Forming a professional corporation (PC) is a popular option for professionals who want to limit their personal liability while enjoying the benefits of a corporate structure. For individuals practicing licensed professions in Minnesota, forming a professional corporation can provide many advantages. Here is a step-by-step guide to forming a professional corporation in Minnesota:
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Step 1: Choose a Name for your Professional Corporation
Selecting an appropriate name for your professional corporation is crucial. The name should comply with the Minnesota Secretary of State's guidelines, which require the name to include either "Professional Corporation" or its abbreviation "P.A." or "PA." Furthermore, the name should not be deceptively similar to existing businesses or violate trademark laws.
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Before finalizing the name, it is recommended to conduct a search on the Minnesota Secretary of State's website to ensure that the desired name is available.
Step 2: Prepare the Articles of Incorporation
In Minnesota, the Articles of Incorporation is the document that legally creates your professional corporation. This document needs to be filed with the Minnesota Secretary of State to formalize your entity.
The Articles of Incorporation generally require the following information:
- Professional services to be conducted
- Name and addresses of all shareholders and directors
- Registered office and registered agent information
- Desired duration of the corporation
Filling out the Articles of Incorporation accurately is essential to avoid any potential delays or rejection during the filing process.
Step 3: Obtain Consent and Certification from Licensing Boards
For professionals with licensed occupations, obtaining consent and certification from the relevant licensing board is mandatory before forming a professional corporation.
Each licensing board may have specific requirements and processes, so it is important to contact the appropriate licensing board and gather the necessary documents. The central goal is to acquire consent to form a PC and certifications confirming that all shareholders actively practice the licensed profession.
Step 4: File the Articles of Incorporation
After completing the necessary documentation and obtaining the required certifications, it's time to submit the Articles of Incorporation to the Minnesota Secretary of State, along with the required filing fee ($135 at the time of writing). Filing can be done by mail or submitted electronically on the Secretary of State's website.
Upon submission, the Secretary of State reviews the application. If everything is in order, the Articles of Incorporation are approved, and a Certificate of Incorporation is issued. The process usually takes around 5-10 business days.
Step 5: Submit the Certificate of Incorporation to Licensing Boards
Once you receive the Certificate of Incorporation from the Secretary of State, it is necessary to submit a copy of it to the relevant licensing boards. Informing the licensing board about your newly-formed PC will ensure compliance with their regulations.
Step 6: Comply with Other Formalities
After the formation of your professional corporation, there are a few additional steps to consider to ensure long-term compliance and successful operation of your entity:
- Obtain an Employer Identification Number (EIN) from the IRS for tax purposes.
- Comply with the Minnesota Department of Revenue's requirements, such as filing state tax returns and obtaining any necessary licenses or permits.
- Prepare corporate bylaws, which outline how your professional corporation will operate. Although not mandatory, having bylaws is highly advisable for clear and consistent management.
- Open a separate bank account for your professional corporation to maintain proper segregation of personal and business finances.
Conclusion
Forming a professional corporation in Minnesota involves a systematic process that includes obtaining consent from licensing boards, preparing necessary documents, filing with the Secretary of State, and complying with other formalities. By incorporating these steps into your practice, you can establish a professional corporation to protect your personal assets while advancing your professional career in Minnesota. Remember to consult an attorney or a professional resource specific to your situation to ensure compliance with all legal requirements.
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