Forming a professional corporation (PC) in Michigan requires careful consideration of state laws and regulations. This guide will provide you with all the necessary steps and insights to successfully create your professional corporation in 2023.
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What is a Professional Corporation?
A professional corporation (PC) is a legal structure that allows certain licensed professionals, such as doctors, lawyers, dentists, and accountants, to form a corporation and provide their services through it. PC offers some advantages, including liability protection and enhanced credibility.
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Step 1: Choose a Name for Your Professional Corporation
Choosing the right name for your professional corporation is important for branding and compliance purposes. Michigan's law requires professional corporation names to include a designation that highlights the form of the entity and the specific profession(s) practiced. Examples include "Professional Corporation," "Professional Association," or the abbreviations "P.C." or "P.A."
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Before finalizing your chosen name, it is advisable to conduct a thorough search to ensure no other entity is already using that name in Michigan. You can use the Michigan Department of Licensing and Regulatory Affairs (LARA) online business entity search to check for name availability.
Step 2: Appoint Directors and Officers
A professional corporation in Michigan must have at least one director and one officer. Directors are responsible for guiding the overall direction of the corporation, while officers handle the day-to-day operations. You can appoint yourself or hire individuals within your profession to fill these roles.
Step 3: File Articles of Incorporation
To form a professional corporation in Michigan, you need to file Articles of Incorporation with LARA. Important details to include in the Articles of Incorporation are:
- The PC's name and registered office address.
- The names and addresses of the initial directors and officers.
- A statement indicating which professions will be practiced through the corporation.
- A statement declaring that all shareholders must be licensed in at least one of the professions practiced by the corporation.
- The professional corporation's purpose and activities.
Upon completing the Articles of Incorporation, you must mail them, along with the filing fee, to LARA for processing.
Step 4: Obtain Licenses and Permits
Before providing professional services, each shareholder and employee in a professional corporation should ensure they possess the appropriate licenses and permits. Professionals need to comply with the specific licensing requirements of their respective profession(s) as regulated by Michigan's professional licensing boards.
Moreover, some professional services may require additional permits or certifications. For instance, a medical professional corporation may need to obtain a Comprehensive Hospital License or Controlled Substance License. You should research the specific requirements applicable to your profession(s) before commencing business operations.
Step 5: Comply with Ongoing Reporting and Record-Keeping Requirements
After successfully forming your professional corporation, you need to abide by ongoing reporting and record-keeping requirements to maintain legal compliance. Michigan law prescribes annual reporting obligations which include filing an Annual Report with LARA and paying the associated fee. The report entails providing updated information about the professional corporation, such as changes in the company address, director changes, etc.
Furthermore, maintaining accurate and up-to-date records of meetings, company transactions, and financial statements is essential for corporate compliance.
Conclusion
Forming a professional corporation is a meticulous process that requires adherence to specific regulations and guidelines. By following the steps outlined in this guide, you can establish your professional corporation in Michigan and enjoy the benefits it brings, such as liability protection and professional credibility. Remember to consult legal professionals or resources to ensure compliance with any updates or changes in laws and regulations.
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