In many states, professionals who want to incorporate their practice must form a special type of corporation called a professional corporation or professional service corporation. These professional corporations are usually similar to regular corporations but have certain special requirements.
In Florida, professional corporations are governed by the Florida Professional Service Corporations and Limited Liability Companies Law (Title XXXVI, Chapter 621, Florida Statutes) and Florida Business Corporation Act (Title XXXVI, Chapter 607, Florida Statutes). To read the applicable state laws, visit the statutes online at the Florida legislature’s website.
Professional service corporations in Florida can be formed for the purpose of providing professional services in a specific area. All shareholders of the corporation must be licensed or authorized to render services in that same professional service area. Professional services include any type of personal service that requires a license or legal authorization, such as a chiropractor, physician, certified public accountant, dentist, surgeon, veterinarian, life insurance agent, architect, attorney at law, or other professional.
All shareholders must be licensed to perform the same professional services and the professional service corporation’s purpose must correspond to this same professional service. However, shareholders are not required to perform services for the professional service corporation. Other employees or agents of the corporation can provide such services as long as they are licensed or authorized professionals in that area. The corporation can also have non-licensed employees, such as clerks, secretaries, bookkeepers, technicians, and other assistants, who perform non-professional services for the corporation.
There are ownership restrictions that apply to Florida professional service corporations. Shares of a professional service corporation can only be owned by a professional service corporation, a professional limited liability company, or an individual who is duly licensed or otherwise legally authorized to provide the same specific professional services that the professional service corporation offers.
Any sale or transfer of the professional corporation’s stock is subject to the same ownership restrictions. Shareholders of a professional service corporation are also prohibited from creating a voting trust agreement or any other agreement that would allow someone else to exercise the voting power of any or all of that person’s stock.
A professional corporation must contain the words “chartered,” “professional association,” or “P.A.” Using other words, such as “company,” “professional service corporation,” or “incorporated” or any other word, abbreviation, affix, or prefix indicating that it is a professional service corporation is specifically prohibited. The name can contain the last name of some or all of the shareholders, including retired or deceased shareholders.
The words “chartered,” “professional association,” or “P.A.” can be omitted from the corporation’s name only if the professional service corporation has registered its name as a fictitious name with the Florida Department of State, Division of Corporations. Business entities in Florida must register a fictitious name when they do business under any name other than the shareholder’s legal personal name or a properly registered corporate name, trademark, or service mark. Professional service corporations that don’t register a fictitious name must use “chartered,” “professional association,” or the abbreviation “P.A.” in their name.
There are exemptions to the fictitious name filing requirements for attorneys and other professionals licensed by the Department of Business and Professional Regulation and the Department of Health. Regardless of the exemptions provided in the Fictitious Name Registration Act (Florida Statute 865.09), contact the licensing board for your profession at the Department of Business and Professional Regulation or the Department of Health to determine whether or not you need to register a fictitious name. For more information on fictitious names and to register a business name online, visit the Florida Division of Corporations Sunbiz (Florida Sunbiz) website.
To form your professional corporation, you must file articles of incorporation with the Florida Department of State, Division of Corporations. See the Florida Sunbiz website for forms and information on filing fees, how to e-file, and the mailing address for sending in your articles of incorporation.
To create your articles, use the Profit Articles of Incorporation form on the Florida Sunbiz website. Follow the instructions provided. Your articles must include the following:
You can include an effective date in your articles which cannot be more than five business days prior to the date of receipt or 90 days after the date of filing. If you don’t include an effective date, the date will be the date the articles are received for filing.
Call or check the websites of city and county government offices in your area to inquire about local permit and business license requirements. The Florida Small Business Development Centers also have permitting and licensing information for counties and cities under their jurisdiction. You can visit the Florida Small Business Development Centers website to find the office nearest you.
Other agencies with helpful information include the Florida Department of Agriculture and Consumer Services and the Florida Department of Business and Professional Regulation. You can use these agencies’ websites to find information on license requirements, search records, get a new or renewed license, and locate exam information. For further information about new and existing businesses and links to state agencies, visit Florida’s official website at www.MyFlorida.com.
Once you have formed your professional corporation, you will need to comply with tax and other regulatory requirements that apply to professional corporations in Florida. For state corporate tax information, check theFlorida Department of Revenue website. For information relating to federal employer identification numbers, federal income tax filing requirements, tax publications, and forms, check the Internal Revenue Service (IRS) website.
For more information on the general requirements for forming a corporation in Florida (many of which apply to professional corporations), see Nolo’s article How to Form a Corporation in Florida.
By Dana Altman, Esq.