The professional corporations or professional service corporation are corporate entities which make special provision in relation to the legal usage of the corporate name by licensed professional service providers like physicians, attorneys, architects, accountants and other professionals who engage in the business of conducting commercial activity in relation to their own profession. These corporations usually maintain the same share capital with the business.
A professional corporation normally has its registered office at the place where the company is registered. This is to ensure that there is no misunderstanding about ownership of the company.
Other than that the Corporate Directors of the corporation can appoint two directors who can be any individual or any body of people who are qualified and have the necessary experience. The other two members have to be professionals who are not related to one another.
Generally a professional corporation is limited in nature and it does not have any shareholders but the directors have to exercise their power to sell and buy shares in the corporation. Only professionals who are entitled to share capital of any kind can hold a share in this kind of corporation.
The shareholders in a professional corporation do not have to give up their share capital if the company fails to operate. The shareholders of a professional corporation can continue to hold their shares after the company has failed to operate for the prescribed period of time.
It is advisable to register the professional corporation in the relevant jurisdiction of the country where you operate your business. Registration is normally free of cost and will not cost you any money. However, the registration of a professional corporation must be done before the first day of the year. In the United States the name of the professional corporation can be mentioned on the balance sheet only on the first day of the year.
If you want to get an effective tax benefit from your professional corporation, you should apply for an S-Corp tax identification number. This is very important if the corporation is to be classified as a business or not.
The name of your professional corporation can be decided by you, but in general you can decide it after obtaining the consent of your shareholders. For this purpose, you may appoint a board of directors and you also need to make sure that you have enough members.
At your shareholder’s meeting you must make a proposal for the name of your company. This proposal must include all the information relating to the business that you run, the financial position that you have and also the financial projections that you have made.
Most of the professional corporations have to be registered in order to function legally. You may not operate your business without the help of a legal company.
If you decide to set up a professional corporation, you should take all the necessary steps to carry out the law about liability. when it comes to your customers.
You should have a board of directors at the head of your professional corporation. The Board of Directors should be elected on the basis of professional experience and should be experts in the field.
When you are setting up a professional corporation, you should ensure that there are at least three directors on the board. The Board of Directors must be appointed by you and should have sufficient knowledge of the business that you are running. You should appoint someone who is a lawyer as a secretary in case any legal issues arise.
One of the most important parts of running a professional corporation is your accountant. He should be very experienced in the business that he is managing and he must have complete knowledge about the law about liability.
The accountant is the one who will calculate the business expenses and income. He is also responsible for paying off the debts that the company has incurred. There are many reasons why a person wants to set up a professional corporation, but they are not limited to these things.
So, in short, the question of what is a professional corporation is a very important question to answer when you want to set up a business or run a business. It is one thing, which needs some thought and attention.