Starting a Professional Corporation in Louisiana 2024: Ultimate Guide

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How to Start a Professional Corporation in Louisiana

Licensed professional? Level up your business with Louisiana professional corporation! Enjoy unique benefits like Louisiana 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 Louisiana with your professional corporation today!

This guide will review the requirements for starting a professional corporation in Louisiana, 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 Louisiana 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 Louisiana.

The primary purpose of Louisiana 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, Louisiana 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 Louisiana.

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Who Can File Under Professional Corporation Laws

Under Louisiana 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 Louisiana, the following professionals can typically form a professional corporation:

  • Physicians and Surgeons
  • Dentists
  • Chiropractors
  • Optometrists
  • Podiatrists
  • Certified Public Accountants
  • Architects
  • Engineers and Land Surveyors
  • Psychologists
  • Marriage and Family Therapists
  • Clinical Social Workers
  • Professional Clinical Counselors
  • Veterinarians
  • Attorneys
  • Speech-Language Pathologists
  • Pharmacists
  • Registered Nurses
  • Physical Therapists
  • Occupational Therapists
  • Acupuncturists

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.

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Structure of a Professional Corporation

  • Shareholders: Louisiana 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 Louisiana 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 Louisiana 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 Louisiana: A Guide

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

Step 1: Appointment of Resident Agent

The first step in forming a Professional Corporation is appointing Resident Agent in Louisiana. 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 Louisiana and be available during regular business hours.

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

Step 2: Choosing the Name of the Corporation

Selecting a name for your Louisiana 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.

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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 Louisiana 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 Louisiana 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.

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Step 8: Filing of Statement of Information

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

Step 9: Getting Tax Permits from the State

The professional corporation must obtain the necessary tax permits from the Louisiana Department 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 Louisiana Professional Corporation to maintain proper accounting and financial records.

Fees Associated with Professional Corporation in Louisiana

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

  • State Laws and Regulations: To form a professional corporation in Louisiana, it is crucial to comply with the state laws and regulations governing professional corporations. The Louisiana Revised Statutes Title 12 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 Louisiana is to draft and file the Articles of Incorporation with the Louisiana Secretary of State. This document includes essential information about the corporation, such as its name, address, purpose, and number of authorized shares. Filing the Articles of Incorporation requires a filing fee currently $75 for most professions. However, it is essential to check with the Louisiana 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 Louisiana. 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 Louisiana Secretary of State is recommended to ensure the chosen name is available. This search is free, but reserving a name before filing the Articles of Incorporation requires a reservation fee of $25 online and $25 mail.
  • Articles of Incorporation: The Articles of Incorporation is a critical document for forming a professional corporation in Louisiana. 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 Articles of Incorporation must be filed with the Louisiana 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 Louisiana may involve other costs, such as:
    • Annual Report: professional corporations must file an initial Statement of Information with the Louisiana Secretary of State every Anniversary month of the corporation of filing the Articles of Incorporation. The filing fee for this form is $30.
    • Licensing and Permit Fees: Depending on the specific profession, the governing licensing board may require additional licensing and permit fees.
    • Resident Agent Fee: Hiring of Resident Agent service will likely involve an annual fee of $50 – $150, 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 Louisiana:

Federal income tax

A professional corporation in Louisiana 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

Louisiana Professional Corporation is also subject to state taxes, such as the Louisiana 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 Louisiana.

Tax deductions and exemptions

A professional corporation in Louisiana 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 Louisiana

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 Louisiana avoids double taxation by allowing income, losses, and deductions to pass through to the shareholders’ personal tax returns.

