How to Form a Professional Corporation in Indiana


Steve Goldstein
Steve Goldstein
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Form a Professional Corporation in Indiana

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

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

What is a Professional Corporation in Indiana?

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 Indiana. 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 Indiana.

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

How to Form a Professional Corporation in Indiana

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 Indiana, 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 Indiana

After you have decided on the idea to form a professional corporation in Indiana, deciding the name for your corporation is significant. There is a complete guide on Indiana 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 Indiana, 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 Indiana 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 Indiana Registered Agent

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

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

Step 4: File the Articles of Incorporation in Indiana

After you hire a Indiana Registered Agent to form a professional corporation, the next step is to file the Indiana 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 Indiana may be done with two ways, online and by mail. The Articles of Incorporation fee may vary from different states. However, in Indiana, it costs $30 for filing online and by mail. Create an account/Log in to the SOS site, get the online form, fill it, and submit online. For offline filing, Send the form by mail to Department of Secretary of State Business Services Division, 302 West Washington Street, Room E018, Indianapolis, IN 46204.

Step 5: Write an Operating Agreement in Indiana

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 Indiana 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 Indiana

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

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 Indiana 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 Indiana 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 Indiana

Before your professional corporation operates in Indiana, 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 Indiana, 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 Indiana

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

Important Information

Maintaining Professional and Business License in Indiana

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 Indiana

In Indiana, 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 Indiana, 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 Indiana

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

  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 Indiana?
A professional corporation in Indiana is a legal entity that allows professionals, such as attorneys, doctors, and engineers, to form a corporation in order to conduct their business.
How do I form a Professional Corporation in Indiana?
You must file an application for registration of a professional corporation with the Indiana Secretary of State. The form must include the name of the professional corporation and the names of the incorporators. You will also need to file articles of incorporation and other required documents.
What are the benefits of forming a Professional Corporation in Indiana?
Forming a professional corporation in Indiana can provide your business with a number of advantages such as limited liability protection, increased credibility, and tax advantages.
What are the requirements for forming a Professional Corporation in Indiana?
In order to form a professional corporation in Indiana, you must file an application for registration with the Indiana Secretary of State, file articles of incorporation, obtain a business license, and comply with other requirements such as the Professional Corporation Act.
What is the filing fee to form a Professional Corporation in Indiana?
The filing fee to form a professional corporation in Indiana is $90.
How long does it take to form a Professional Corporation in Indiana?
It typically takes 5-7 business days to form a professional corporation in Indiana.
Does a Professional Corporation in Indiana need to have directors?
Yes, a professional corporation in Indiana must have at least 3 directors.
Does a Professional Corporation in Indiana need to have shareholders?
Yes, a professional corporation in Indiana must have at least one shareholder.
Does a Professional Corporation in Indiana need to have an Operating Agreement?
Yes, it is recommended that a professional corporation in Indiana have an operating agreement which outlines the roles and responsibilities of the directors and shareholders.
Does a Professional Corporation in Indiana need to have a registered agent?
Yes, a professional corporation in Indiana must have a registered agent that is authorized to accept service of process and other legal documents on behalf of the corporation.
Is a Professional Corporation in Indiana required to file annual reports?
Yes, a professional corporation in Indiana is required to file annual reports with the Indiana Secretary of State.
Is a Professional Corporation in Indiana required to have a corporate seal?
No, a professional corporation in Indiana is not required to have a corporate seal.
What taxes does a Professional Corporation in Indiana have to pay?
A professional corporation in Indiana is subject to the same taxes as other corporations in the state, including income taxes, sales taxes, and property taxes.
Can a Professional Corporation in Indiana own property?
Yes, a professional corporation in Indiana can own property in its own name.
Can a Professional Corporation in Indiana sue or be sued?
Yes, a professional corporation in Indiana is legally allowed to sue or be sued.
What is the liability protection provided by a Professional Corporation in Indiana?
A professional corporation in Indiana provides its shareholders with limited liability protection, meaning that the shareholders’ personal assets are typically not at risk in the event that the corporation is sued or has other liabilities.
Is a Professional Corporation in Indiana required to have annual meetings?
Yes, a professional corporation in Indiana is required to have annual meetings in order to review the corporation’s financials, discuss any changes to the business, and elect new directors and officers.
Are there any restrictions on the activities of a Professional Corporation in Indiana?
Yes, the activities of a professional corporation in Indiana are limited to those activities that are related to the profession of its shareholders.
Can a Professional Corporation in Indiana merge with another corporation?
Yes, a professional corporation in Indiana can merge with another corporation.
Can a Professional Corporation in Indiana be dissolved?
Yes, a professional corporation in Indiana can be dissolved by filing the appropriate documents with the Indiana Secretary of State.
What are the rules regarding the use of professional titles by a Professional Corporation in Indiana?
The use of professional titles by a professional corporation in Indiana is governed by the Indiana Professional Corporation Act, which states that only shareholders of the corporation may use professional titles to advertise the corporation’s services.
Does a Professional Corporation in Indiana need to obtain a business license?
Yes, a professional corporation in Indiana must obtain a business license in order to conduct business in the state.
Are there any special regulations for Professional Corporations in Indiana?
Yes, a professional corporation in Indiana is subject to the Indiana Professional Corporation Act, which outlines the requirements for forming and operating a professional corporation in the state.
What are the responsibilities of the directors of a Professional Corporation in Indiana?
The directors of a professional corporation in Indiana are responsible for managing the business and making decisions related to the operations of the corporation.
What are the responsibilities of the shareholders of a Professional Corporation in Indiana?
The shareholders of a professional corporation in Indiana are responsible for electing the board of directors, approving major decisions, and providing financial support for the corporation.
Is a Professional Corporation in Indiana required to keep corporate records?
Yes, a professional corporation in Indiana is required to maintain corporate records such as meeting minutes, financial documents, and other relevant papers.
Is a Professional Corporation in Indiana required to file tax returns?
Yes, a professional corporation in Indiana is required to file tax returns with the Internal Revenue Service and Indiana Department of Revenue.
What are the steps to form a professional corporation in Indiana?
The steps to forming a professional corporation in Indiana include choosing a corporate name, filing articles of incorporation with the Indiana Secretary of State, obtaining any necessary professional licenses, obtaining an Employer Identification Number (EIN), registering for state and local taxes, and drafting bylaws.
What is the filing fee for articles of incorporation in Indiana?
The filing fee for articles of incorporation in Indiana is $90.
Is there an annual maintenance fee for professional corporations in Indiana?
Yes, professional corporations in Indiana must pay an annual franchise tax fee. The amount of the fee is determined by the number of shares authorized in the articles of incorporation.
Are there special requirements for professional corporations in Indiana?
Yes, professional corporations in Indiana must include certain language in their articles of incorporation, such as a statement of purpose and a statement that the corporation is organized to engage in a profession or profession.
Do professional corporations in Indiana need to hold annual meetings?
Yes, professional corporations in Indiana must hold an annual meeting of shareholders and directors.
What is the deadline for filing taxes in Indiana?
The deadline for filing taxes in Indiana is April 15th of each year.
Are there any other legal requirements for professional corporations in Indiana?
Yes, professional corporations in Indiana must also comply with other legal requirements, such as adopting certain corporate governance measures and maintaining corporate records.

