Starting a Professional Corporation in Delaware 2024: Ultimate Guide

Licensed professional? Level up your business with Delaware professional corporation! Enjoy unique benefits like Delaware LLC, such as limited liability, tax perks, and a polished image. Our step-by-step guide unravels the essentials for smooth compliance and the right fit. LLCBase has your back with expert guidance, so make an informed decision and triumph in Delaware with your professional corporation today!

This guide will review the requirements for starting a professional corporation in Delaware, explore the advantages and disadvantages of this business structure, and help you determine if it is the right fit for your business goals.

What is a Professional Corporation

A Professional Corporation (P.C.) is a unique type of corporation designed for licensed professionals, such as doctors, dentists, lawyers, architects, and accountants. Forming a P.C. allows licensed professionals to offer their services through a corporate structure, providing them with the benefits of a traditional corporation, such as limited liability protection and tax advantages. Forming a professional corporation in Delaware is a popular choice due to the thriving professional landscape and business-friendly environment. When starting a professional corporation, choose a reliable formation service in Delaware.

The primary purpose of Delaware Professional Corporation is to protect its owners from personal liability for the corporation’s actions. The shareholders’ personal assets are protected if the professional corporation faces legal issues. Moreover, Delaware professional corporations can offer certain tax benefits, such as deducting employee benefits and operating expenses. These advantages make forming a professional corporation an attractive option for many professionals in Delaware.

Recommended: Hire a formation service to make your dream a reality! Choose the best for a seamless professional corporation setup in Delaware. We recommend –

Our #1 Pick: LegalZoom – ($0 + State Fees) Online LLC Setup

Who Can File Under Professional Corporation Laws

Under Delaware Professional Corporation laws, only certain licensed professionals are eligible to form a professional corporation. The specific professions allowed to form a P.C. may vary slightly by state, but in Delaware, the following professionals can typically form a professional corporation:

Each profession has its governing licensing board, which sets specific rules and regulations for forming and operating a professional corporation. It is essential to check with the relevant board and state laws to ensure that your profession is eligible to form a professional corporation and to understand the specific requirements associated with your profession.

Launching a professional corporation in Delaware? Get in touch with the best LLC formation services in Delaware for expert guidance and support tailored to your unique venture. Let their skilled assistance pave the way for seamlessly setting up your professional corporation, so you can focus on growing your business!

LLC Services	Rating & Pricing	Top Features	Learn More
#1 Editor's Choice	5/5 $0 + State Filing Fee	Free LLC Formation Various Legal Services Attorney Advice	Learn More
	3/5 $299 + State Filing Fee	Single Package Flat Pricing Legal Services	Learn More

Structure of a Professional Corporation

• Shareholders: Delaware Professional Corporation’s shareholders must be licensed professionals in the same field as the corporation’s purpose. For example, if a professional corporation is formed to offer legal services, all shareholders must be licensed attorneys. This requirement ensures that the professional corporation’s management comprises qualified individuals with relevant expertise.
• Directors: The directors of a professional corporation in Delaware are responsible for overseeing the corporation’s operations and making high-level decisions. The directors must also be licensed professionals in the same field as the corporation’s purpose. The number of directors required depends on the specific licensing board’s regulations, but typically a minimum of one director is needed.
• Officers: The officers of Delaware Professional Corporation manage the professional corporation. Officers typically include a President, Secretary, and Treasurer. However, additional officers can be appointed as needed. While not all officers must be licensed professionals, the President must hold a valid license in the same field as the corporation’s purpose.

Starting a Professional Corporation in Delaware: A Guide

Here is a detailed guide to starting a professional corporation in Delaware that you should follow.

Step 1: Appointment of Registered Agent

The first step in forming a Professional Corporation is appointing Registered Agent in Delaware. This individual or company will act on behalf of the corporation, receiving official notices and legal documents. The agent must have a physical address in Delaware and be available during regular business hours.

We compiled the list of the best registered agent services in Delaware to help you choose the one you can rely on.

