How to Form a Professional Corporation in Florida


Steve Goldstein
Steve Goldstein
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Form a Professional Corporation in Florida

Are you considering starting a professional corporation in Florida? Congratulations! Establishing a professional corporation is an excellent choice for entrepreneurs and professionals alike who seek to benefit from a business structure that provides limited liability protection, tax advantages, and enhanced credibility. However, navigating the process of forming a professional corporation in Florida can be daunting.

This article aims to provide a comprehensive guide on how to form a professional corporation in Florida, covering everything from understanding the basics of this business entity to the essential steps and requirements you must comply with to launch your new venture successfully. Let’s dive in and explore the ins and outs of forming a professional corporation in Florida!

What is a Professional Corporation in Florida?

A professional service corporation (PSC), sometimes called a professional corporation (abbreviated as PC), is a type of organization authorized by state law to allow owners of particularly licensed professions in Florida. The owner of a professional corporation is responsible for their own negligence or misconduct, but they are not held personally accountable for the actions of other owners. PC or P.C. is a regularly used abbreviation to identify professional corporations.

PCs and LLCs provide personal asset protection; that is, the personal assets are free from business debts. However, they do not have similar tax benefits. There is no secret formula as to which type of business structure is better than the other. It solely depends on the requirements of your business. However, forming an LLC is easier than setting up a PC in Florida.

LLCBuddy Editorial Team

Unlike other types of corporations, owners of Professional Corporations get two types of citizenship. One is where they incorporated the corporation, and the other is where they conduct the business. This benefit is not available for other types of corporations. You can form a free LLC in Florida if you hire a professional service that provides LLC formation at $0.

How to Form a Professional Corporation in Florida

To form a Professional Corporation for the professional service you provide, you must follow a few steps that include verifying if you are qualified for a PC, naming your business, hiring a Registered Agent, filing the Articles of Incorporation, outlining an operating agreement, requesting for an EIN, opening a bank account, getting a business license, and filing for an annual report and taxes.

Step 1: Verify If You Are Qualified for a Professional Corporation

In forming a professional corporation in Florida, you should know if you are qualified. There are specific professions that are allowed to form a professional service corporation, including-

  • Doctors
  • Architects
  • Engineers
  • Accountants
  • Lawyers and others

You should be qualified to have a license to provide your service. In most cases, once you have graduated with your studies, passed the exam, and got your license, you may now form a professional corporation. However, if you work in an industry that doesn’t offer a license or professional certification, you should consider forming a corporation or limited liability company.

Step 2: Name your Professional Corporation in Florida

After you have decided on the idea to form a professional corporation in Florida, deciding the name for your corporation is significant. There is a complete guide on Florida LLC name guidelines for you to have a proper business name. Here are some regulations you must follow while naming your professional corporation.

  • The business name should have the word PC, frequently followed by the name of the principal owner in place of Inc or LLC. (Example. John Doe, MD, PC)
  • No confusion with a government entity name.
  • A unique name is needed with no match
  • Limit of restricted words that need a license.

In Florida, if you do not wish to file your professional corporation right away but want to hold the name that you have decided on, then you can reserve your corporation name for 120 days. To keep the name, you must file a name reservation application with Florida Secretary of State.

A professional corporation, professional association, service corporation, or professional service corporation must be present in the name if it doesn’t already. You might opt to register your business under a different legal name if your preferred name isn’t available. Once you have chosen a name, you can submit an application for a DBA (doing business as). In this manner, you can choose any name you desire to run a clinic or law firm.

Step 3: Choose the Florida Registered Agent

The next step in forming a professional corporation is hiring the Florida Registered Agent, a person that accepts legal paperwork on behalf of your business. This person or business will receive important tax forms, legal documents, all notices of lawsuits, and other official government correspondence in Florida. Forming a professional corporation for your service will be easier if you have Registered Agent in Florida.

Alternatively, you can serve as your own Florida Registered Agent if you have the time. However, you must stay compliant to avoid missing any important documents from Florida.

Step 4: File the Articles of Incorporation in Florida

After you hire a Florida Registered Agent to form a professional corporation, the next step is to file the Florida Articles of Incorporation. In writing the Articles of Incorporation, the business name, owner’s contact information, corporation address, and Registered Agent contact information should be written. You should also include the names of all co-owners. All owners have to prove they have the proper license to practice the specific profession they intend to.

Filing the Articles of Incorporation in Florida may be done with two ways, online and by mail. The Articles of Incorporation fee may vary from different states. However, in Florida, it costs $35 for filing in-person and by mail. Get the online form from Secretary of State, fill it up, and submit. Don’t refresh the page during the process. It will erase everything. . For offline filing, Send the form by mail to New Filing Section, Division of Corporations, P.O. Box 6327, Tallahassee, FL 32314.

