Starting a Professional Corporation in Ohio 2024: Ultimate Guide

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How to Start a Professional Corporation in Ohio

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

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

Start a Professional Corporation

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 Ohio 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 Ohio.

The primary purpose of Ohio 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, Ohio 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 Ohio.

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Who Can File Under Professional Corporation Laws

Under Ohio 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 Ohio, 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: Ohio 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 Ohio 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 Ohio 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 Ohio: A Guide

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

Step 1: Appointment of Statutory Agent

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

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

Step 2: Choosing the Name of the Corporation

Selecting a name for your Ohio 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 Ohio 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 Ohio 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

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

Step 9: Getting Tax Permits from the State

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

Fees Associated with Professional Corporation in Ohio

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

  • State Laws and Regulations: To form a professional corporation in Ohio, it is crucial to comply with the state laws and regulations governing professional corporations. The Ohio Revised Code Title XVII 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 Ohio is to draft and file the Articles of Incorporation with the Ohio 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 $99 for most professions. However, it is essential to check with the Ohio 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 Ohio. 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 Ohio 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 $39 online and $39 mail.
  • Articles of Incorporation: The Articles of Incorporation is a critical document for forming a professional corporation in Ohio. 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 Ohio 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 Ohio may involve other costs, such as:
    • Annual Report: professional corporations must file an initial Statement of Information with the Ohio Secretary of State every July 30th of filing the Articles of Incorporation. The filing fee for this form is $91.
    • Licensing and Permit Fees: Depending on the specific profession, the governing licensing board may require additional licensing and permit fees.
    • Statutory Agent Fee: Hiring of Statutory 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 Ohio:

Federal income tax

A professional corporation in Ohio 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

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

Tax deductions and exemptions

A professional corporation in Ohio 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 Ohio