Step 2: Choosing the Name of the Corporation

Selecting a name for your Delaware Professional Corporation is crucial. The name must be unique and appropriate, including the words “professional corporation” or the abbreviation “P.C.” It must also comply with the rules and regulations of the governing licensing board and should not be confusingly similar to an existing corporation’s name.

Recommended: Lock down your ultimate business name confidently with the name reservation by a reliable business formation service. Effortlessly scope out name options with just a few clicks! We recommend –

Our #1 Pick: LegalZoom – ($0 + State Fees) Online LLC Setup

Step 3: Drafting of By-laws

By-laws are the internal rules and regulations governing the management and operations of the professional corporation. These should include provisions related to the appointment of directors, issuance of shares, and any restrictions imposed by the licensing board.

Step 4: Appointment of Board of Directors

The board of directors oversees the management and operations of the Delaware Professional Corporation. Directors must be licensed professionals in the same field as the corporation’s purpose.

Step 5: Conduction of Board Meetings

Regular board meetings are essential for maintaining the proper functioning and compliance of the professional corporation. The by-laws should specify the frequency, notice requirements, and procedures for conducting these meetings.

Step 6: Issuance of Corporate Shares

Shares represent ownership in the corporation. The professional corporation must issue shares to its shareholders, who must be licensed professionals in the same field. Share issuance should comply with the by-laws and any restrictions imposed by the licensing board.

Step 7: Comply with State Requirements

Forming Delaware Professional Corporation requires compliance with specific state requirements, such as obtaining necessary permits and licenses, paying fees, and adhering to rules and regulations the governing licensing board sets forth.

Need trustworthy guidance on business licenses, permits, and compliance? Look no further than the best business attorneys in Delaware who are adept at navigating your specific industry’s legal ins and outs. With their friendly support, you can confidently and seamlessly manage your business requirements!

Step 8: Filing of Statement of Information

Delaware professional corporations must file an annual report with the Delaware Secretary of State. This document includes essential information about the corporation, including its name, address, Registered Agent, and directors.

Step 9: Getting Tax Permits from the State

The professional corporation must obtain the necessary tax permits from the Delaware Division of Revenue, such as an Employer Identification Number (EIN) from the Internal Revenue Service (IRS).

Step 10: Opening of a Bank Account

Finally, open a separate bank account for the Delaware Professional Corporation to maintain proper accounting and financial records.

Fees Associated with Professional Corporation in Delaware

Here are some of the most common fees when starting a professional corporation in Delaware.

• State Laws and Regulations: To form a professional corporation in Delaware, it is crucial to comply with the state laws and regulations governing professional corporations. The Delaware General Corporation Law and the specific licensing board’s regulations for each profession outline the requirements and restrictions for professional corporation formation. Before starting the process, professionals should consult with their licensing board to ensure they meet the necessary qualifications.
• Incorporation Process: Once the licensing requirements are met, the next step to form a professional corporation in Delaware is to draft and file the Certificate of Incorporation with the Delaware Secretary of State. This document includes essential information about the corporation, such as its name, address, purpose, and number of authorized shares. Filing the Certificate of Incorporation requires a filing fee currently $89 for most professions. However, it is essential to check with the Delaware Secretary of State for the specific fee associated with your profession.
• Naming Requirements: You must follow specific rules when choosing a name for a Professional Corporation in Delaware. The name must include the words “Professional Corporation,” “P.C.,” or “Prof. Corp.” Additionally, the name cannot be misleading or too similar to an existing corporation’s name. Conducting a name search with the Delaware Secretary of State is recommended to ensure the chosen name is available. This search is free, but reserving a name before filing the Certificate of Incorporation requires a reservation fee of Not available online and $75 mail.
• Certificate of Incorporation: The Certificate of Incorporation is a critical document for forming a professional corporation in Delaware. It outlines the corporation’s essential information, such as the name, address, purpose, and number of authorized shares. The Articles must also include a statement that the corporation is a professional corporation and the specific profession it practices. Once completed, the Certificate of Incorporation must be filed with the Delaware Secretary of State, accompanied by the appropriate filing fee.
• Additional Fees and Costs: In addition to the filing fees mentioned above, forming Professional Corporation in Delaware may involve other costs, such as:
  • Annual Report: professional corporations must file an initial Statement of Information with the Delaware Secretary of State every In Delaware, the annual report filing time is not applicable, as it is not a mandatory requirement. of filing the Certificate of Incorporation. The filing fee for this form is $0 because it is not mandatory.
  • Licensing and Permit Fees: Depending on the specific profession, the governing licensing board may require additional licensing and permit fees.
  • Registered Agent Fee: Hiring of Registered Agent service will likely involve an annual fee of $50 – $300, which can vary depending on the service provider.
  • Legal and Accounting Fees: Forming a professional corporation may involve consulting with attorneys and accountants, which can result in additional professional fees.

