What are professional corporations (PCs) and professional limited liability companies (PLLCs)?
PCs and PLLCs are C corporations, S corporations and limited liability companies (LLCs) organized for the purpose of providing professional services. What services constitute professional services are defined by state law and differ from state to state. Typically, professions that require a license, such as doctors, chiropractors, lawyers, accountants, architects, or engineers, are required to form PCs or PLLCs. Also, PCs or PLLCs generally must be organized for the sole purpose of rendering professional services of the licensed practitioners.
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How are professional corporations and PLLCs formed?
The incorporation documents, the Articles of Incorporation for a professional corporation (PC) and Articles of Organization for a PLLC, are similar to those of standard corporations and limited liability companies (LLCs). But with PCs and PLLCs, the proper state licensing body must often approve the incorporation documents before these documents can be filed with the Secretary of State.
Also, the incorporation documents typically must have the signature and license number of a licensed professional as the incorporator. That’s why the filing time for PCs and PLLCs is typically longer than the filing time for standard corporations and LLCs. BizFilings obtains the necessary approvals for our customers when we incorporate their businesses as PCs and PLLCs.
To form a PC or PLLC with BizFilings, the ordering process is slightly different. Based on state requirements, we ensure that your particular business needs to form a PC or PLLC in your state of incorporation before we apply our $125 PC/PLLC formation fee to your order. Placing a normal incorporation service order with us is the first step in this process, then our Incorporation Specialists confirm this requirement and contact you regarding next steps. See our Ordering Details tab for PCs and PLLCs for more information on ordering.
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How are professional corporations (PCs) and PLLCs taxed?
Generally, the taxation of PCs and PLLCs is the same as standard corporations and limited liability companies (LLCs). PCs are taxed like C corporations (unless they make the S corporation election). But many PCs do not have the advantage of graduated corporate federal income tax rates. Those that are "qualified personal service corporations" must pay the highest federal income tax rate of 35 percent on all taxable income instead of applying the lower marginal rates to some income. Qualified personal service corporations typically provide services in the fields of health, law, engineering, architecture, accounting, actuarial science or consulting. Seek the advice of an attorney or accountant to determine if your company meets this classification in your state of incorporation.
Most states will recognize a PC's federal election of S corporation status, which allows for pass-through tax treatment—the corporation’s income is not taxed at the business level, but the corporation does complete a tax return. The income or loss as shown on this return is "passed through" the corporation and reported on the owners’ personal tax returns. Any tax due is then paid by the owners at the individual level. To see if your state of incorporation recognizes the federal S corporation election, view the Ongoing Corporation Requirements page of our state guides.
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What do I name my professional corporation (PC) or professional limited liability company (PLLC)?
Naming a business is always an important decision. Many professionals choose to name their businesses or firms using their name and/or that of their partners. Others choose to include the name of their specialty. The name of your PC or PLLC must not be "deceptively similar" to any existing corporation or limited liability company (LLC) and be "distinguishable on the record" of your state. It is possible that the name you select will not be available. That’s why we ask for a second choice on our incorporation service order form.
Additionally, the name you choose usually must show your business is a PC or PLLC. Most states require that the corporate or LLC name be followed by the ending "Professional Corporation" or the abbreviation "P.C.," "PC," or, in some states, "P.A." (professional association) or "S.C." (service corporation). For PLLCs, the appropriate ending is "Professional Limited Liability Company" or "PLLC."
Depending on your state of incorporation, there may be restrictions that require the profession to be listed in the company name (for example, Johnson Chiropractic, PC). Additionally, there may be specific "restricted words" that are not available for use in names. Check the Corporation Formation Requirements or LLC Formation Requirements page of our state guides for your intended state of incorporation for more details.
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Who can be a shareholder or director in a professional corporation?
Many states restrict who may be a shareholder or a director of a professional corporation. For example, in some states only licensed practitioners of the specific service that the corporation provides may own stock and serve on the board of directors. Other states require at least 50% of the shareholders and directors to be licensed professionals. Contact our Incorporation Specialists to learn more about the requirements for your state of incorporation.
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What is a registered agent?
A registered agent is required when you incorporate a business. A company must also have a registered agent when it registers to do business in a state or states other than the state of incorporation (a process called foreign qualification).A registered agent is a person or company who receives important legal and tax documents on behalf of a business. The registered agent must have a physical address in the state of incorporation (or qualification) and be available during normal business hours.
BizFilings includes Registered Agent Service in our incorporation service packages. As your registered agent, we go beyond satisfying your state's legal requirement, we provide a number of benefits at no additional charge to you, including our monthly Registered Agent Watch email, access to BizComply─our online compliance management tool, electronic Service of Process (notice of litigation) delivery, 24/7 access to your account and more.
For professionals, there are a number of benefits to having BizFilings as your registered agent, including:
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- State compliance expertise. Compliance matters are not likely to be your area of expertise, or interest. As your compliance partner, BizFilings will help you stay in compliance with state requirements for corporations and LLCs. We remind you of annual report deadlines, and in a number of states can even help you file these reports. We also provide you with monthly compliance emails.
- Private communication with you. When a lawsuit is brought against a company, a Service of Process is delivered to the registered agent. This document is often delivered in person by local law enforcement. Having law enforcement show up at your office in front of clients or patients is less than ideal. Having BizFilings as your registered agent service provider ensures you receive any Service of Process promptly and privately.
- Having a team of professionals handle this important requirement. Just as your clients turn to you because of the experience and training you have in your field, so do ours. Our family of companies has been providing registered agent service for over 100 years. We have a company-owned network of offices in each state as well as a dedicated registered agent department in our home office in Madison, Wisconsin to help you with your needs.
How do I ensure my registered agent requirement is continuously fulfilled?
When you incorporate a business or form an LLC with BizFilings, you receive our Registered Agent Service for 6 months free. You also avoid interruption of this valuable service with our convenient auto-renewal program. At the time of renewal, you can choose to renew your company’s Registered Agent Service yearly for $167, two years for $249 (save $129) or three years for $348 (save $219). This helps ensure your company remains in good standing with the state.
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