FAQs

What is a Professional Corporation in Louisiana?
A Professional Corporation in Louisiana is a business entity formed and owned by professionals who offer services in only one field, such as doctors, attorneys, engineers, or accountants.
What are the advantages of starting a Professional Corporation in Louisiana?
The main advantages of starting a Professional Corporation in Louisiana are limited liability protection, tax benefits, and flexibility in business structure.
How many people are required to form a Professional Corporation in Louisiana?
At least two people are required to form a Professional Corporation in Louisiana.
What are the steps involved in starting a Professional Corporation in Louisiana?
The steps involved in starting a Professional Corporation in Louisiana include selecting a name, filing Articles of Incorporation and obtaining a corporate charter, registering with the Louisiana Secretary of State, obtaining state and federal licenses, and obtaining necessary bonds, insurance, and registrations.
What are the Articles of Incorporation in Louisiana, and what should be included in them?
The Articles of Incorporation in Louisiana are legal documents that outline the rules and structure of a Professional Corporation. They should include the corporation’s name, registered agent, duration, and the names and addresses of the initial directors or incorporators.
How long does it take to start a Professional Corporation in Louisiana?
It typically takes about one to two weeks to start a Professional Corporation in Louisiana.
What is a registered agent in Louisiana?
The registered agent in Louisiana is a person or entity designated to receive official communication and legal correspondence on behalf of the corporation.
Can I use my home address as the registered agent address for my Professional Corporation in Louisiana?
Yes, you can use your home address as the registered agent address for your Professional Corporation in Louisiana.
What types of taxes does a Louisiana Professional Corporation need to pay?
A Louisiana Professional Corporation needs to pay federal and state income taxes, as well as Louisiana sales and use taxes.
Do I need to obtain a business license to operate a Professional Corporation in Louisiana?
Yes, you need to obtain a business license to operate a Professional Corporation in Louisiana.
How much does it cost to start a Professional Corporation in Louisiana?
The cost to start a Professional Corporation in Louisiana can vary depending on the legal and administrative fees involved. Typically, it can cost between $500 to $2,500.
How long does a Louisiana Professional Corporation remain active?
In Louisiana, a Professional Corporation can remain active indefinitely.
What is the difference between a Louisiana Professional Corporation and a Louisiana LLC?
A Louisiana Professional Corporation is designed for professionals who offer services in only one field, whereas a Louisiana LLC is designed for all types of businesses.
Can I be a Professional Corporation in Louisiana if I am a sole proprietor?
No, you cannot be a Professional Corporation in Louisiana if you are a sole proprietor.
What are the renewal requirements for a Louisiana Professional Corporation?
A Louisiana Professional Corporation needs to file an annual report, maintain its license and registration, pay state fees, and renew its Corporate Charter every three years.
What are the filing fees for a Louisiana Professional Corporation?
The filing fees for a Louisiana Professional Corporation are $80 for initial filing and $30 for annual reporting.
Who regulates Professional Corporations in Louisiana?
Professional Corporations in Louisiana are regulated by the Louisiana Secretary of State and other supervisory bodies in the related professional field.
Can a Professional Corporation in Louisiana have multiple professional designations?
No, a Professional Corporation in Louisiana can have only one professional designation.
Are there any restrictions on how a Louisiana Professional Corporation can distribute profits?
Yes, a Louisiana Professional Corporation must distribute profits equally among the owners instead of distributing them according to their respective stake in the corporation.
How do I obtain a Professional Corporation charter in Louisiana?
You can obtain a Professional Corporation charter in Louisiana by filing Articles of Incorporation with the Louisiana Secretary of State and paying the appropriate fees.
What is the corporate charter of a Louisiana Professional Corporation?
A Louisiana Professional Corporation’s Corporate Charter is a legal document that details the corporation’s purpose, structure, location, and other governing information.
Can a Louisiana Professional Corporation convert to an LLC?
Yes, a Louisiana Professional Corporation can convert to an LLC if it satisfies the legal requirements.
Are there any restrictions on who can form a Professional Corporation in Louisiana?
Yes, in Louisiana, only licensed professionals in specific fields can form a Professional Corporation.
What is the minimum share capital for a Louisiana Professional Corporation?
There is no specific minimum share capital requirement for a Louisiana Professional Corporation.
Do I need to file for a particular license in Louisiana to operate a specific professional corporation?
Yes, to operate a Louisiana Professional Corporation, you must obtain a license from your professional governing authority.
How often should a Louisiana Professional Corporation hold meetings?
A Louisiana Professional Corporation must hold annual meetings with its board of directors.
Are there any benefits of operating a Louisiana Professional Corporation rather than a sole proprietorship?
Yes, the benefits of operating a Louisiana Professional Corporation as compared to a sole proprietorship include getting protection from liabilities and being able to separate personal and business assets.
Can a Louisiana Professional Corporation have unlimited shareholders?
No, unlike typical for-profit corporations, Louisiana Professional Corporations can’t have more than eighty (80) shareholders.
What are the requirements for starting a professional corporation in Louisiana?
In Louisiana, the first step to starting a professional corporation is filing articles of incorporation with the Secretary of State’s office.
Do licensed professionals need to form a professional corporation in Louisiana?
Yes, licensed professionals in Louisiana are required to form a professional corporation to practice.
How many shareholders are allowed in a professional corporation in Louisiana?
Louisiana law allows for up to 35 shareholders in a professional corporation.
Can a professional corporation in Louisiana offer both professional and non-professional services?
No, a professional corporation in Louisiana can only offer professional services in the field of its licensed profession.
What are the benefits of forming a professional corporation in Louisiana?
The benefits of forming a professional corporation in Louisiana include liability protection and tax benefits.
What types of professionals can form a professional corporation in Louisiana?
Professions that can form a professional corporation in Louisiana include doctors, lawyers, accountants, architects, engineers, and more.
Do professional corporations in Louisiana have to pay state taxes?
Yes, professional corporations in Louisiana are required to pay state taxes.
What is the process for obtaining a professional license in Louisiana?
The process for obtaining a professional license in Louisiana varies depending on the profession, but generally involves meeting educational and licensing requirements and submitting an application to the relevant state board.
How much does it cost to form a professional corporation in Louisiana?
The cost of forming a professional corporation in Louisiana varies but can include fees for name reservation, articles of incorporation filing, and ongoing annual reports.
Can a professional corporation in Louisiana have a different name than the last name of the professional shareholders?
Yes, Louisiana law allows professional corporations to adopt a different name than the last name of the professional shareholders.
Are professional corporations in Louisiana required to have professional liability insurance?
No, professional liability insurance is not required for professional corporations in Louisiana, but it is recommended.
How can I dissolve a professional corporation in Louisiana?
To dissolve a professional corporation in Louisiana, you must file articles of dissolution with the Secretary of State’s office, pay any outstanding taxes or fees, and notify creditors and shareholders of the dissolution.
Are there any restrictions on the sale or transfer of shares in a professional corporation in Louisiana?
Louisiana law places restrictions on the sale or transfer of shares in a professional corporation to ensure that only licensed professionals can maintain ownership.
Can a professional corporation in Louisiana share profits with non-professional employees?
Yes, a professional corporation in Louisiana can share profits with non-professional employees as long as it is in compliance with state and federal laws.
What are the annual reporting requirements for a professional corporation in Louisiana?
A professional corporation in Louisiana is required to file an annual report with the Secretary of State’s office and pay an annual fee.
Can a non-professional own shares in a professional corporation in Louisiana?
No, Louisiana law allows only licensed professionals to own shares in a professional corporation.
Is a professional corporation in Louisiana required to have a board of directors?
Louisiana law requires a professional corporation to have a board of directors, but the number and qualifications of the board members can vary depending on the profession.
Can a professional corporation in Louisiana be subject to lawsuits?
Yes, professional corporations in Louisiana can be subject to lawsuits for professional malpractice or negligence.
Can a professional corporation in Louisiana convert to another business entity?
Yes, a professional corporation in Louisiana can convert to another business entity, such as a limited liability company or partnership.
Are there any residency requirements for professional shareholders in a Louisiana professional corporation?
Louisiana law does not have any residency requirements for professional shareholders in a professional corporation.
Can a professional corporation in Louisiana engage in other types of businesses besides its licensed profession?
No, a professional corporation in Louisiana can only engage in the licensed profession of its professional shareholders.
Are professional corporations in Louisiana required to have bylaws?
Yes, professional corporations in Louisiana are required to adopt initial bylaws and can amend them as needed.
Can a professional corporation in Louisiana open a bank account in another state?
Yes, a professional corporation in Louisiana can open a bank account in another state as long as it is compliant with state and federal banking laws.
Can a professional corporation in Louisiana have a foreign subsidiary?
Yes, a professional corporation in Louisiana can have a foreign subsidiary as long as it complies with applicable state and federal laws.
What are the penalties for failing to comply with Louisiana’s professional corporation laws?
Noncompliance with Louisiana’s professional corporation laws can result in fines, revocation of the corporation’s license to practice, and other legal consequences.
Are professional shareholders in Louisiana professional corporations personally liable for debts or legal issues?
No, professional shareholders in Louisiana professional corporations generally enjoy personal liability protection for the corporation’s debts and legal issues.
Can a professional corporation in Louisiana be sued individually or only as a corporation?
A professional corporation in Louisiana can be sued both as a corporation and individually for reputational damage or other non-professional issues.
Are there any regulations or approvals needed to dissolve a professional corporation in Louisiana?
Yes, to dissolve a professional corporation in Louisiana, the corporation needs to file articles of dissolution with the Secretary of State’s office and get approval from the Louisiana licensing board associated with the profession.