Advantages of a Professional Corporation

• Limited Liability Protection: One of the main benefits of a professional corporation is its limited liability protection to its shareholders. This means the shareholders’ assets are protected from the corporation’s debts and liabilities.
• Tax Benefits: Professional Corporations enjoy specific tax benefits, such as deductions for business expenses and the ability to retain earnings within the corporation.
• Business Credibility: Operating as a professional corporation can enhance the credibility and reputation of the professional services, demonstrating a commitment to compliance and professionalism.
• Continuity of Operations: A professional corporation has a perpetual existence, ensuring the continuity of operations even if the shareholders or directors change.

Disadvantages of a Professional Corporation

• Complexity and Cost of Formation: Forming a professional corporation can be more complex and costly than other business structures, such as sole proprietorships or partnerships.
• Ongoing Compliance Requirements: professional corporations must adhere to ongoing compliance requirements, including regular board meetings, filing annual reports, and maintaining proper records.
• Limited Flexibility in Management: professional corporations may need more flexibility in management, as the board of directors must consist of licensed professionals in the same field.

Taxation of Professional Corporations

Here are the taxes that your professional corporation must pay in Delaware:

Federal income tax

A professional corporation in Delaware is subject to federal income tax on its net earnings. However, a P.C. can elect to be taxed as an S corporation, which allows the corporation’s income, deductions, and credits to pass through to the shareholders. This can result in significant tax savings by avoiding double taxation.

State taxes

Delaware Professional Corporation is also subject to state taxes, such as the Delaware franchise tax, which is based on the corporation’s annual net income. Additionally, depending on the nature of its operations, the professional corporation may be subject to other state and local taxes, such as payroll and sales taxes permit in Delaware.

Tax deductions and exemptions

A professional corporation in Delaware can take advantage of various tax deductions and exemptions, such as deductions for employee benefits, operating expenses, and depreciation. These deductions can help reduce the corporation’s taxable income, ultimately leading to tax savings for the P.C. and its shareholders.

Alternatives to Professional Corporations in Delaware

If you decide that a professional corporation is not for you, then you might consider the following alternatives.

• Sole Proprietorships: A simpler business structure is where an individual operates the business under their name without limited liability protection.
• Partnerships: Two or more individuals join to operate a business, sharing profits, losses, and responsibilities.
• Limited Liability Companies (LLCs): A hybrid business structure that combines the limited liability protection of a corporation with the tax benefits and flexibility of a partnership.
• S-corporations: Starting an S Corp in Delaware avoids double taxation by allowing income, losses, and deductions to pass through to the shareholders’ personal tax returns.