Also Read

Why Indiana Professional Corporation is So Important

One of the key reasons why professional corporations are so important in Indiana is the ability to bring together a diverse group of professionals under one roof. From doctors and lawyers to engineers and consultants, these entities allow individuals with different areas of expertise to collaborate and share knowledge in ways that are beneficial for both the professionals and their clients. This collaborative environment promotes cross-pollination of ideas and best practices, leading to more well-rounded and effective services for clients.

Additionally, professional corporations in Indiana provide a level of structure and accountability that may not be present in other forms of business organization. By adhering to state regulations and standards specific to professional corporations, members are held to a higher level of professional conduct and ethics. This not only protects clients from malpractice and misconduct but also helps to maintain the integrity and reputation of the profession as a whole.

Furthermore, professional corporations offer a certain level of legal protection to their members, shielding them from personal liability in the event of lawsuits or other legal issues. This peace of mind allows professionals to focus on their work without the constant fear of personal financial ruin, thereby freeing them to take calculated risks and pursue innovative solutions for their clients.

Moreover, professional corporations in Indiana can also provide tax advantages for their members. By taking advantage of certain tax incentives and deductions available to professional corporations, members can maximize their earnings and investments, further fueling their ability to provide high-quality services to clients.

In addition to these tangible benefits, professional corporations in Indiana also serve a crucial role in boosting the overall economy of the state. By attracting top talent and nurturing a culture of excellence and innovation, these entities contribute to job creation, economic growth, and a thriving professional services sector.

Ultimately, the presence of professional corporations in Indiana is a clear reflection of the state’s commitment to fostering a business-friendly environment that supports and cultivates excellence in the professional services sector. By providing a platform for professionals to collaborate, innovate, and excel in their respective fields, professional corporations play a vital role in driving economic growth, promoting high ethical standards, and ultimately, enhancing the quality of services available to clients.

It is clear that the role of professional corporations in Indiana cannot be understated. Their contribution to the economy, the professional services sector, and the community as a whole is undeniable. As the state continues to evolve and grow, professional corporations will remain a crucial pillar of support for professionals and clients alike.

Conclusion

In forming a professional corporation in Indiana, 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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