Also Read

How to Save Money While Forming Louisiana Professional Corporation

One of the first steps in forming a professional corporation in Louisiana is choosing a business entity type. While a professional corporation provides liability protection for its owners, it typically involves more paperwork and higher formation costs compared to other entity types. To save money, individuals should carefully weigh the benefits of forming a professional corporation against the costs and consider alternative business structures that may better suit their needs.

Another way to save money while forming a professional corporation in Louisiana is to handle certain tasks independently. For instance, rather than hiring a lawyer to draft formation documents, business owners can use online resources and templates to create articles of incorporation themselves. While it is important to ensure that these documents comply with Louisiana state laws and regulations, taking the DIY approach can help save on legal fees.

In addition, business owners can save money by selecting a registered agent for their professional corporation who offers affordable services. A registered agent is responsible for receiving legal documents on behalf of the corporation and maintaining compliance with state regulations. By comparing service fees and researching options, business owners can find a registered agent that meets their needs without breaking the bank.

Furthermore, business owners should consider obtaining business insurance to protect their professional corporation from unforeseen liabilities and risks. While insurance premiums may add to initial startup costs, having proper coverage can save money in the long run by safeguarding the business assets and mitigating potential legal expenses.

When it comes to managing ongoing expenses for a professional corporation, budgeting and cost-conscious decision-making are essential. Business owners should establish a financial plan that outlines projected revenue, expenses, and cash flow to identify areas where costs can be minimized. By monitoring spending and exploring opportunities to reduce overhead, business owners can improve profitability and position their professional corporation for long-term success.

Overall, saving money while forming and operating a professional corporation in Louisiana requires careful planning, research, and attention to detail. By making informed decisions, leveraging cost-saving strategies, and staying proactive in financial management, business owners can establish a solid foundation for their venture without overspending. With a commitment to thriftiness and resourcefulness, entrepreneurs can navigate the complexities of forming a professional corporation in Louisiana while maintaining financial stability and sustainability.

Conclusion

Louisiana 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 Louisiana.

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