How to Form a Professional Corporation in Missouri


Steve Goldstein
Steve Goldstein
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Form a Professional Corporation in Missouri

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

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

What is a Professional Corporation in Missouri?

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 Missouri. 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 Missouri.

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

How to Form a Professional Corporation in Missouri

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 Missouri, 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 Missouri

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

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

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

Step 4: File the Articles of Incorporation in Missouri

After you hire a Missouri Registered Agent to form a professional corporation, the next step is to file the Missouri 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 Missouri may be done with two method that is filing online, or by mail. The Articles of Incorporation fee may vary from different states. However, in Missouri, it costs $50 fo filing online, $105 for filing 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 or drop it off in person to Corporations Unit, James C. Kirkpatrick State Information Center, P.O. Box 778, Jefferson City, MO 65102.

Step 5: Write an Operating Agreement in Missouri

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 Missouri 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 Missouri

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

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 Missouri 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 Missouri 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 Missouri

Before your professional corporation operates in Missouri, 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 Missouri, 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 Missouri

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

Important Information

Maintaining Professional and Business License in Missouri

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 Missouri

In Missouri, 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 Missouri, 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 Missouri

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

  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 Missouri?
A Professional Corporation in Missouri is a type of corporation formed by professionals like doctors, lawyers, dentists, and other specialized professionals, and is regulated by the Missouri Secretary of State.
What is the purpose of forming a Professional Corporation in Missouri?
The purpose of forming a Professional Corporation in Missouri is to provide a legal entity to operate a business, protect personal assets, and provide liability protection for its owners.
What are the advantages of forming a Professional Corporation in Missouri?
The advantages of forming a Professional Corporation in Missouri include limited liability protection, tax deductions, and continuity of business.
What is the process for forming a Professional Corporation in Missouri?
The process for forming a Professional Corporation in Missouri includes filing formation documents with the Missouri Secretary of State, paying a filing fee, and creating corporate documents such as Articles of Incorporation and bylaws.
What is the filing fee for forming a Professional Corporation in Missouri?
The filing fee for forming a Professional Corporation in Missouri is $50.
What documents are required to form a Professional Corporation in Missouri?
The documents required to form a Professional Corporation in Missouri include Articles of Incorporation and bylaws.
What are the maintenance requirements for a Professional Corporation in Missouri?
The maintenance requirements for a Professional Corporation in Missouri include filing annual reports and paying annual fees.
What are the tax implications of a Professional Corporation in Missouri?
The tax implications of a Professional Corporation in Missouri include filing a corporate tax return and paying taxes on corporate income.
Is it necessary to have a board of directors for a Professional Corporation in Missouri?
Yes, it is necessary to have a board of directors for a Professional Corporation in Missouri.
What are the requirements for the directors of a Professional Corporation in Missouri?
The requirements for the directors of a Professional Corporation in Missouri include being a natural person and being a shareholder of the corporation.
Are there any restrictions on the activities of a Professional Corporation in Missouri?
Yes, there are restrictions on the activities of a Professional Corporation in Missouri, including engaging in activities unrelated to the business of the professional corporation.
Can a Professional Corporation in Missouri issue stock?
Yes, a Professional Corporation in Missouri can issue stock, but the number and type of shares must be specified in the Articles of Incorporation.
Are there any restrictions on the sale of stock by a Professional Corporation in Missouri?
Yes, there are restrictions on the sale of stock by a Professional Corporation in Missouri, including restrictions on the transfer of shares.
Are there any restrictions on the transfer of shares by a Professional Corporation in Missouri?
Yes, there are restrictions on the transfer of shares by a Professional Corporation in Missouri, including pre-emptive rights and first refusal rights.
Are there any restrictions on the distribution of corporate profits by a Professional Corporation in Missouri?
Yes, there are restrictions on the distribution of corporate profits by a Professional Corporation in Missouri, including restrictions on the payment of dividends.
Are there any restrictions on the issuance of debt by a Professional Corporation in Missouri?
Yes, there are restrictions on the issuance of debt by a Professional Corporation in Missouri, including restrictions on the amount and type of debt that can be issued.
What is the liability of the shareholders of a Professional Corporation in Missouri?
The liability of the shareholders of a Professional Corporation in Missouri is limited to the amount of their investment in the corporation.
What are the requirements for maintaining corporate records for a Professional Corporation in Missouri?
The requirements for maintaining corporate records for a Professional Corporation in Missouri include maintaining records of all meetings and corporate transactions, and maintaining adequate financial records.
What is the procedure for amending the Articles of Incorporation of a Professional Corporation in Missouri?
The procedure for amending the Articles of Incorporation of a Professional Corporation in Missouri includes filing an amendment with the Missouri Secretary of State and paying the applicable filing fee.
Are there any restrictions on the sale of assets by a Professional Corporation in Missouri?
Yes, there are restrictions on the sale of assets by a Professional Corporation in Missouri, including restrictions on the transfer of assets to non-shareholders.
Are there any restrictions on the dissolution of a Professional Corporation in Missouri?
Yes, there are restrictions on the dissolution of a Professional Corporation in Missouri, including the approval of the shareholders and the filing of dissolution documents with the Missouri Secretary of State.
What are the penalties for failure to comply with the requirements for a Professional Corporation in Missouri?
The penalties for failure to comply with the requirements for a Professional Corporation in Missouri include fines and potential suspension or revocation of the corporation’s rights and privileges.
Is it necessary to obtain a tax identification number for a Professional Corporation in Missouri?
Yes, it is necessary to obtain a tax identification number for a Professional Corporation in Missouri in order to file taxes and open a corporate bank account.
Is it necessary to obtain a business license for a Professional Corporation in Missouri?
Yes, it is necessary to obtain a business license for a Professional Corporation in Missouri in order to conduct business in the state.
What are the insurance requirements for a Professional Corporation in Missouri?
The insurance requirements for a Professional Corporation in Missouri vary based on the type of business and the activities of the corporation.
Are there any restrictions on the names of Professional Corporations in Missouri?
Yes, there are restrictions on the names of Professional Corporations in Missouri, including the requirement that the name be distinguishable from other businesses in the state.
Is it necessary to register as a foreign corporation if a Professional Corporation in Missouri does business outside of Missouri?
Yes, it is necessary to register as a foreign corporation if a Professional Corporation in Missouri does business outside of Missouri.
What are the steps to form a professional corporation in Missouri?
The steps to form a professional corporation in Missouri include
What is the filing fee for forming a professional corporation in Missouri?
The filing fee for forming a professional corporation in Missouri is $105.
What information is needed to form a professional corporation in Missouri?
The information needed to form a professional corporation in Missouri includes the name of the corporation, the purpose of the corporation, the mailing address, the number of shares authorized, the names and addresses of the incorporators, and the name of the registered agent.
What documents must be filed to form a professional corporation in Missouri?
The documents that must be filed to form a professional corporation in Missouri include the Articles of Incorporation and the Professional Corporation Statement.
How long does it take to form a professional corporation in Missouri?
It typically takes 7-10 business days to form a professional corporation in Missouri.
Are there any special requirements to form a professional corporation in Missouri?
Yes, professional corporations in Missouri must file an annual report with the Secretary of State and must obtain the necessary business licenses and permits.

