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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