How to Form a Professional Corporation in Georgia


Steve Goldstein
Steve Goldstein
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Form a Professional Corporation in Georgia

Are you considering starting a professional corporation in Georgia? 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 Georgia can be daunting.

This article aims to provide a comprehensive guide on how to form a professional corporation in Georgia, 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 Georgia!

What is a Professional Corporation in Georgia?

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 Georgia. 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 Georgia.

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 Georgia if you hire a professional service that provides LLC formation at $0.

How to Form a Professional Corporation in Georgia

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 Georgia, 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 Georgia

After you have decided on the idea to form a professional corporation in Georgia, deciding the name for your corporation is significant. There is a complete guide on Georgia 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 Georgia, 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 30 days. To keep the name, you must file a name reservation application with Georgia 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 Georgia Registered Agent

The next step in forming a professional corporation is hiring the Georgia 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 Georgia. Forming a professional corporation for your service will be easier if you have Registered Agent in Georgia.

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

Step 4: File the Articles of Incorporation in Georgia

After you hire a Georgia Registered Agent to form a professional corporation, the next step is to file the Georgia 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 Georgia may be done with three ways, online, by mail and in-person. The Articles of Incorporation fee may vary from different states. However, in Georgia, it costs $100 for filing online and $110 for filing it by mail and in person.. 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 or drop it off to Corporations Division, 2 Martin Luther King Jr. Dr. SE, Suite 313 West Tower, Atlanta, Georgia 30334..

Step 5: Write an Operating Agreement in Georgia

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 Georgia 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 Georgia

The next step is to appoint the initial board of directors in your PC in Georgia. All the initial directors must submit their details to the owner. The owner must keep the records and submit them in accordance with the Georgia 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 Georgia

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 Georgia 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 Georgia 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 Georgia

Before your professional corporation operates in Georgia, 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 Georgia, 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 Georgia

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 Georgia classification of taxes for the taxes an LLC in Georgia has to pay.

Important Information

Maintaining Professional and Business License in Georgia

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 Georgia

In Georgia, 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 Georgia, 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 Georgia

