How to Form a Professional Corporation in Louisiana


Steve Goldstein
Steve Goldstein
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Form a Professional Corporation in Louisiana

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

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

What is a Professional Corporation in Louisiana?

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 Louisiana. 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 Louisiana.

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

How to Form a Professional Corporation in Louisiana

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 Resident 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 Louisiana, 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 Louisiana

After you have decided on the idea to form a professional corporation in Louisiana, deciding the name for your corporation is significant. There is a complete guide on Louisiana 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 Louisiana, 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 60 days. To keep the name, you must file a name reservation application with Louisiana 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 Louisiana Resident Agent

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

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

Step 4: File the Articles of Incorporation in Louisiana

After you hire a Louisiana Resident Agent to form a professional corporation, the next step is to file the Louisiana Articles of Incorporation. In writing the Articles of Incorporation, the business name, owner’s contact information, corporation address, and Resident 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 Louisiana may be done with four ways, online, by mail, fax, and in person. The Articles of Incorporation fee may vary from different states. However, in Louisiana, it costs $75 for filing online, fax, 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 State of Louisiana Secretary of State, P.O. Box 94125, Baton Rouge, LA 70804. Drop it off in person to 8585 Archives Ave., Baton Rouge, LA 70809. Fax it to 225-932-5314.

Step 5: Write an Operating Agreement in Louisiana

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 Louisiana 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 Louisiana

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

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 Louisiana 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 Louisiana 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 Louisiana

Before your professional corporation operates in Louisiana, 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 Louisiana, 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 Louisiana

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

Important Information

Maintaining Professional and Business License in Louisiana

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 Louisiana

In Louisiana, you will be required to submit a report each year. The owners’ and Resident 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 Louisiana, 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 Louisiana

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

  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

How do I form a professional corporation in Louisiana?
To form a professional corporation in Louisiana, you must file Articles of Incorporation with the Louisiana Secretary of State’s office. You must include the name of the corporation, its purpose, the name and address of the incorporator, and the names and addresses of the initial directors.
What documents must be filed to form a professional corporation in Louisiana?
To form a professional corporation in Louisiana, you must file Articles of Incorporation with the Louisiana Secretary of State’s office. You must include the name of the corporation, its purpose, the name and address of the incorporator, and the names and addresses of the initial directors.
What is the filing fee to form a professional corporation in Louisiana?
The filing fee to form a professional corporation in Louisiana is $100.
What is the registered agent requirement for a professional corporation in Louisiana?
All professional corporations in Louisiana must appoint and maintain a registered agent in the state. The registered agent must be a Louisiana resident or a business entity with a physical street address in the state.
What are the requirements for a professional corporation in Louisiana?
Professional corporations in Louisiana must have at least one incorporator, one director, and a registered agent with a physical street address in the state. The corporation must also have a valid Louisiana business license, and the Articles of Incorporation must include the name of the corporation, its purpose, the name and address of the incorporator, and the names and addresses of the initial directors.
How do I obtain a Louisiana business license for a professional corporation?
To obtain a Louisiana business license for a professional corporation, you must contact the local licensing authority in the parish or city where the business will be located.
What are the tax consequences of forming a professional corporation in Louisiana?
Professional corporations in Louisiana are subject to state taxes, including income, corporate franchise, and sales taxes.
What are the requirements to form a Professional Corporation in Louisiana?
To form a Professional Corporation in Louisiana, you must file the Articles of Incorporation with the Louisiana Secretary of State, designate the corporation as a professional corporation, designate the profession that the corporation will practice, and execute and file the Professional Corporation Statement of Compliance with the Secretary of State.
What information do I need to include in my Articles of Incorporation?
The Articles of Incorporation must include the corporate name, the purpose of the corporation, the registered office address and the name and address of the registered agent. It must also include the names and addresses of the directors and the number of shares of stock the corporation is authorized to issue.
How long does it take to form a Professional Corporation in Louisiana?
The process usually takes about 10-12 business days.
What fees are associated with forming a Professional Corporation in Louisiana?
The filing fee for Articles of Incorporation is $100. The filing fee for the Professional Corporation Statement of Compliance is $25.
Do I need to have a Registered Agent in Louisiana?
Yes. All professional corporations must designate and maintain a registered agent in Louisiana. The registered agent must have a physical street address in Louisiana and be available during normal business hours.
What are the ongoing requirements for a Professional Corporation in Louisiana?
Professional corporations must file an Annual Report with the Louisiana Secretary of State and pay an annual fee of $50. Professional corporations must also maintain corporate records, hold annual meetings and keep minutes of all meetings and actions taken by the corporation.
What is a Professional Corporation in Louisiana?
A Professional Corporation in Louisiana is a company organized for a specific profession where the liability of the shareholders is limited to their investments in the corporation.
Is it necessary to register a Professional Corporation in Louisiana?
Yes, it is necessary to register a Professional Corporation in Louisiana with the Louisiana Secretary of State.
What documents are required for registering a Professional Corporation in Louisiana?
The documents required for registering a Professional Corporation in Louisiana include Articles of Incorporation, Statement of Required Corporate Actions, and a Certificate of Good Standing.
What is the filing fee for registering a Professional Corporation in Louisiana?
The filing fee for registering a Professional Corporation in Louisiana is $100.
Are there any additional fees for registering a Professional Corporation in Louisiana?
Yes, there are additional fees for registering a Professional Corporation in Louisiana such as an expedite fee and a certificate of authority fee.
How long does it take to register a Professional Corporation in Louisiana?
It typically takes 4-6 weeks to register a Professional Corporation in Louisiana.
Does a Professional Corporation in Louisiana need to have a registered agent?
Yes, a Professional Corporation in Louisiana needs to have a registered agent who is located in Louisiana and is authorized to accept service of process.
Does a Professional Corporation in Louisiana need to obtain a federal tax ID?
Yes, a Professional Corporation in Louisiana needs to obtain a federal tax ID from the Internal Revenue Service (IRS).
Does a Professional Corporation in Louisiana need to obtain a state tax ID?
Yes, a Professional Corporation in Louisiana needs to obtain a state tax ID from the Louisiana Department of Revenue.
Does a Professional Corporation in Louisiana need to obtain a sales tax ID?
Yes, a Professional Corporation in Louisiana needs to obtain a sales tax ID from the Louisiana Department of Revenue.
What is the annual report filing requirement for a Professional Corporation in Louisiana?
A Professional Corporation in Louisiana is required to file an annual report with the Louisiana Secretary of State by the end of the calendar year.
Does a Professional Corporation in Louisiana need to obtain a business license?
Yes, a Professional Corporation in Louisiana may need to obtain a business license from the local municipality or parish in which it is operating.
Is a Professional Corporation in Louisiana required to hold annual meetings?
Yes, a Professional Corporation in Louisiana is required to hold annual meetings of the shareholders and directors.
Does a Professional Corporation in Louisiana need to keep corporate records?
Yes, a Professional Corporation in Louisiana is required to keep corporate records such as minutes of meetings, resolutions, bylaws, and stock certificates.
Are Professional Corporations in Louisiana subject to taxation?
Yes, Professional Corporations in Louisiana are subject to taxation at the state level.
How is a Professional Corporation in Louisiana dissolved?
A Professional Corporation in Louisiana can be dissolved by filing Articles of Dissolution with the Louisiana Secretary of State.
Can a Professional Corporation in Louisiana be converted to another form of business entity?
Yes, a Professional Corporation in Louisiana can be converted to another form of business entity such as a limited liability company or a partnership.
Can a Professional Corporation in Louisiana be merged with another business entity?
Yes, a Professional Corporation in Louisiana can be merged with another business entity such as a limited liability company or a partnership.
Can a Professional Corporation in Louisiana be reorganized?
Yes, a Professional Corporation in Louisiana can be reorganized through a reorganization plan filed with the Louisiana Secretary of State.
What type of insurance does a Professional Corporation in Louisiana need?
A Professional Corporation in Louisiana should obtain liability insurance to protect the business from potential claims and lawsuits.

