Starting a Professional Corporation in Rhode Island 2024: Ultimate Guide

LLCBase is your go-to place for everything about LLCs, and it's led by Brian Cohan, who's an expert in the field. Brian and our team are here to give you clear and helpful advice on how to set up and manage an LLC. We've been through the process and know the ins and outs. Our articles and guides are based on real experiences, making them practical for you. We're committed to helping you make smart choices for your business. With LLCBase, you're in good hands as you navigate the world of LLCs.

How to Start a Professional Corporation in Rhode Island

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

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

The primary purpose of Rhode Island 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, Rhode Island 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 Rhode Island.

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

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

Who Can File Under Professional Corporation Laws

Under Rhode Island 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 Rhode Island, 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.

Launching a professional corporation in Rhode Island? Get in touch with the best LLC formation services in Rhode Island 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

$0 + State Filing Fee

  • Free LLC Formation

  • Various Legal Services

  • Attorney Advice

$299 + State Filing Fee

  • Single Package

  • Flat Pricing

  • Legal Services

Structure of a Professional Corporation

  • Shareholders: Rhode Island 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 Rhode Island 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 Rhode Island 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 Rhode Island: A Guide

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

Step 1: Appointment of Resident Agent

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

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

Step 2: Choosing the Name of the Corporation

Selecting a name for your Rhode Island 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 Rhode Island 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 Rhode Island 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 Rhode Island 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

Rhode Island professional corporations must file an annual report with the Rhode Island 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 Rhode Island Division 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 Rhode Island Professional Corporation to maintain proper accounting and financial records.

Fees Associated with Professional Corporation in Rhode Island

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

  • State Laws and Regulations: To form a professional corporation in Rhode Island, it is crucial to comply with the state laws and regulations governing professional corporations. The Rhode Island General Laws Title 7 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 Rhode Island is to draft and file the Articles of Incorporation with the Rhode Island 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 $230 for most professions. However, it is essential to check with the Rhode Island 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 Rhode Island. 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 Rhode Island 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 Not available online and $50 mail.
  • Articles of Incorporation: The Articles of Incorporation is a critical document for forming a professional corporation in Rhode Island. 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 Rhode Island 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 Rhode Island may involve other costs, such as:
    • Annual Report: professional corporations must file an initial Statement of Information with the Rhode Island Secretary of State every March 1st of filing the Articles of Incorporation. The filing fee for this form is $50.
    • 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 Rhode Island:

Federal income tax

A professional corporation in Rhode Island 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

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

Tax deductions and exemptions

A professional corporation in Rhode Island 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 Rhode Island

