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Why Mule Racers and 93 other types of California Businesses Cannot Form LLCs

October 25, 2015

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View our chart of licensed activities by clicking here.

Read our analysis of the law by clicking here.

Did you know that there are dozens of activities that cannot be provided as a LLC in California?

Most states permit professionals to render services through a professional limited liability company. But that’s not the case in California. In California, professional services may be rendered by a professional corporation, but not by a LLC.

The lunacy is that dozens of other kinds of businesses are also prohibited from forming LLCs. Basically, if the business has to be licensed in California, it can only be operated as a LLC if the statute expressly permits it.

There are a lot of occupations that must be licensed in California. To determine 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? 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,” (e.g., accounting, law, medicine). 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.

We found 93 professions, occupations, or services that have to be licensed in California. Here’s a list of the 13 that can be operated as LLCs:

Alarm companies

Alcoholic beverage licensees

Cemetery authority

Contractors

Foreign labor contractors

Gambling enterprise owners

Home improvement salespersons

Horse racing track operators

Outdoor advertising

Private investigators

Repossession agencies

Seller of travel

Surplus medication collection and distribution intermediaries

This means that there are many businesses and occupations that require licensure under California law that cannot operate as LLCs. It’s a bizarre list that would make anyone wonder why the legislature cares! Here are a few examples:

Barbers

Martial Arts Studios

Mule Racers

Interior Designers

Guide Dogs for the Blind

Massage Therapists

Yacht and Ship Brokers

View our chart of licensed activities by clicking here.

Read our analysis of the law by clicking here.

Our attorneys are admitted to practice law in California, New York, and Texas.
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