9998.1.5 (“person” that can register as a foreign labor contractor includes an LLC).

[119]Id. §§ 19852(f), 19890.5, 19892, 19893.

[120]Id. § 7152(b) (granting an exemption from the registration requirement for an officer of record of an LLC licensed as a contractor).

[121]Id. §§ 19413, 19480. The horse racing chapter of the Business and Professions Code authorizes the California Horse Racing Board to adopt rules and regulations concerning licensing. Id. § 19520(a). The Board has adopted regulations allowing an LLC to own a racehorse. Cal. Code Regs. tit. 4, §§ 1505(a)(2), § 1506.

[122]Cal. Bus. & Prof. Code §§ 5219, 5301.

[123]Id. §§ 7520.3, 7525.1(i).

[124]Section 7500.1 of the Business and Professions Code defines a “licensee” to include a “limited liability company . . . licensed under this chapter as a repossession agency.” Id. § 7500.1(o). Subsection (b) of section 7503.4 provides for the filing of an application for a license by an LLC. Id. § 7503.4(b); see also id. § 7508.4(a) (permitting a fine to be assessed for conducting business as an LLC “unless the licensee holds a valid license issued to that exact same . . . limited liability company”). But the very next provision clearly says that “[n]othing in this chapter permits a domestic or foreign limited liability company to be licensed as a repossession agency.” Id. § 7503.4(c).

[125]Id. § 17550.15(e) (indicating that an LLC can be a seller of travel); id. § 17550.21(k) (“Upon reregistration by a previously registered seller of travel, the information required by this section may be verified by the . . . manager of a limited liability company.”).

[126]Id. § 4112(b).

[127]California law provides that “[e]very company that engages in the practice of structural pest control, as a sole proprietorship, partnership, corporation, or other organization or any combination thereof, shall be registered with the Structural Pest Control Board.” Id. § 8610(a) (emphasis added); see also id. § 8504 (defining “person” to include an LLC). It may also be that structural pest control operators are considered “professionals” given the extensive training and experience that are required for an individual to be licensed. See id. §§ 8562, 8564.

[128]Id. §§ 4046, 4169.5(c)(3).

[129]Cal. Harb. & Nav. Code § 729.5(a).


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