Helped Clients Recover Over $25 Billion. Since 1979.
Helped Clients Recover Over $25 Billion. Since 1979.
A nurse practitioner who opens a clinic, buys into a practice, or signs on with a physician group is running a business as well as delivering care. California law shapes that business in specific ways: who may own it, what kind of entity it can be, and what written agreements have to be in place with physicians and staff. The Schenk Law Firm handles the business side of NP practices in San Diego and across California. We form the entity, draft the ownership and physician agreements, review the clinic lease, and paper the sale or purchase of a practice, so you can open and grow on documents that fit a licensed health care business.
Your license category drives your structure. Many California nurse practitioners practice under standardized procedures developed with a physician. California also allows nurse practitioners who complete transition requirements set by the Board of Registered Nursing to practice without standardized procedures, first in certain group settings and later independently. Those practitioners are often called 103 and 104 nurse practitioners, after the code sections that describe them. Separately, California restricts the corporate practice of medicine and limits who may own a professional corporation. Before you form an entity or sign a partnership deal, confirm your license category with the Board of Registered Nursing. The Schenk Law Firm then drafts the formation documents, ownership agreements, and physician contracts that match it.
Business Advisory Led by a Partner
David Lizerbram is a Partner and the Head of Business Advisory at The Schenk Law Firm. He has practiced business law out of North Park, San Diego since 2005, and he works on your matter directly.
Documents Built for a Licensed Practice
A nurse practitioner clinic has ownership limits and physician relationships that a generic business template ignores. We draft shareholder agreements, buy-sell terms, and physician contracts with your license and entity type in mind.
Coordination With Your Other Advisors
Clinical protocols, billing, and payer questions belong with the right professionals. We handle the business law work and coordinate with your accountant, health care regulatory counsel, and practice consultants where their input is needed.
A San Diego Firm You Can Reach
Meet with us at our North Park office in San Diego or remotely. You get clear explanations of what each document does and what it will cost before the work begins.
Entity Formation and Ownership Structure California does not permit a licensed professional practice to be organized as an LLC, and it limits who may own a professional corporation. A nurse practitioner who wants liability protection for a clinic will usually form a nursing corporation, where the majority of shares must be held by licensed nurses and certain other licensed professionals may hold a minority stake. A nurse practitioner joining a physician-owned practice may be eligible to hold a minority interest in a medical corporation instead. The Schenk Law Firm prepares the articles of incorporation, bylaws, organizational minutes, and initial share issuance, and we coordinate with your accountant on the S-Corp or C-Corp tax election.
| Nursing Corporation (Professional Corporation) | Sole Proprietorship | General Partnership | |
|---|---|---|---|
| Liability Protection | Limited (covers business debts and contracts; does not shield a nurse practitioner from personal professional liability) | None (the nurse practitioner's personal assets are exposed) | None (each partner is liable for all partnership debts) |
| Tax Treatment | C-Corp or S-Corp election available | Pass-through (Schedule C) | Pass-through (Form 1065) |
| Ownership Requirements | Majority of shares held by licensed registered nurses; certain other licensed professionals may hold a minority interest | Single licensed nurse practitioner | Two or more licensed practitioners |
| Formation Complexity | Moderate (articles of incorporation, bylaws, organizational minutes, shareholder agreement) | Minimal (local business license and tax registrations) | Low (written partnership agreement recommended but not legally required) |
| Governance Requirements | Annual shareholder and director meetings, written minutes, board resolutions | None | As set by the partnership agreement |
| Transferability | Shares transferable only to qualified licensees, on the terms of the shareholder agreement | Not transferable as an entity; assets may be sold | As set by the partnership agreement |
| Best Suited For | NP-owned clinics with staff, leases, or co-owners, and practices planning to grow or sell | Solo nurse practitioners testing a small practice with limited exposure | Two practitioners in an early, short-term arrangement |
When two nurse practitioners open a clinic together, or a nurse practitioner partners with a physician or another licensed professional, the shareholder agreement is the document that keeps the business running when people disagree. It sets how much each owner contributed, how profits are paid out, who makes day-to-day decisions, which decisions need unanimous consent, and what each owner is expected to work. It also addresses what happens if an owner stops practicing, loses a license, or wants out. The Schenk Law Firm drafts and negotiates these agreements and makes sure the ownership terms respect California’s limits on who may hold shares in a professional corporation.
A management services organization, or MSO, is a separate, non-clinical company that provides the business side of a practice: office space, equipment, staff, billing support, marketing, and administration. The professional corporation keeps control of patient care and clinical decisions. This structure is one way a non-licensed partner or investor can take part in an NP practice without owning the professional entity. California’s rules on fee-splitting and referral compensation apply to how management fees are set, so the agreement needs care. The Schenk Law Firm forms the MSO, drafts the management services agreement, and coordinates with your health care regulatory counsel where a fee arrangement needs a separate review.