Step 5: Write an Operating Agreement in Florida

An operating agreement is a document that contains all of your company’s organizational details. It is not required to draft an operating agreement in most states. Yet, having one as an internal document is strongly advised. The Florida operating agreement includes information like-

  1. About Business
  2. Members and management
  3. Capital contribution
  4. Profit Distribution
  5. Change of membership
  6. Dissolution

Step 6: Designate the PC Board of Directors in Florida

The next step is to appoint the initial board of directors in your PC in Florida. All the initial directors must submit their details to the owner. The owner must keep the records and submit them in accordance with the Florida SOS. When writing the By-laws, as a shareholder and owner, you must make sure there is a point mentioned about appointing a new director later.

Step 7: Write the Corporate Bylaws

Now that you are done forming the team of the board of directors, the next step is to draft corporate bylaws. Corporate bylaws are the basic rules that control a corporation. It includes the organization’s structure, processes, laws, and rules. As a result, all personnel, managers, and corporation members must obey the firm’s rules.

In creating corporate bylaws, you should include the following on how the decisions will be made.

  • The responsibilities are given to each officer.
  • How will judgments in business be made?
  • Where and when are the annual shareholder meetings?
  • The minimum number of shareholders required for decision-making.
  • Location and timing of dividend payments.

Step 8: Hold the First Board of Directors’ Meeting

After drafting the corporate bylaws, gather all the board of directors for the first meeting. This meeting will be finalized by appointing directors to manage the company’s daily operations, approve the bylaws, choose the corporation’s accounting year, and approve the stock issue. All board meetings should have minutes taken and stored with the company’s records.

Step 9: Request an EIN in Florida

After documenting the operating agreement, you should get or request an Employer Identification Number (EIN). An EIN will serve as the tax ID for your professional corporation. EIN can be obtained from the Internal Revenue Service (IRS). It is a 9-digit number similar to Social Security Number. EIN, however, is distinct from SSN. It is only used for business-related activities, particularly for submitting general taxes. The form must be completed and uploaded to the IRS website.

The application of an EIN in Florida can be through the following:

  • Apply Online- The online EIN application is the preferred method for customers to apply for and obtain an EIN.
  • Apply by Fax- Taxpayers can fax the completed Form SS-4 application to the appropriate fax number), after ensuring that the Form SS-4 contains all of the required information.
  • Apply by Mail- The EIN application Form SS-4 can be filed via mail. The processing time frame to receive the mail is 4 weeks.
  • Apply by Telephone-International Applicants – International applicants may call 267-941-1099 (not a toll-free number) from 6 a.m. to 11 p.m. (Eastern Time) Monday through Friday to obtain their EIN.

After you have your EIN number, you can benefit in a number of ways. It will give your professional corporation the final advantage necessary to operate at full capacity without encountering legal or judicial issues.

Step 10: Open a Bank Account and Prepare for Taxes

Once you have filed and received your Employer Identification Number, you should open a bank account since you will use this account for yourself, your clients, and your employees.

Your business dealings in Florida might be simpler by having a US business bank account because it boosts your company’s legitimacy and liquidity. For firms other than sole proprietorships, most banks demand an EIN to create a business bank account. Also, keeping separate finances helps you avoid combining personal and professional finances. Also, having an EIN makes tax preparation easier. With a professional corporation, you can anticipate paying employment and corporate taxes.

Step 11: Get a Business License in Florida

Before your professional corporation operates in Florida, you need to have a business license first. A business license is a formal document issued by the state government agency that allows you to operate your business in the geographic region that that agency governs. In Florida, business license and permit costs depend on the business’s nature and type. You must check with the local authorities if any special licenses or city-based permits are needed.

Step 12: File Your Taxes in Florida

Finally, you are down to the last step. After getting a business license and being ready to operate, do not forget to file your taxes first. You should start paying taxes quarterly as soon as possible to avoid a large tax bill. Each state has different tax requirements. Go through the Florida classification of taxes for the taxes an LLC in Florida has to pay.

Important Information

Maintaining Professional and Business License in Florida

Now that you have established your professional corporation, you must maintain or renew your professional license every now and then. Even if your business is established but you don’t have a valid license to operate, your business is irrelevant. And, even if your professional license is still valid for a year or two, but your business license is already expired, it is still irrelevant.

Make time to check the status of your licenses at least once per year. Then, you can keep from missing anything significant. If there are any issues, you can address them.