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

FAQs

What is a professional corporation?
A professional corporation is a corporation that is owned and operated by individuals who are licensed in a regulated profession such as law, medicine, or accounting.
How is a professional corporation in Ohio formed?
A professional corporation in Ohio is formed by filing articles of incorporation with the Ohio Secretary of State, along with the appropriate filing fee.
Who can form a professional corporation in Ohio?
In Ohio, only professionals who are licensed to practice in their field can form a professional corporation.
What are the benefits of forming a professional corporation in Ohio?
The primary benefit of forming a professional corporation in Ohio is limited liability protection for the owners.
Can a professional corporation be formed for any profession in Ohio?
No, only certain professions are eligible to form a professional corporation in Ohio, including licensed medical professionals, lawyers, and accountants.
What are the minimum requirements for forming a professional corporation in Ohio?
In Ohio, the minimum requirements for forming a professional corporation include two or more individuals who are licensed to practice the same profession, and filing articles of incorporation with the state.
Can a professional corporation be formed as a non-profit entity in Ohio?
No, a professional corporation cannot be formed as a non-profit entity in Ohio.
What is the process of filing articles of incorporation for a professional corporation in Ohio?
The process of filing articles of incorporation for a professional corporation in Ohio involves completing and filing a form with the Ohio Secretary of State, as well as paying a filing fee.
Are there any ongoing maintenance requirements for a professional corporation in Ohio?
Yes, a professional corporation in Ohio must file an annual report with the state and renewal fees.
Is there a specific name requirement for a professional corporation in Ohio?
Yes, a professional corporation in Ohio must include the words ‘professional corporation’ or ‘P.C.’ in their name.
Can an out-of-state professional corporation operate in Ohio?
Yes, out-of-state professional corporations can operate in Ohio by registering with the Ohio Secretary of State and meeting certain requirements.
Are there any special tax considerations for professional corporations in Ohio?
Yes, professional corporations in Ohio are subject to a state and federal tax rate similar to that of regular corporations.
Is a professional corporation able to offer its employees retirement benefits?
Yes, a professional corporation is able to offer its employees retirement benefits, such as a 401(k) plan.
Can a professional corporation pay dividends to shareholders?
Yes, a professional corporation can pay dividends to its shareholders.
Does the Ohio Secretary of State provide a document list for formation of a professional corporation?
Yes, the Ohio Secretary of State provides a document list for the formation of a professional corporation available on their website.
Is the Ohio Secretary of State the only agency that a corporation is required to register with?
No, a corporation is may be required to register with other Ohio agencies such as the Ohio Department of Taxation, the Ohio Division of Unemployment Insurance, or the Ohio Bureau of Workers’ Compensation.
How long does it take to form a professional corporation in Ohio?
The time it takes to form a professional corporation in Ohio can vary depending on workload and staffing levels at the Ohio Secretary of State’s office.
On what forms are the Articles of Incorporation for a Professional Corporation filed with the state of Ohio?
The Articles of Incorporation for a Professional Corporation are filed with the state of Ohio using Ohio Form 533A Business Corporation.
Do all Professional Corporations in Ohio need a registered agent?
Yes, all Professional Corporations operating in Ohio must have a registered agent appointed for acceptance purposes on behalf of the corporation.
Is there a limit to how many professional corporations you can form in Ohio?
There is no specific limit to the number of professional corporations one can form in Ohio.
What obligations do Ohio Professional Corporations have to their clients or patients?
Ohio’s professional corporations must adhere to federal privacy laws and to all ethical requirements relating to the practice of their particular profession.
What is the licensing process like for an Ohio professional corporation?
The licensing process varies depending on the field, but requires appropriate training, past licensure credentials, sufficient insurance and registration with the appropriate Ohio agencies.
Can I conduct business with an irregular name in Ohio?
No, All corporations in Ohio must have names that include ‘Professional Corporation,’ or ‘P.C.’
What’s the renewal fee for Professional Corporations in Ohio documented by the Secretary of State?
As of 2021, the Ohio’s Secretary of State annual filing fees for professional corporations are $75.
Are there accompanying penalties for late payments of Professional Corporations’ Ohio fees and licenses?
While Ohio’s late payment policy related to corporate fees is organization specific, there is a general grace period implicated, and fees and/or penalties extend with delay.
What information should my proposed Articles of Organization contain for filing in Ohio?
Information and requirements for Ohio include providing the professional corporations name and proposed name type to the Ohio Department of Taxation, amongst requirements imposed by law.
May professional nurse practitioners form Professional Corporations in Ohio?
Yes. Section governing of the profession’s practice and insurance notifications regarding malpractice liability grounds are in place but P.C formation isn’t voided out by any regulation.
What is a professional corporation in Ohio?
A professional corporation in Ohio is a type of corporation formed by professionals who provide licensed services, such as doctors, lawyers, engineers, and accountants.
What is the process of starting a professional corporation in Ohio?
The process of starting a professional corporation in Ohio involves filing articles of incorporation with the Ohio Secretary of State and obtaining a license from the Ohio Board of Professional Conduct.
Can I use an existing business name for my professional corporation in Ohio?
You may be able to use an existing business name for your professional corporation in Ohio, but you should first conduct a search with the Ohio Secretary of State to ensure the name is available and in compliance with Ohio’s naming requirements.
What are Ohio’s naming requirements for a professional corporation?
Ohio’s naming requirements for a professional corporation include using “Professional Corporation,” “P.C.,” or “Inc.” after the corporation’s name and ensuring the name is not deceiving or confusing.
Can I start a professional corporation by myself?
Yes, you can start a professional corporation by yourself in Ohio, but you must be a licensed professional in your practice area.
How much does it cost to start a professional corporation in Ohio?
The cost of starting a professional corporation in Ohio varies, but it typically includes filing fees to the Ohio Secretary of State and the Ohio Board of Professional Conduct.
How long does it take to start a professional corporation in Ohio?
The process of starting a professional corporation in Ohio typically takes several weeks to months to complete, depending on the efficiency of the filing process and obtaining the necessary license from the Ohio Board of Professional Conduct.
Are there any special tax considerations for a professional corporation in Ohio?
Yes, professional corporations in Ohio may have special tax considerations, including eligibility for certain deductions and credits.
Can I operate my professional corporation from home in Ohio?
Yes, you can operate your professional corporation from home in Ohio, but you must ensure compliance with zoning and business license requirements for home-based businesses.
Can I convert my existing business to a professional corporation in Ohio?
Yes, you can convert your existing business to a professional corporation in Ohio, but you must follow the necessary filing requirements with the Ohio Secretary of State and Ohio Board of Professional Conduct.
What liability protections does a professional corporation in Ohio provide?
A professional corporation in Ohio provides limited liability protections for its owner(s) against lawsuits and debts, separate from personal assets.
Are there any limitations to owning a professional corporation in Ohio?
Yes, there are limitations to owning a professional corporation in Ohio, including being a licensed professional and adhering to any requirements or restrictions on ownership based on your practice area.
What compliances requirements does a professional corporation in Ohio have?
A professional corporation in Ohio has compliance requirements, including regular reporting and fee obligations to the Ohio Secretary of State and the Ohio Board of Professional Conduct.
Can I practice in multiple states with a professional corporation in Ohio?
It is possible to practice in multiple states with a professional corporation in Ohio, but you may need to obtain additional licenses and comply with corresponding state requirements.
How does the Ohio Board of Professional Conduct ensure professional conduct of a professional corporation?
The Ohio Board of Professional Conduct ensures professional conduct of a professional corporation by regulating and enforcing Ohio’s rules of professional conduct.
Can I form a limited liability company (LLC) instead of a professional corporation in Ohio?
Yes, you can form a limited liability company (LLC) instead of a professional corporation, but the type of entity that best suits your business needs may depend on your practice area and preferences.
What do I need to know about shareholder agreements for a professional corporation in Ohio?
Shareholder agreements for a professional corporation in Ohio may be useful in defining ownership and management rights, operation agreements, and providing guidance in the event of shareholder disputes.
Can I hire employees as a professional corporation in Ohio?
Yes, you can hire employees as a professional corporation in Ohio, and you must follow state employment regulations and document employee relations appropriately.
What is the personal liability of professional corporations in Ohio?
The personal liability of professional corporations in Ohio is limited to the assets invested in the corporation, and personal assets are usually separate and protected to avoid debt-related liens.
Can I change the name of my professional corporation after it is formed in Ohio?
Yes, you can change the name of your professional corporation in Ohio after it is formed by filing a simple amendment to the original articles of incorporation with the Ohio Secretary of State.
What role does the Ohio Medical Board play in professional corporations involving doctors?
The Ohio Medical Board plays a supervisory role in professional corporations involving doctors, and it ensures compliance with ethical codes when arranging business arrangements.
What is the annual filing requirement for professional corporations in Ohio?
The annual filing requirement for professional corporations in Ohio includes submitting an annual certificate of corporate/non-profit renewal and paying an annual fee of $15 to the Ohio Secretary of State.
What is an agent for service of process requirement for a professional corporation in Ohio?
Professional corporations in Ohio are required to have an agent for service of process, who receives legal correspondence and enables the corporation to receive adequate notice of pending legal action.
What is a foreign professional corporation in Ohio?
A foreign professional corporation in Ohio is a professional corporation that is incorporated in another state but seeks to do business in Ohio, and additional filings in the state of Ohio are required.
How does a foreign professional corporation qualify to do business in Ohio?
A foreign professional corporation must file an application with the Ohio Secretary of State and obtain a foreign registration, detailing its business nature, viability, organizational structures, and references.
Can a professional corporation in Ohio raise capital by selling stock?
Yes, a professional corporation in Ohio can raise capital by selling stock, but health care entities such as medical and your procedures must restrict stockholdings to licensed professionals in those fields.
Are any professional corporation requirements more strigent in Ohio?
Ohio has requirements for individual practice areas in specific fields such as psychology, architecture, engineering, and law that those applying, even members of professional corporations must follow, with strict oversight protocols.