A clinic lease has terms a standard office lease may not address. The permitted use clause needs to allow patient care, and the space may need exam rooms, sinks, accessible restrooms, and secure storage for records and medications. Before you sign, the lease should spell out who pays for build-out, whether the landlord will grant a rent abatement during construction, what signage you are allowed, and whether you can assign the lease if you sell the practice. Personal guarantees, renewal options, and relocation clauses also deserve attention. The Schenk Law Firm reviews the letter of intent and the lease, explains the terms that put you at risk, and negotiates changes with the landlord or broker.
Disagreements between co-owners, or with a landlord, vendor, or former business partner, can pull a nurse practitioner away from patients and put the clinic’s finances at risk. A dispute over profit distributions, an owner who stops showing up, a landlord who refuses to finish promised improvements, or a vendor who fails to deliver can each threaten the practice. The Schenk Law Firm reviews the governing agreements, explains where you stand, and works toward a resolution through negotiation, demand letters, or a negotiated buyout. Well-drafted agreements at the start reduce the chance of a dispute later, which is why we draft with exit terms in mind.
Opening an NP clinic means signing contracts for electronic health records software, practice management and scheduling platforms, medical equipment purchases or leases, billing services, staffing agencies, and laboratory or supply arrangements. These contracts often contain automatic renewals, early termination fees, limits on the vendor’s liability, and data ownership terms that matter when you switch systems. Vendors that handle patient information will also need business associate terms. The Schenk Law Firm reviews and negotiates these contracts, flags the terms that cost you money or control, and coordinates with your privacy or compliance advisor where a contract raises questions outside business law.
Many California nurse practitioners work with a physician under standardized procedures, and even nurse practitioners practicing without standardized procedures need arrangements for consultation and for referring complex cases and emergencies. The business terms of that relationship belong in a written agreement: the physician’s compensation, the time commitment, availability for consultation, the length of the agreement, termination rights, notice periods, and what happens if the physician leaves. The clinical protocols themselves are developed by the clinicians. The Schenk Law Firm drafts and negotiates the business agreement around those protocols so both sides know their obligations.
A nursing corporation has to operate like a corporation. That means holding annual shareholder and director meetings, keeping written minutes, adopting board resolutions for major decisions, issuing and recording shares properly, and keeping company money separate from personal money. Gaps in these records can weaken the liability protection the corporation is meant to provide and can complicate a sale or the addition of a new owner. The Schenk Law Firm prepares annual minutes and resolutions, documents share issuances and transfers, and reviews your corporate records so they are in order when you need them.
Every NP practice eventually changes hands, through a sale, a transfer to a co-owner, a retirement, or a wind-down. A buy-sell agreement decides how that happens before anyone is under pressure. It covers death, disability, retirement, and loss of license, sets how the shares will be valued, and explains how the buyout gets paid. California requires that shares in a professional corporation held by someone who is no longer qualified be transferred, so the agreement should set the mechanics in advance. The Schenk Law Firm drafts buy-sell agreements and coordinates with your accountant and insurance advisor on valuation and funding.
Buying or selling a nurse practitioner practice raises questions that a typical business sale does not. The buyer must be qualified to own the professional entity, or the deal must be structured as an asset purchase. Patient records need a custodian and a transfer plan. The lease, equipment contracts, and software agreements may need consent to assign. Staff need to be offered new employment. California generally allows a reasonable noncompete from a seller of a business’s goodwill, which can protect a buyer. The Schenk Law Firm drafts and negotiates letters of intent, purchase agreements, and closing documents, and coordinates with your accountant and lender.
Outside investment is where the structure matters most. An investor who is not a licensed professional generally cannot own shares in a nursing corporation. Investment is usually routed through a management services organization that owns non-clinical assets and provides business services under a written agreement, while the licensed owners keep control of patient care. The investor’s return, the management fee, and the decision-making rights all need to be set out carefully. The Schenk Law Firm forms the entities, drafts the investment and management documents, and coordinates with your health care regulatory counsel and accountant on the parts of the deal outside business law.
An NP clinic may employ other nurse practitioners, registered nurses, medical assistants, front desk staff, and billing personnel, and it may bring in contractors. California uses a strict test to decide who qualifies as an independent contractor, and misclassification can bring back wages, penalties, and tax liability. Employee noncompete agreements are generally void in California, so protecting the practice relies on confidentiality and non-solicitation terms that California allows. The Schenk Law Firm drafts offer letters, employment agreements, contractor agreements, and confidentiality agreements, and coordinates with employment counsel or your payroll provider on wage and hour questions.
A second clinic changes the legal picture. You will need a new lease, possibly a new entity or a holding structure, and staffing and physician arrangements that cover the new site. Bringing in new owners to run the expansion means amending the shareholder agreement and possibly the bylaws. Growth funded by outside money may call for a management services organization. The Schenk Law Firm helps you decide how to structure each new location, drafts the documents for new owners and investors, and reviews leases and contracts for the added site.
Attorney advertising. This page is general information about California business law for nurse practitioners and is not legal advice. Reading it does not create an attorney-client relationship. Licensing, scope of practice, and regulatory questions should be confirmed with the Board of Registered Nursing or appropriate health care regulatory counsel. Prior results do not guarantee a similar outcome. Contact The Schenk Law Firm to discuss your specific situation.