FAQs

Also Read

• Start a Professional Corporation in Alabama
• Start a Professional Corporation in Alaska
• Start a Professional Corporation in Arizona
• Start a Professional Corporation in Arkansas
• Start a Professional Corporation in California
• Start a Professional Corporation in Colorado
• Start a Professional Corporation in Connecticut
• Start a Professional Corporation in DC
• Start a Professional Corporation in Delaware
• Start a Professional Corporation in Florida
• Start a Professional Corporation in Georgia
• Start a Professional Corporation in Hawaii
• Start a Professional Corporation in Idaho
• Start a Professional Corporation in Illinois
• Start a Professional Corporation in Indiana
• Start a Professional Corporation in Iowa
• Start a Professional Corporation in Kansas
• Start a Professional Corporation in Kentucky
• Start a Professional Corporation in Louisiana
• Start a Professional Corporation in Maine
• Start a Professional Corporation in Maryland
• Start a Professional Corporation in Massachusetts
• Start a Professional Corporation in Michigan
• Start a Professional Corporation in Minnesota
• Start a Professional Corporation in Mississippi
• Start a Professional Corporation in Missouri
• Start a Professional Corporation in Montana
• Start a Professional Corporation in Nebraska
• Start a Professional Corporation in Nevada
• Start a Professional Corporation in New Hampshire
• Start a Professional Corporation in New Jersey
• Start a Professional Corporation in New Mexico
• Start a Professional Corporation in New York
• Start a Professional Corporation in North Carolina
• Start a Professional Corporation in North Dakota
• Start a Professional Corporation in Ohio
• Start a Professional Corporation in Oklahoma
• Start a Professional Corporation in Oregon
• Start a Professional Corporation in Pennsylvania
• Start a Professional Corporation in Rhode Island
• Start a Professional Corporation in South Carolina
• Start a Professional Corporation in South Dakota
• Start a Professional Corporation in Tennessee
• Start a Professional Corporation in Texas
• Start a Professional Corporation in Utah
• Start a Professional Corporation in Vermont
• Start a Professional Corporation in Virginia
• Start a Professional Corporation in Washington
• Start a Professional Corporation in West Virginia
• Start a Professional Corporation in Wisconsin
• Start a Professional Corporation in Wyoming

How to Save Money While Forming Delaware Professional Corporation

First and foremost, it is important to research and fully understand the process of forming a professional corporation in Delaware. By educating yourself on the specific requirements and steps involved, you can avoid unnecessary expenses that may arise from mistakes or oversights. There are plenty of online resources available that can provide guidance on the process, as well as templates and sample documents to help streamline the formation process.

Another key strategy to save money when forming a Delaware professional corporation is to take advantage of online incorporation services. These services typically offer packages that include all the necessary documents and filings required to establish a professional corporation, at a fraction of the cost of hiring a lawyer or accountant. While some may be hesitant to use online services due to concerns about accuracy or legitimacy, reputable providers have proven to be reliable and efficient in helping entrepreneurs navigate the incorporation process.

Additionally, timing can play a significant role in saving money when forming a Delaware professional corporation. By planning ahead and timing the submission of necessary documents and filings during certain periods, such as during a promotional period or when filing fee discounts are available, you can potentially save a significant amount of money. Keeping track of important deadlines and staying informed about any changes in filing fees or requirements can help you take advantage of money-saving opportunities.

Furthermore, it is important to prioritize and allocate your resources wisely when forming a Delaware professional corporation. While it may be tempting to spend excessively on flashy logos or elaborate marketing materials, focusing on the essentials and necessities can help you conserve funds that can be better allocated towards other aspects of your business. Assessing your needs and making thoughtful decisions about where to invest your resources can help you avoid unnecessary expenses and save money in the long run.

Lastly, networking and seeking advice from other professionals who have experience in forming corporations in Delaware can provide invaluable insights and cost-saving measures. By building relationships with individuals who have been through the process before, you can gain valuable knowledge and avoid costly mistakes that could arise from inexperience. Seeking advice from mentors or industry peers can also help you identify potential opportunities for cost savings and streamline the process of forming your Delaware professional corporation.

In conclusion, forming a Delaware professional corporation does not have to break the bank. By taking a strategic and proactive approach to the process, entrepreneurs can save money and optimize their resources to ensure a successful and sustainable business venture. Through research, utilizing online services, timing submissions, prioritizing essentials, and seeking advice from experienced professionals, forming a Delaware professional corporation can be a cost-effective and efficient process.

Conclusion

Delaware Professional Corporation can offer several benefits for licensed professionals. However, it is essential to carefully consider the proper structure and compliance requirements before proceeding. Seeking professional guidance in forming a professional corporation can help ensure a smooth process and enable professionals to focus on providing their services. Visit LLCBase for more information about starting a professional corporation in Delaware.