*(2023 Guide)*
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A professional corporation (PC) is a unique business structure that is specifically designed for licensed professionals such as doctors, lawyers, accountants, and architects. If you are a licensed professional in Wisconsin and wish to form a professional corporation, this guide will walk you through the necessary steps and provide important information to help you establish your business.
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1. Understand the Benefits of a Professional Corporation
Before you proceed with forming a PC, it's essential to understand the advantages it offers. Some key benefits of a professional corporation in Wisconsin include:
- Limited Liability: Like other corporations, a PC provides limited liability protection to its shareholders, shielding personal assets from business debts and legal liabilities.
- Tax Benefits: A PC has the option to be taxed as either a C corporation or an S corporation. While C corporations are subject to double taxation, S corporations are considered pass-through entities, meaning the profits and losses flow directly to the shareholders' personal tax returns.
- Professional Status: Forming a PC reinforces your professional status and increases credibility in the eyes of clients and potential business partners.
- Continuity: Unlike partnerships or sole proprietorships, a PC can exist beyond the life of its shareholders, ensuring business continuity.
2. Choose a Name for Your Corporation
Selecting an appropriate name for your professional corporation is crucial as it will represent your services and professionalism. The name must comply with Wisconsin's corporate naming rules, which include uniqueness and appropriate usage of words like "professional corporation" or its abbreviation, PC.
Before finalizing your chosen name, it's advisable to conduct a search on the Wisconsin Department of Financial Institutions website to ensure availability. Additionally, you can reserve the name for up to 120 days by submitting a Name Reservation Application along with the appropriate fee.
3. Prepare and File Articles of Incorporation
To officially form your professional corporation, you must file Articles of Incorporation with the Wisconsin Department of Financial Institutions. The articles should contain the following information:
- Corporate Name and Address: Clearly state the chosen name and the principal place of business.
- Purpose: Specify the professional services the corporation will provide.
- Registered Agent: Appoint a registered agent who will receive legal notices and official documents on behalf of the corporation.
- Shareholders: List the initial shareholders of the corporation.
- Directors: Mention the names and addresses of the initial directors.
- Professional Licensure: Include a statement confirming that all shareholders and employees are licensed professionals.
- Capital Structure: Detail the authorized capital stock and value.
- Effective Date: You can specify the desired effective date, which can be a future date.
After completing the Articles of Incorporation, submit them along with the required fee to the Wisconsin Department of Financial Institutions either online or by mail. Once approved, you will receive a Certificate of Incorporation, confirming the formation of your professional corporation.
4. Obtain Necessary Licenses and Permits
As a licensed professional, you may require additional permits or licenses to legally operate your professional corporation. Contact the relevant licensing boards or departments to understand the specific requirements for your profession. These might include professional licenses, occupational permits, or any specific certificates.
Ensure that all the required licenses and permits are obtained before commencing operations to avoid any legal issues.
5. Fulfill Ongoing Compliance Requirements
To maintain the legal and operational status of your professional corporation, certain ongoing compliance requirements must be met:
- Registered Agent: Your PC must maintain a registered agent in Wisconsin to receive official communications and legal notices on behalf of the corporation.
- Annual Reports: File an Annual Report with the Wisconsin Department of Financial Institutions, accompanied by the appropriate fee, by the predetermined due date.
- Taxes: Ensure timely filing and payment of all applicable federal, state, and local taxes. Consult with a certified public accountant for guidance on tax compliance.
- Corporate Records: Maintain accurate and up-to-date corporate records, including meeting minutes, shareholder agreements, and financial statements.
Conclusion
Forming a professional corporation in Wisconsin provides licensed professionals with many advantages, including limited liability and tax benefits. By following the steps outlined in this guide, you can successfully establish your professional corporation and set a strong foundation for growth and success.
Remember to consult with a qualified attorney or business professional for personalized advice relevant to your specific situation. Good luck with your professional corporation venture in Wisconsin!
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