Also Read

How to Save Money While Forming Ohio Professional Corporation

First and foremost, it is crucial to do your research before starting the process of forming an Ohio professional corporation. Understanding the specific requirements and regulations in the state can help you avoid unnecessary expenses and delays. Consulting with a business attorney or using online resources can provide valuable insights into the necessary steps to take.

When it comes to choosing a name for your professional corporation, there are several ways to save money. Instead of commissioning a professional branding agency, consider brainstorming with colleagues or friends to come up with a unique and memorable name for your business. Additionally, conducting a thorough search of existing businesses can prevent potential legal issues down the road.

Another way to save money during the formation process is to handle certain tasks yourself. For example, preparing and filing the necessary documents with the Ohio Secretary of State can be done independently, avoiding costly attorney fees. There are numerous online resources and guides available to assist with this process, making it more accessible for entrepreneurs on a budget.

Additionally, consider using a registered agent service instead of hiring a private individual or law firm. Registered agent services typically cost less and provide the same level of representation for your professional corporation. This can save you money on an ongoing basis while ensuring that you comply with Ohio’s legal requirements.

Furthermore, when it comes to selecting officers and directors for your professional corporation, consider choosing individuals who are willing to serve in multiple roles. This can help you avoid unnecessary expenses associated with hiring additional personnel. By leveraging the skills and expertise of your team members, you can save money without compromising the operational efficiency of your business.

Finally, when it comes to choosing a business structure for your professional corporation, consider the long-term implications of each option. While a traditional corporation may offer certain advantages, such as limited liability protection, it can also come with higher operational costs. Alternatively, an S-corporation or limited liability company (LLC) may be more cost-effective in the long run, depending on your specific needs and goals.

In conclusion, saving money while forming an Ohio professional corporation requires careful planning and consideration of your options. By leveraging online resources, handling certain tasks independently, and exploring cost-effective alternatives, you can set up your business entity without breaking the bank. With a strategic approach and a focus on efficiency, you can save money while building a strong foundation for your professional corporation in Ohio.

Conclusion

Ohio 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 Ohio.

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