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 Rhode Island 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 type of corporation formed by licensed professionals such as doctors, lawyers, or accountants.
Can I form a professional corporation in Rhode Island?
Yes, you can form a professional corporation in Rhode Island.
What are the benefits of forming a professional corporation in Rhode Island?
The benefits of forming a professional corporation in Rhode Island include personal liability protection, tax advantages, and increased credibility and professional reputation.
What is the process for forming a professional corporation in Rhode Island?
The process for forming a professional corporation in Rhode Island includes filing with the Rhode Island Secretary of State and obtaining professional licenses for all shareholders.
Do I need a lawyer to help me form a professional corporation in Rhode Island?
It is recommended to seek legal advice from a lawyer who has experience with professional corporation formation in Rhode Island.
What is the minimum number of shareholders required to form a professional corporation in Rhode Island?
In Rhode Island, a professional corporation can be formed with one or more shareholders.
Can an individual form a professional corporation in Rhode Island?
No, professional corporations in Rhode Island must be formed by licensed professionals.
What types of licensed professionals can form a professional corporation in Rhode Island?
In Rhode Island, licensed professionals such as doctors, lawyers, accountants, engineers, and architects can form a professional corporation.
Do shareholders in a professional corporation have unlimited personal liability?
No, shareholders in a professional corporation have limited personal liability.
How is a professional corporation taxed in Rhode Island?
A professional corporation in Rhode Island is taxed as a regular corporation, but certain deductions may be available for professional services.
What is the filing fee for forming a professional corporation in Rhode Island?
The filing fee for forming a professional corporation in Rhode Island is $210.
How long does it take to form a professional corporation in Rhode Island?
The process to form a professional corporation in Rhode Island can take several weeks to several months, depending on the complexity of the corporation.
What documents are required to form a professional corporation in Rhode Island?
The documents required to form a professional corporation in Rhode Island include articles of incorporation, bylaws, and professional licenses for all shareholders.
Can a professional corporation in Rhode Island have a dba?
Yes, a professional corporation in Rhode Island can conduct business under a dba, but the dba must be registered.
What are the residency requirements for forming a professional corporation in Rhode Island?
There are no residency requirements for forming a professional corporation in Rhode Island.
Can foreign shareholders be part of a professional corporation in Rhode Island?
Yes, foreign shareholders can be a part of a professional corporation in Rhode Island.
What is the annual report fee for a professional corporation in Rhode Island?
The annual report fee for a professional corporation in Rhode Island is $50.
Can a shareholder be both an officer and director in a professional corporation in Rhode Island?
Yes, a shareholder can be both an officer and director in a professional corporation in Rhode Island.
What happens if a shareholder in a professional corporation dies in Rhode Island?
If a shareholder in a professional corporation dies in Rhode Island, their shares will be transferred according to their will or the state’s intestacy laws.
Can a professional corporation in Rhode Island sue or be sued?
Yes, a professional corporation in Rhode Island can sue or be sued.
What happens if a professional corporation in Rhode Island is dissolved?
If a professional corporation in Rhode Island is dissolved, its assets will be distributed to its shareholders after all debts and liabilities are paid.
Is renewal required for professional licenses in Rhode Island?
Yes, renewal is required for professional licenses in Rhode Island.
What are the penalties for failing to renew a professional license in Rhode Island?
Failing to renew a professional license in Rhode Island can result in fines, license suspension or revocation, and other disciplinary actions.
What happens if a shareholder’s license is revoked in Rhode Island?
If a shareholder’s license is revoked in Rhode Island, they must dispose of their shares within a specified period of time.
Can shareholders loan money to a professional corporation in Rhode Island?
Yes, shareholders can loan money to a professional corporation in Rhode Island, but the loan must be properly documented and approved by the board of directors.
What happens if a shareholder declares bankruptcy in Rhode Island?
If a shareholder declares bankruptcy in Rhode Island, their shares may be sold to pay off creditors.
Can a professional corporation in Rhode Island hold property?
Yes, a professional corporation in Rhode Island can hold property.
What is the benefit of forming a professional corporation in Rhode Island?
Rhode Island has a favorable tax climate for businesses, which includes professional corporations. Also, forming a professional corporation offers liability protection and other legal benefits for licensed professionals.
What are the requirements for forming a professional corporation in Rhode Island?
To form a professional corporation in Rhode Island, licensed professionals must file Articles of Incorporation with the Rhode Island Secretary of State’s office and obtain any necessary licenses or permits for their profession.
How much does it cost to form a professional corporation in Rhode Island?
The cost of forming a professional corporation in Rhode Island varies and includes filing fees and potential legal fees.
How can I find a professional corporation lawyer in Rhode Island?
A great way to search for a professional corporation lawyer in Rhode Island is to use an online legal directory or contact the Rhode Island State Bar Association for a referral.
Do shareholders of a professional corporation need to be licensed in Rhode Island?
Yes, shareholders of a professional corporation in Rhode Island must be licensed professionals in the state.
Can a professional corporation in Rhode Island have more than one profession represented as shareholders?
Yes, Rhode Island allows a professional corporation to have shareholders from different professions, but each shareholder’s profession must be licensed in Rhode Island.
Are professional corporations in Rhode Island taxed differently than regular corporations?
No, professional corporations are taxed the same as regular corporations in Rhode Island.
What is the process to open a professional bank account for a Rhode Island professional corporation?
To open a professional bank account in Rhode Island for a professional corporation, the corporation must provide the necessary documents, such as articles of incorporation, business license, and identifying information for all shareholders and managers.
Does Rhode Island require professional corporations to carry liability insurance?
Rhode Island does not require professional corporations to carry liability insurance, but it is highly recommended for licensed professionals to protect their assets and reputation.
Are there any ongoing compliance requirements for professional corporations in Rhode Island?
Yes, professional corporations in Rhode Island are required to file annual reports with the Rhode Island Secretary of State’s office and maintain proper business licenses and permits for their profession.
Can non-professionals invest in a professional corporation in Rhode Island?
No, Rhode Island requires that all shareholders in a professional corporation must be licensed professionals.
What are the annual reporting requirements for professional corporations in Rhode Island?
Rhode Island requires professional corporations to file an annual report that includes the corporation’s name, business and mailing address, number and class of shares issued and outstanding, and the names and addresses of all directors and officers.
Are there any restrictions on advertising for professional corporations in Rhode Island?
Yes, licensed professionals in Rhode Island are governed by advertising regulations and must comply with the rules for advertising set by their respective licensing board.
Is a professional corporation liable for all debts and actions made by the licensed professionals who are shareholders or employees?
No, professional corporations are structured to protect each shareholder’s assets, and the corporation itself is typically liable for any debts or actions made in the corporation’s name.
Can a professional corporation in Rhode Island be owned entirely by one shareholder?
Yes, a professional corporation in Rhode Island can be owned entirely by one shareholder, but that shareholder must be a licensed professional in the state.
Is a professional corporation required to hold annual meetings?
Professional corporations in Rhode Island are required to hold an annual meeting of the shareholders and directors to discuss business and vote on important matters.
How can I tell if the name I want to use for my Rhode Island professional corporation is available?
Visit the Rhode Island Secretary of State’s website to perform a business name search and check if the desired name is available.
What is the purpose of including a registered agent in forming a Rhode Island professional corporation?
Having a registered agent for a Rhode Island profession corporation provides a designated point of contact for the corporation to receive important legal and tax documents from the state. A registered agent can be an individual who resides in Rhode Island or a business entity authorized to do business in the state.
Can a professional corporation in Rhode Island accept investment money from friends and family who are not licensed professionals?
No, Professional corporations in Rhode Island can only issue stock and accept investors who are licensed professionals.
Do shareholders have personal liability protection in a Rhode Island professional corporation?
Yes, shareholders in a Rhode Island professional corporation have limited liability protection based on their invested shares and the corporation’s structure.
Can a Rhode Island professional corporation have an out-of-state registered agent?
No, a Rhode Island professional corporation must have a registered agent that resides in Rhode Island or is authorized to do business in the state.
How do I know if my profession is eligible for a professional corporation in Rhode Island?
Rhode Island law allows a broad list of professions to form professional corporations, so check with the Rhode Island Secretary of State’s office or consult with a professional corporation lawyer to verify eligibility.
Can I form a professional corporation in Rhode Island if I am not licensed in the state?
No, only licensed professionals are allowed to form a professional corporation in Rhode Island.
What is an S-Corporation election, and how does it impact a Rhode Island professional corporation?
An S-Corporation election is a tax classification option that allows the corporation’s income and losses to be passed through to shareholders to avoid double taxation. Rhode Island recognizes S-Corporation status and below for those who wanted to choose this climate.
Does Rhode Island have a minimum-capitalization requirement for professional corporations?
No, Rhode Island does not have a minimum capitalization requirement for professional corporations.
Can an out-of-state licensed professional form a professional corporation in Rhode Island?
Yes, as long as the licensed professional meets the eligibility requirements and complies with all state regulations and laws to form a professional corporation in Rhode Island.

