Virginia’s professional corporation statute does two things at once, and the second is easy to breach by accident as a business grows.
Under Va. Code § 13.1-543, a professional corporation must be organised for the sole and specific purpose of rendering professional services, and may be formed only by individuals — or professional business entities — duly licensed or otherwise legally authorised to render those services in Virginia.
Ownership is restricted, but not to physicians
This is the useful part. Virginia limits ownership to those licensed or legally authorised to provide the service; it does not narrow that to physicians alone, so another authorised licensee may co-own. That is more flexible than Michigan’s same-service shareholder rule and less flexible than Minnesota’s multi-category firm. Confirm your specific combination with Virginia counsel rather than reasoning from another state.
The sole-purpose limit is the one that drifts
A professional corporation exists to render its professional service. Businesses grow sideways: retail product lines, memberships, cosmetic services that are not the professional service, a second brand run through the same entity, property held in it because it was convenient.
Each of those is a question about whether the entity is still organised for the sole and specific purpose it was formed for. None of them announce themselves; they accumulate.
A structural pattern that works
- The professional corporation renders the professional service, and only that.
- A separately owned management company holds the premises, the brand, the retail line, the technology and the staff who are not delivering the professional service.
- A fixed, fair-market management fee moves money between them, agreed in writing in advance.
- Ownership of the professional corporation stays with licensees, checked each time the cap table moves.
Why this matters more at exit than at formation
Nobody examines the sole-purpose question when a clinic opens. It gets examined during diligence, when a buyer’s counsel reads the articles and then reads the profit and loss. An entity whose revenue is visibly not the professional service is a diligence problem that arrives late and costs leverage.
Related reading
Frequently asked questions
Can a non-physician own a Virginia professional corporation?
Ownership is limited to individuals or professional business entities duly licensed or legally authorised to render the service. It is not limited to physicians, but it does exclude non-licensees.
What is the sole-purpose requirement?
A professional corporation must be organised for the sole and specific purpose of rendering the professional services named. Unrelated revenue lines raise the question of whether it still is.
Where should the retail and membership business sit?
Typically in a separately owned management company, with a fixed fair-market fee between the entities.
Can a nurse practitioner co-own?
Possibly, where they are legally authorised to render the service named in the articles. Confirm the combination with Virginia counsel.
General information about Virginia entity rules, not legal advice. Confirm your obligations with healthcare counsel licensed in Virginia.