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

  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 Georgia?
A professional corporation in Georgia is a type of for-profit corporation that is formed under the laws of the state of Georgia and is regulated by the Georgia Secretary of State.
What are the benefits of forming a Professional Corporation in Georgia?
Some of the benefits of forming a professional corporation in Georgia include limited personal liability, the ability to transfer ownership interests, and the ability to attract investors.
How do I form a Professional Corporation in Georgia?
To form a professional corporation in Georgia, you must file Articles of Incorporation with the Secretary of State, appoint directors, issue stock, and create corporate bylaws.
What documents do I need to form a Professional Corporation in Georgia?
To form a professional corporation in Georgia, you will need to file Articles of Incorporation with the Secretary of State and create corporate bylaws.
What information do I need to include in the Articles of Incorporation for my Professional Corporation in Georgia?
The Articles of Incorporation for a professional corporation in Georgia must include the corporation’s name, the purpose of the corporation, the address of the corporation’s registered office, the name and address of the registered agent, and the names and addresses of the incorporators.
How much will it cost to form a Professional Corporation in Georgia?
The cost to form a professional corporation in Georgia will depend on the complexity of your business and the fees associated with filing with the Secretary of State. Generally, the filing fee for Articles of Incorporation is $100.
What is the timeline for forming a Professional Corporation in Georgia?
The timeline for forming a professional corporation in Georgia will depend on the complexity of your business and the availability of the Secretary of State. Generally, the filing process can take anywhere from one day to several weeks.
Do I need to obtain a business license to form a Professional Corporation in Georgia?
Yes, in order to form a professional corporation in Georgia, you will need to obtain a business license from the state. In addition, certain professional corporations may need to obtain additional licenses or permits depending on the type of business.
What are the ongoing requirements for a Professional Corporation in Georgia?
The ongoing requirements for a professional corporation in Georgia include filing an Annual Registration with the Secretary of State, holding annual meetings of shareholders and directors, and keeping accurate financial records.
How do I dissolve a Professional Corporation in Georgia?
To dissolve a professional corporation in Georgia, you must file Articles of Dissolution with the Secretary of State and notify all known creditors. The dissolution process may also require additional steps depending on the circumstances of the corporation.
Is it necessary to register a Professional Corporation in Georgia?
Yes, you must register your Professional Corporation in Georgia with the Georgia Secretary of State.
What is required to form a Professional Corporation in Georgia?
You must file Articles of Incorporation with the Georgia Secretary of State and pay the filing fee. You may also need to register with the appropriate licensing board in Georgia.
What information is required to form a Professional Corporation in Georgia?
The Articles of Incorporation must include the name of the corporation, the purpose of the corporation, the address of the registered office and the incorporator’s name and address. You may need additional information, such as the names and addresses of the directors and officers.
What is the filing fee to form a Professional Corporation in Georgia?
The filing fee to form a Professional Corporation in Georgia is $100.
How long does it take to form a Professional Corporation in Georgia?
It typically takes about 7-10 business days for the Georgia Secretary of State to process the Articles of Incorporation and issue the Certificate of Incorporation.
Are there any special requirements for Professional Corporations in Georgia?
Yes, Professional Corporations in Georgia must use the words “Professional Corporation” or “P.C.” in the corporation’s name. Additionally, the Professional Corporation must obtain a Certificate of Authorization from the appropriate licensing board in Georgia.
What is a Certificate of Authorization?
A Certificate of Authorization is a document issued by the appropriate licensing board in Georgia that allows the Professional Corporation to operate.
Are there any other requirements for Professional Corporations in Georgia?
Yes, Professional Corporations in Georgia must file an annual report with the Georgia Secretary of State and pay the annual registration fee. Additionally, the corporation may need to file additional reports with the appropriate licensing board.
What is the annual registration fee for Professional Corporations in Georgia?
The annual registration fee for Professional Corporations in Georgia is $50.
What is the penalty for failing to file an annual report or pay the annual registration fee?
If a Professional Corporation fails to file an annual report or pay the annual registration fee, the Georgia Secretary of State may revoke the corporation’s Certificate of Incorporation.
Does a Professional Corporation in Georgia need to have a registered agent?
Yes, a Professional Corporation in Georgia must appoint a registered agent to receive service of process.
What other corporate formalities must a Professional Corporation in Georgia follow?
Professional Corporations in Georgia must follow the same corporate formalities as other corporations, such as holding annual meetings and keeping accurate corporate records.
Can a Professional Corporation in Georgia have more than one class of stock?
Yes, a Professional Corporation in Georgia can have more than one class of stock.
Can a Professional Corporation in Georgia have non-voting shares?
Yes, a Professional Corporation in Georgia can have non-voting shares.
What is the liability of shareholders of a Professional Corporation in Georgia?
The shareholders of a Professional Corporation in Georgia are not personally liable for the debts and obligations of the corporation.
Can a Professional Corporation in Georgia own real estate?
Yes, a Professional Corporation in Georgia can own real estate.
Can a Professional Corporation in Georgia enter into contracts?
Yes, a Professional Corporation in Georgia can enter into contracts.
What is the tax rate for Professional Corporations in Georgia?
Professional Corporations in Georgia are subject to the same tax rate as other corporations in the state.
Are there any special tax considerations for Professional Corporations in Georgia?
Yes, Professional Corporations in Georgia may be eligible for certain tax credits and deductions.
Can a Professional Corporation in Georgia issue stock?
Yes, a Professional Corporation in Georgia can issue stock.
Can a Professional Corporation in Georgia issue stock to employees?
Yes, a Professional Corporation in Georgia can issue stock to employees.
Can a Professional Corporation in Georgia be dissolved?
Yes, a Professional Corporation in Georgia can be dissolved by filing a Certificate of Dissolution with the Georgia Secretary of State.

Also Read

Why Georgia Professional Corporation is So Important

Professional corporations, or PC’s, are entities that allow professionals in certain fields to organize and operate their businesses in a manner that provides them with the legal, financial, and organizational advantages of a corporation. This distinct structure affords professionals such as doctors, lawyers, accountants, and other licensed practitioners the same liability protection and tax benefits that traditional corporations enjoy.

In the state of Georgia, where the economy is thriving and the business environment is competitive, establishing a professional corporation can be a crucial step for professionals looking to protect their personal assets and take their practice to the next level. By forming a professional corporation, professionals in Georgia can shield themselves from personal liability for the debts and obligations of the business, providing a layer of security that is essential in today’s litigious society.

Additionally, professional corporations in Georgia are subject to a different set of rules and regulations than regular corporations, tailored specifically to the needs and requirements of licensed professionals. This allows professionals to maintain their license and professional standing while also benefiting from the flexibility and tax advantages of a traditional corporate structure.

Furthermore, professional corporations in Georgia can facilitate the pooling of resources and expertise among professionals in the same field, creating opportunities for collaboration, knowledge sharing, and professional development. By forming a professional corporation, professionals can join forces to expand their reach, offer more comprehensive services, and attract a wider client base.

The importance of professional corporations in Georgia cannot be overstated, especially in light of the increasingly complex legal and regulatory landscape that governs professional practices. By establishing a professional corporation, professionals can ensure that they are in compliance with all relevant laws and regulations, protecting themselves and their clients from potential legal pitfalls.

In conclusion, the creation and operation of a professional corporation in Georgia is a vital step for professionals looking to protect their assets, enhance their business practices, and navigate the intricate world of professional services. By forming a professional corporation, professionals can enjoy the benefits of a corporation while still maintaining the integrity and professionalism that are hallmarks of their chosen profession. The importance of professional corporations in Georgia cannot be understated, and professionals in the state should carefully consider this option to safeguard their practice and realize their full potential.

Conclusion

In forming a professional corporation in Georgia, 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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