Wisconsin offers a unique option for professionals looking to start a business – a professional corporation. Forming a professional corporation in Wisconsin comes with several advantages, such as limiting personal liability and obtaining certain tax benefits. In this article, we will guide you through the necessary steps to form a professional corporation in Wisconsin.

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What is a Professional Corporation?

A professional corporation (PC) is a legal structure specifically designed for licensed professionals, such as doctors, lawyers, accountants, and engineers. Unlike a traditional corporation, shareholders of a PC can only be professionals licensed in the same field as the corporation. The primary advantage is that a PC allows professionals to benefit from the limited liability protection offered by a corporation while maintaining certain professional characteristics.

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Step 1: Name your Professional Corporation

Choosing a name for your professional corporation requires careful consideration. The name must comply with Wisconsin's naming requirements and should reflect the nature of your business. The professional corporation's name must end with words like "Professional Corporation," "Chartered," or any abbreviation thereof.

It is essential to check the availability of your desired name to ensure no one else is using a similar name. The Wisconsin Department of Financial Institutions provides an online name availability search tool, making it easy to find out if your desired name is unique and available for use.

Step 2: Prepare and File Articles of Incorporation

The next requirement to form a professional corporation in Wisconsin involves preparing and filing the Articles of Incorporation. This document officially establishes the existence of your professional corporation. The following information needs to be included in the Articles of Incorporation:

1. The name of the corporation

2. The purpose of the corporation, clearly indicating it is a professional corporation.

3. The principal office address of the corporation.

4. The registered agent and their address (this is the person or entity authorized to accept legal documents on behalf of the corporation).

5. The number of shares authorized to be issued by the corporation.

After preparing the Articles of Incorporation, you must file them with the Wisconsin Department of Financial Institutions. You can file online or via mail, along with the filing fee.

Step 3: Appoint Directors and Officers

A professional corporation in Wisconsin must have at least one director, who is responsible for managing the corporate affairs. The director's name and address should be included in the Articles of Incorporation. You can add more directors as necessary, depending on your business needs.

Officers are individuals appointed by the directors to carry out specific duties and responsibilities within the corporation. While not required by the Wisconsin statute, it is recommended to appoint officers for better management efficiency.

Step 4: Create Corporate Bylaws

Corporate bylaws are essential documents that govern the internal affairs and operations of a corporation. Although Wisconsin law does not require professional corporations to have corporate bylaws, it is highly recommended to create them.

Bylaws consist of rules and regulations regarding shareholder and director meetings, voting procedures, and other important corporate matters. Well-crafted bylaws ensure transparency and fairness among shareholders and directors while providing a structure for decision-making.

Step 5: Obtain Necessary Permits and Licenses

Depending on your professional field, additional permits and licenses may be required to operate legally in Wisconsin. Some professions may have specific regulations and licensing boards you need to comply with. Consulting with an attorney or industry professionals can help ensure you have all the necessary permits and licenses for your professional corporation.

Step 6: Obtain an EIN and Fulfill Tax Obligations

Every professional corporation must have an Employer Identification Number (EIN) assigned by the Internal Revenue Service (IRS). An EIN is necessary for tax purposes, opening a business bank account, and hiring employees.

To apply for an EIN, you can use the IRS's free online application or complete Form SS-4 and mail it to the IRS. Additionally, you must fulfill Wisconsin's tax obligations, such as registering for state taxes and obtaining the necessary permits.

Step 7: Comply with Ongoing Requirements

Once your professional corporation is formed, there are ongoing requirements to ensure legal compliance. These include annual reports to be filed with the Wisconsin Department of Financial Institutions and maintaining necessary licenses and permits. It is important to stay updated with regulatory changes and fulfill all requirements to avoid penalties and consequences.

In conclusion, forming a professional corporation in Wisconsin requires careful planning and adherence to specific legal requirements. By following the steps outlined in this article, you can establish your professional corporation successfully. Remember to consult with legal and accounting professionals to mitigate any potential risks and protect your business interests.

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Starting a professional corporation is an excellent way for licensed professionals such as doctors, lawyers, accountants, and architects to limit liability while enjoying the various benefits of a corporate structure. If you are considering forming a professional corporation in Rhode Island, this guide will provide you with essential information and step-by-step instructions to help you get started.

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Understanding a Professional Corporation

A professional corporation, often referred to as a "PC," is a type of business entity that is specifically structured to provide professional services. It offers liability protection to individual professionals within their practice areas while also availing certain tax benefits and formalities of a corporation.

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Step 1: Choose a Name for Your Professional Corporation

Choosing the right name for your professional corporation is crucial. The name must include a term such as "Professional Corporation" or its abbreviations like "PC" or "P.C." Additionally, it should not be confusingly similar to an existing business entity operating in the same or similar area of expertise.

To verify the availability of your desired business name, you can conduct a search on the Rhode Island Secretary of State website. If the name is available, proceed to the next step. Otherwise, you will need to come up with an alternative name.

Step 2: Appoint Directors and Officers

A professional corporation requires the appointment of directors and officers responsible for overseeing and managing the operations of the company.

* Directors: Directors are individuals chosen by the shareholders to make decisions on behalf of the corporation. They must meet the eligibility criteria set by Rhode Island law.

* Officers: Officers handle the day-to-day operations of the corporation. Common officer positions include President, Vice President, Secretary, and Treasurer.

Step 3: Draft Articles of Incorporation

The foundation of any corporation begins with properly drafted articles of incorporation. In Rhode Island, you need to file articles with the Secretary of State to form a professional corporation.

The articles of incorporation should contain:

* The corporation's name and address.

* The stated purpose for forming the corporation.

* The number of shares, type of stock, and par value, if any.

* The name and address of each individual incorporator, which may include shareholders, directors, officers, or attorneys.

You can obtain a sample template for articles of incorporation on the Rhode Island Secretary of State website. Once you have filled in the required information, submit the articles of incorporation along with the necessary filing fee to the Secretary of State.

Step 4: Obtain Necessary Licenses and Permits

As a professional corporation, you must ensure that all professionals involved in the company are properly licensed by their respective regulatory bodies. Contact the appropriate professional licensing board in Rhode Island to obtain any necessary licenses or permits required for your specific industry.

Step 5: Hold Initial Organizational and Shareholders Meeting

After the Secretary of State approves your articles of incorporation, it is essential to hold an initial organizational meeting with your designated directors and officers. During this meeting, you will establish the corporation's bylaws, elect officers, and adopt any corporate resolutions necessary for daily operations.

Step 6: Comply with Ongoing Corporate Formalities

Once your professional corporation is up and running, it is important to maintain ongoing corporate formalities. This includes:

* Filing annual reports with the Rhode Island Secretary of State

* Paying any necessary state, local, and federal taxes

* Conducting regular board meetings and keeping accurate records of corporate minutes

* Keeping corporate records and financial information up to date and organized.

By complying with these requirements, your professional corporation will remain in good legal standing.

Conclusion

Forming a professional corporation in Rhode Island involves several crucial steps, from choosing the right name and drafting articles of incorporation to complying with ongoing corporate formalities. It is highly recommended to consult with an attorney or professional advisor specialized in corporate law and regulations to ensure compliance with all applicable rules and regulations. Forming a professional corporation can offer numerous benefits for licensed professionals in Rhode Island and can be an important step towards long-term success and growth in your professional practice.

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