Also Read

How to Save Money While Forming Rhode Island Professional Corporation

One of the most important steps to saving money when forming a professional corporation in Rhode Island is to do your research. While it may be tempting to hire an expensive attorney or professional services firm to handle the process for you, there are many resources available online that can help you complete the paperwork yourself. There are step-by-step guides, templates, and even online services that can help you navigate the incorporation process without breaking the bank.

Another way to save money when forming a professional corporation is to carefully consider the structure of your business. Choosing the right structure will not only save you money in the short term, but it can also have long-lasting financial benefits. For example, forming a Limited Liability Company (LLC) instead of a traditional professional corporation can save you money on both taxes and administrative costs. An LLC also allows for more flexibility in management and operations, which can be a huge benefit for small businesses.

Once you have determined the structure of your professional corporation, it’s important to carefully consider your choice of registered agent. A registered agent is responsible for receiving legal documents on behalf of your business, so it’s crucial to choose someone reliable and reputable. While it may be tempting to hire a professional registered agent service, this can be an unnecessary expense. Instead, consider appointing yourself or a trusted employee as the registered agent to save money on this ongoing cost.

Finally, it’s essential to carefully review all contracts and agreements you enter into during the incorporation process. Hiring a lawyer to review these documents can be expensive, so consider doing some research online or seeking the advice of a trusted advisor instead. By being diligent in reviewing these documents yourself, you can ensure that you are not overpaying for services or committing to unnecessary expenses.

In conclusion, saving money when forming a professional corporation in Rhode Island is entirely possible with careful planning and consideration. By doing your research, choosing the right structure, appointing a reliable registered agent, and reviewing contracts yourself, you can ensure that your business is set up for success without breaking the bank. Remember, every dollar you save during the incorporation process is a dollar that can be reinvested back into your business for future growth and success.

Conclusion

Rhode Island 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 Rhode Island.

Leave a Comment