Filing an Annual Report in Florida

In Florida, you will be required to submit a report each year. The owners’ and Registered Agent’s names and contact details are listed in the annual report. Also, it should include all of your yearly financial activity. You must submit one yearly in Florida, and you can do it yourself or hire someone else to handle it. Everything must be precise and up to date.

Advantages of Forming a Professional Corporation in Florida

A professional corporation takes a lot of time to process and pursue. However, with the help of the Florida Registered Agent, everything will become easier. In fact, there are advantages that will help you form a professional corporation in Florida.

  1. Limited Liability: The biggest advantage of setting up a professional corporation is that the owners are not held personally responsible for the debts and obligations of the company. This indicates that only the company’s assets will be confiscated to settle claims and creditors if the business is sued or declares bankruptcy. Additionally, this protection exempts corporate owners from being held accountable for other owners’ reckless or criminally negligent acts.
  1. Tax Deductions: Similar company expenses, such as employee fringe benefits, startup and operating costs, and equipment purchases, can be written off by professional companies in the same ways they can be for other kinds of firms. However, there are several tax deductions professional corporations can take advantage of that other types of businesses can’t. For example, the salaries and bonuses paid to owners and employees are tax-deductible.
  1. Retained Earnings: Professional corporations can keep a portion of their profits under the corporate tax system to grow their companies.

FAQs

What is a Professional Corporation in Florida?
A professional corporation in Florida is a type of corporate entity that is formed to engage in a specific profession, such as law, accounting, medicine, engineering, architecture, or other professional services.
What are the benefits of forming a Professional Corporation in Florida?
Forming a professional corporation in Florida allows the business to benefit from limited liability protection, tax advantages, and the ability to raise capital more easily.
What are the legal requirements for forming a Professional Corporation in Florida?
To form a professional corporation in Florida, you must file Articles of Incorporation with the Florida Division of Corporations and pay a filing fee. You will also need to obtain a federal tax ID number, obtain a business license, and register with the Florida Department of Revenue.
Who can form a Professional Corporation in Florida?
Any individual or group of individuals who are licensed to practice a professional service can form a professional corporation in Florida.
What are the steps involved in forming a Professional Corporation in Florida?
The steps involved in forming a professional corporation in Florida include
Are there any restrictions on the name of a Professional Corporation in Florida?
Yes, the name of a professional corporation in Florida must include the word “corporation,” “incorporated,” or “professional corporation” and must not be the same as or similar to any existing name on record with the Florida Division of Corporations.
Do I need a lawyer to form a Professional Corporation in Florida?
While it is not required, it is recommended that you consult with a lawyer when forming a professional corporation in Florida to ensure that all legal requirements are met.
How long does it take to form a Professional Corporation in Florida?
The process of forming a professional corporation in Florida typically takes between 7-10 business days.
What happens after I form a Professional Corporation in Florida?
After you form a professional corporation in Florida, you will need to obtain a federal tax ID number, obtain a business license, and register with the Florida Department of Revenue. You will also need to obtain any necessary permits and licenses for your profession, and register with the IRS for employment taxes.
How much does it cost to form a Professional Corporation in Florida?
The filing fee for forming a professional corporation in Florida is $70. Additional costs may include attorney fees, business license fees, filing fees for other permits or licenses, and registration fees for employment taxes.
What are the steps to form a Professional Corporation in Florida?
The steps to form a Professional Corporation in Florida include selecting a corporate name, filing Articles of Incorporation, obtaining a Federal Tax ID Number (EIN), creating corporate bylaws, appointing directors, obtaining a business license, and filing for professional registration.
What are the filing fees for forming a Professional Corporation in Florida?
The filing fee for forming a Professional Corporation in Florida is $70.
What is the deadline for filing Articles of Incorporation for a Professional Corporation in Florida?
The deadline for filing Articles of Incorporation for a Professional Corporation in Florida is within 15 days of submitting the application.
Is Professional Corporation in Florida required to have a registered agent?
Yes, Professional Corporation in Florida is required to have a registered agent.
Are there any special requirements for a Professional Corporation in Florida?
Yes, Professional Corporations in Florida are required to include the words “Professional Corporation” or “P.C.” in their name and must also be registered with the Department of Professional Regulation.
Is it required to obtain a business license for a Professional Corporation in Florida?
Yes, it is required to obtain a business license for a Professional Corporation in Florida.
What documents are required to complete the formation of a Professional Corporation in Florida?
The documents required to complete the formation of a Professional Corporation in Florida include Articles of Incorporation, corporate bylaws, and a business license.
Does a Professional Corporation in Florida need to hold annual meetings?
Yes, a Professional Corporation in Florida is required to hold annual meetings of its board of directors.
Is it necessary to file annual reports for a Professional Corporation in Florida?
Yes, it is necessary to file annual reports for a Professional Corporation in Florida.
What is the deadline for filing an annual report for a Professional Corporation in Florida?
The deadline for filing an annual report for a Professional Corporation in Florida is May 15th.
Does a Professional Corporation in Florida need to file an annual report with the state?
Yes, a Professional Corporation in Florida is required to file an annual report with the state.
Can a Professional Corporation in Florida issue stock?
Yes, a Professional Corporation in Florida can issue stock.
Is it necessary to have a board of directors for a Professional Corporation in Florida?
Yes, it is necessary to have a board of directors for a Professional Corporation in Florida.
Are Professional Corporations in Florida required to have corporate bylaws?
Yes, Professional Corporations in Florida are required to have corporate bylaws.
Does a Professional Corporation in Florida have to keep corporate records?
Yes, a Professional Corporation in Florida must keep all corporate records, including minutes of meetings, financial statements, and resolutions.
What taxes must a Professional Corporation in Florida pay?
A Professional Corporation in Florida must pay state corporate taxes, federal corporate taxes, and payroll taxes.
Can a Professional Corporation in Florida hire employees?
Yes, a Professional Corporation in Florida can hire employees.
Are there any restrictions on the activities of a Professional Corporation in Florida?
Yes, a Professional Corporation in Florida must be organized to engage in activities related to a specific profession and must also comply with professional licensing requirements.
Does a Professional Corporation in Florida need to have a corporate seal?
Yes, a Professional Corporation in Florida must have a corporate seal.
Do Professional Corporations in Florida need to register with the Florida Department of State?
Yes, Professional Corporations in Florida must register with the Florida Department of State.
Is it necessary to have a registered office for a Professional Corporation in Florida?
Yes, it is necessary to have a registered office for a Professional Corporation in Florida.
Does a Professional Corporation in Florida need to have shareholders?
Yes, a Professional Corporation in Florida must have shareholders.
What are the advantages of forming a Professional Corporation in Florida?
The advantages of forming a Professional Corporation in Florida include protection of personal assets, limited liability, pass-through taxation, and the ability to raise capital by selling stock.

