Understanding Differences Between Professional Practice Entities and General Business Entities
Law, rules and regulations, not Alerts, specify the requirements for practice and violating them constitutes professional misconduct. Not adhering to this Alert may be interpreted as professional misconduct only if the conduct also violates pertinent law, rules and regulations, some citations of which are listed at the end of this Alert.
Generally, licensed professionals may not set up a general business corporation (GBC) to provide professional services. Except where specifically authorized by law, a general business corporation may not:
- provide professional services to the public;
- exercise any judgment over the delivery of professional services;
- have employees who offer professional services to the public;
- hold itself out as offering professional services; or
- share profits or split fees with licensed professionals.
Fee splitting/profit sharing
Avoid business arrangements where profits and/or fees, generated by the provision of your professional services, are shared or split with non professional persons or business entities. Board of Regents Rule 29.1 (b) (4) states that unprofessional conduct shall include; permitting any person to share in the fees for professional services, other than: a partner, employee, associate in a professional firm or corporation, professional subcontractor or consultant authorized to practice the same profession, or a legally authorized trainee practicing under the supervision of a licensed practitioner. This prohibition shall include any arrangement or agreement whereby the amount received in payment for furnishing space, facilities, equipment or personnel services used by a professional licensee constitutes a percentage of, or is otherwise dependent upon, the income or receipts of the licensee from such practice, except as otherwise provided by law with respect to a facility licensed pursuant to Article 28 of the Public Health Law or Article 13 of the Mental Hygiene Law.
Chiropractors are cautioned to carefully review these prohibitions when considering any proposed business arrangements.
Violation of this prohibition may result in professional misconduct charges being brought by the Office of Professional Discipline. For more information on the professional discipline process please consult the Professional Misconduct Enforcement web page: http://www.op.nysed.gov/opd/
For more information please consult the Corporate Entities for Professional Practice web page: http://www.op.nysed.gov/corp/
The following statutes, rules and regulations are applicable:Education: Education Law, Title 8, Article 130, Section 6507; Regulations of the Commissioner of Education, Part 59, Section 59.10; Board of Regents Rule 29.1
Other Laws: Business Corporation Law, Articles 4, 15 and 15-A; Limited Liability Company Law, Articles 12 and 13; and Partnership Law.