Also Read

Why Louisiana Professional Corporation is So Important

One of the primary reasons why Louisiana Professional Corporation is so crucial is due to the liability protection it offers to its members. When professionals form a corporation, they are creating a separate legal entity that shields their personal assets from any liabilities incurred by the business. This protection is invaluable in industries where lawsuits and liability claims are common occurrences. By operating as a professional corporation, professionals can focus on their work without constantly worrying about the potential risks to their personal finances.

Additionally, Louisiana Professional Corporation allows professionals to take advantage of certain tax benefits that are not available to other business structures. By electing to be taxed as a corporation, professionals can benefit from lower corporate tax rates and potentially reduce their overall tax burden. This can result in significant cost savings for professionals and allow them to reinvest those savings back into their businesses or personal endeavors.

Another key benefit of Louisiana Professional Corporation is the ability to attract and retain top talent within the industry. Professionals are more likely to join a corporation that offers the stability and structure that comes with being part of a professional corporation. This can help businesses attract high-caliber employees who are essential to the success and growth of the company.

Furthermore, operating as a professional corporation can also enhance the credibility and reputation of professionals within their respective industries. Clients and customers are more likely to trust and respect businesses that operate under a recognized and regulated entity. Being part of a professional corporation can help professionals establish credibility, promote trust, and demonstrate a commitment to professionalism and ethics.

In addition to the benefits mentioned above, Louisiana Professional Corporation also provides professionals with the flexibility to structure their business operations in a way that best suits their needs. Whether it’s setting up a profit-sharing arrangement, establishing clear roles and responsibilities, or implementing a succession plan, professionals have the autonomy to tailor their corporation to meet their unique goals and objectives.

Overall, Louisiana Professional Corporation plays a critical role in supporting and advancing the interests of professionals in the state. It provides professionals with the necessary legal protection, tax benefits, credibility, and flexibility to thrive in their industries and contribute to the economic prosperity of Louisiana. As such, it is clear why Louisiana Professional Corporation is so important and why it should continue to be recognized and supported within the business community.

Conclusion

In forming a professional corporation in Louisiana, 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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