Also Read

Why Missouri Professional Corporation is So Important

One of the key reasons why Missouri Professional Corporation is so important is the liability protection it offers to its owners. By operating as a corporation, professionals are shielded from personal liability for the debts and obligations of the business. This is crucial in industries where individuals face high levels of risk, such as legal, medical, and financial services. By forming a professional corporation, professionals can safeguard their personal assets and limit their exposure to potential lawsuits and claims.

Furthermore, Missouri Professional Corporation provides a formal framework for professionals to structure their business operations and relationships. This includes delineating responsibilities among owners, establishing protocols for decision-making, and outlining processes for resolving conflicts or disputes. By operating within this structured framework, professionals can maintain clear and transparent operations, which can enhance the credibility and reputation of their practices.

Additionally, Missouri Professional Corporation offers tax benefits for its owners. By electing to be taxed as a corporation, professionals may be able to take advantage of lower tax rates, deductions, and credits that are not available to sole proprietors or partnerships. This can result in significant savings and allow professionals to reinvest in their businesses or expand their services.

Another important aspect of Missouri Professional Corporation is the flexibility it provides for owners to attract investors and raise capital. By issuing shares of stock, professionals can raise funds from outside investors while retaining control of their businesses. This can be especially valuable for professionals looking to grow their practices, expand their services, or invest in new technologies or equipment.

Moreover, Missouri Professional Corporation allows for continuity and succession planning. In the event of retirement, disability, or death of an owner, the corporation can continue to operate without interruption. By establishing clear procedures for transferring ownership and leadership, professionals can ensure the longevity and sustainability of their practices for future generations.

Overall, Missouri Professional Corporation plays a critical role in supporting and fostering the success of professionals in the state. It offers a variety of benefits, including liability protection, structured operations, tax advantages, access to capital, and continuity planning. By utilizing this entity structure, professionals can position themselves for long-term growth, profitability, and success in their respective industries.

Conclusion

In forming a professional corporation in Missouri, 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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