How To Form A Professional Corporation? Easy Steps Inside

Forming a professional corporation is a crucial step for licensed professionals who want to establish a business entity that protects their personal assets and provides tax benefits. In the United States, a professional corporation (PC) is a type of business entity that is specifically designed for professionals such as doctors, lawyers, accountants, and architects. To form a professional corporation, you need to follow a series of steps that involve choosing a business name, filing articles of incorporation, obtaining necessary licenses and permits, and complying with state regulations. In this article, we will guide you through the easy steps to form a professional corporation.

Step 1: Choose a Business Name

Choosing a business name is the first step in forming a professional corporation. The name of your PC must comply with your state’s naming requirements, which typically include the following: the name must contain the words “Professional Corporation” or the abbreviation “PC”, the name must not be deceptively similar to the name of another corporation, and the name must not contain any words that are prohibited by state law. You can check the availability of your desired business name by searching your state’s business database or by contacting your state’s business registration office. Once you have chosen a name, you can reserve it by filing a name reservation application with your state’s business registration office.

Conducting a Name Search

Conducting a name search is an essential step in choosing a business name. You need to search your state’s business database to ensure that your desired name is not already in use by another corporation. You can also check the availability of your desired name as a web domain and social media handle to ensure that you can maintain a consistent online presence. Domain name registration and social media handle registration are important considerations when choosing a business name.

Step 2: File Articles of Incorporation

Filing articles of incorporation is the next step in forming a professional corporation. The articles of incorporation must include the following information: the name and address of your PC, the purpose of your PC, the name and address of your registered agent, and the number of shares of stock that your PC is authorized to issue. You can file the articles of incorporation with your state’s business registration office, either online or by mail. The filing fee varies by state, but it’s typically around 100 to 500.

Preparing the Articles of Incorporation

Preparing the articles of incorporation requires careful consideration of the information that must be included. You need to ensure that the articles of incorporation comply with your state’s requirements and provide all the necessary information about your PC. You can use a template or consult with an attorney to prepare the articles of incorporation. It’s essential to ensure that the articles of incorporation are accurate and complete to avoid any delays or rejection of your filing.

The articles of incorporation must also include a statement that your PC is a professional corporation and that it will only provide professional services. This statement is essential to ensure that your PC is recognized as a professional corporation and that it is subject to the relevant state regulations.

Step 3: Obtain Necessary Licenses and Permits

Obtaining necessary licenses and permits is the next step in forming a professional corporation. You need to obtain any licenses or permits that are required by your state or local government to operate your PC. This may include a business license, professional license, or other permits that are specific to your industry. You can check with your state’s business registration office or your local government to determine what licenses and permits are required.

Complying with State Regulations

Complying with state regulations is essential to ensure that your PC operates legally and avoids any penalties or fines. You need to comply with your state’s regulations regarding professional corporations, including requirements for ownership and control, requirements for governance and management, and requirements for financial reporting and taxation. You can consult with an attorney or accountant to ensure that your PC complies with all relevant state regulations.

Step 4: Establish Governance and Management

Establishing governance and management is the next step in forming a professional corporation. You need to establish a governance structure that includes a board of directors, officers, and shareholders. The board of directors is responsible for overseeing the operations of your PC, while the officers are responsible for managing the day-to-day activities. The shareholders are the owners of your PC and have the right to elect the board of directors and officers.

Creating an Operating Agreement

Creating an operating agreement is essential to establish the governance and management structure of your PC. The operating agreement should include the following information: the roles and responsibilities of the board of directors, officers, and shareholders, the procedures for electing the board of directors and officers, and the procedures for managing the financial affairs of your PC. You can use a template or consult with an attorney to create an operating agreement.

The operating agreement should also include a statement that your PC is a professional corporation and that it will only provide professional services. This statement is essential to ensure that your PC is recognized as a professional corporation and that it is subject to the relevant state regulations.