Also Read

Why Florida Professional Corporation is So Important

The primary reason why the Florida Professional Corporation (PC) is so crucial for professionals is the limited liability it offers. Unlike a sole proprietorship or general partnership, which exposes individual owners to personal liability for the debts and obligations of the business, a professional corporation can shield its owners from such risks. This means that if the corporation faces lawsuits, creditors, or other legal challenges, the owners’ personal assets are typically protected.

Furthermore, the structure of a professional corporation allows professionals to pool their resources and expertise to operate a business under a common entity. This shared responsibility can provide an added layer of credibility and trustworthiness to clients and customers. By forming a PC, professionals are also able to work together more efficiently, share expenses, and ultimately increase the likelihood of success in their respective fields.

Another critical reason why the Florida Professional Corporation is so vital is the credibility it affords professionals in regulated industries. Staying in compliance with state licensing requirements for professionals, such as doctors, lawyers, accountants, and architects, is crucial for maintaining trust from clients. By forming a professional corporation, professionals demonstrate their commitment to following necessary regulations and ethical standards governing their industries. This can boost their reputation and credibility among both clients and peers.

In addition to limited liability and credibility, the Florida Professional Corporation allows professionals to take advantage of various tax benefits. With a professional corporation, owners can deduct business expenses, retirement contributions, healthcare costs, and other eligible expenditures. By utilizing these tax benefits, professionals can potentially reduce their overall tax liability and retain more of their hard-earned profits.

Moreover, operating as a professional corporation in Florida provides professionals with flexibility and management control over their business operations. Owners can structure the corporation to suit their specific needs and goals, appoint directors and officers, and create operational guidelines tailored to their unique circumstances. This level of autonomy can empower professionals to make informed decisions, adapt to changing market conditions, and steer their businesses toward growth and long-term success.

Overall, the Florida Professional Corporation is an essential entity for professionals operating in regulated industries in the state. It offers limited liability protection, credibility, tax benefits, flexibility, and management control, all of which are crucial for building a successful business. By forming a professional corporation, professionals can protect their personal assets, enhance their reputation, maximize tax advantages, and maintain autonomy over their business operations. As such, the Florida Professional Corporation should be the go-to choice for professionals looking to establish a robust and reliable business entity.

Conclusion

In forming a professional corporation in Florida, having someone to help you build it is not necessary but suggestible. Even though it is easy because of the listed benefits and advantages above, forming your group of professional individuals will make it somehow successful. Just make sure to be guided by the steps and ensure that every one of the details and records is accurate and precise. And if you have any questions, share them in the comment section below.

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