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In the final post of our four-part blog series, we discuss the legal consequences of forming the wrong entity for your business operations. In case you missed any of our previous blog posts, you can access them here. The Possible Consequences of Operating as an Incorrect Business Entity: Illegal Agreements and Unenforceable Contracts As mentioned in our earlier blog post (see Part I), because Washington’s prohibition against the corporate practice of learned professions is a creation of common law, many professionals mistakenly form the incorrect entity when starting their business. A group of doctors, for example, would be violating this corporate... Read More

In part three of our four-part blog series, we discuss the special rules applicable to licensed professionals operating as a business. In case you missed Part II on the various business entities available to use by licensed professionals, you can access it here. The Special Rules that Apply to Learned Professionals Operating a Business Entity To understand the various rules that govern licensed professionals operating a business, it is necessary to understand the Washington Professional Service Corporations Act (the “PSCA”). In 1969, in response to the general prohibition against the corporate practice of the learned professions, the Washington legislature enacted the PSCA,... Read More

In part two of our four-part blog series, we discuss the various business entities available for use by licensed professionals. In case you missed Part I on the development of Washington law governing licensed professionals and business entities, you can access it here. Permissible Corporate Entities Available to Learned Professionals Although Washington courts have long prohibited licensed professionals from forming traditional business entities, the Washington Legislature has a nearly equally long history of using specific statutory allowances to permit the practice, subject to certain restrictions. Over time, the Washington Legislature has created several new entity forms that learned professionals may choose... Read More

Introduction Licensed professionals, such as attorneys and physicians, will often operate their business through a business entity, rather than simply operating as a sole proprietorship. Operating as a business entity can produce several benefits for the professional business owner, such as asset protection, limited liability, and potential tax savings. Washington law, however, limits the types of business entities that licensed professionals may use to practice their profession. If a licensed professional incorrectly forms and operates under the incorrect business entity, they expose themselves to potentially severe legal consequences, such as the possibility that a court will refuse to recognize contracts... Read More