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Is Your Practice Incorrectly Incorporated as a Business Corporation?

Tuesday, January 8, 2019   (0 Comments)
Posted by: ICS Staff
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Is Your Practice Incorrectly Incorporated as a Business Corporation?

 

Q:  Can a business corporation be converted to a medical corporation? My practice was incorrectly incorporated as a business corporation rather than a medical corporation.  

Many doctors have formed regular business corporations instead of Medical Corporations, LLCs, or Personal Service Corporations. Regular business  corporations are not legal structures for chiropractic/medical clinics (see more here). However, this is not difficult to correct.

An existing business corporation can be converted to a medical corporation, avoiding the need for creating a new corporation. To convert a business corporation to a medical corporation, download Articles of Amendment form BCA 10.30 from the corporate section of the Secretary of State website.

The key is to use the suffix “S.C.” (Service Corporation) with the corporate name and to change the corporate purpose to include language from the Medical Corporation Act (below).  The owner(s) will fill out form BCA 10.30 to change the name of the corporation by substituting “Inc.” or “Ltd.” with “S.C.”, and change the corporate purpose to:

"3. Purpose(s) for which the corporation is organized:
Medical Corporation: To own, operate and maintain an establishment for the study, diagnosis and treatment of human ailments and injuries, whether physical or mental, and to promote medical, surgical and scientific research and knowledge; provided that medical or surgical treatment, advice or consultation will be given by employees of the corporation only if they are licensed pursuant to the Medical Practice Act.”

The form may be mailed to the Secretary of State at:  Department of Business Services, 501 S. Second, Room 350, Springfield, IL 62756 (address listed in the upper left corner of page 1 of the form) together with the $50 fee, OR for expedited service (within 24 hours), the applicant may walk the form in to the Chicago Secretary of State office at 69 West Washington, 12th floor business services, or 501 S. Second Room 350 in Springfield, together with the regular $50 fee plus an additional $100 for expedited filing.

Once your corporation has been appropriately changed to a Medical Corporation, you are now able to register your Medical Corporation with the Illinois Department of Financial and Professional Regulation. Here is an article to help with that process.

 

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1. Some doctors refer to their corporations as “S-corporations,” under the misunderstanding that this designation is related to the type of business entity formed with the Illinois Secretary of State.  The “S-Corporation” designation is given by the Internal Revenue Service (not by the Illinois Secretary of State) and allows an alternate method of taxation for a corporation.  A medical corporation may also be an S-corporation, but the designation is completely unrelated to the type of business entity formed by the Illinois Secretary of State and does not legitimize the use of a regular business corporation as a structure for a chiropractic practice.

 

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