*Last Updated: July 2023*
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Forming a professional corporation in Tennessee requires following certain procedures and meeting certain requirements set by the state. This guide aims to provide a step-by-step process for professionals who wish to establish and operate a professional corporation in Tennessee in 2023.
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What is a Professional Corporation?
A professional corporation (PC) is a specific type of business entity designed to provide professional services in fields such as law, medicine, architecture, engineering, and accounting. Unlike a regular corporation, a PC is owned and operated exclusively by licensed professionals in the respective field. This corporate structure offers liability protection to individual practitioners and provides a formal business structure to enhance credibility and professionalism.
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Step 1: Choose a Name for Your Professional Corporation
Choosing the right name for your professional corporation is crucial. Ensure the name clearly indicates the professional nature of your entity, ends with "PC" or a similar valid abbreviation, and complies with Tennessee's naming requirements. Verify the availability of the name by conducting a search through the Tennessee Secretary of State’s online database.
Step 2: Eligibility Criteria
To form a professional corporation in Tennessee, it is necessary to fulfill certain eligibility requirements. Professionals intending to create a PC must hold a valid license to practice their respective profession and comply with all relevant state board regulations.
Step 3: Professional Services
Clearly define the professional services your corporation will provide. For instance, if you intend to establish a law firm, specify whether it will specialize in family law, corporate law, or other practice areas. It is vital to maintain the professionalism and integrity expected within your chosen field.
Step 4: Draft Articles of Incorporation
Prepare the articles of incorporation, the founding document that establishes your professional corporation in Tennessee. The articles must include relevant information, such as the corporation's name, purpose, location of the principal office, duration, and the names and addresses of individuals forming the corporation.
To save time and ensure accuracy, consider consulting an attorney or utilizing online legal services to assist in drafting the articles of incorporation.
Step 5: File the Articles of Incorporation
Once the articles of incorporation are complete, file them with the Tennessee Secretary of State by submitting the necessary forms along with the required filing fee. As of 2023, the filing fee for a professional corporation in Tennessee is $100.
After submission, the Secretary of State will review the articles for compliance. If approved, you will receive a Certificate of Incorporation in return. This document serves as proof that your professional corporation is officially registered with the state.
Step 6: Appoint Directors and Officers
Following the establishment of the professional corporation, appoint directors and officers who will oversee the management and operations of the entity. Electing qualified individuals familiar with the profession and business management is crucial for success.
Step 7: Obtain Required Licenses and Permits
While forming a professional corporation in Tennessee may legally establish your business entity, it does not nullify the need for obtaining appropriate professional licenses and permits. Ensure you meet all licensing requirements set by the relevant state board or professional licensing agency.
Step 8: Establish Bylaws
Crafting relevant bylaws is essential for establishing guidelines regarding how the corporation will operate, make decisions, and address potential conflicts. Clearly outline procedures for meetings, roles and responsibilities, voting structure, and other pertinent matters.
Step 9: Register for State Taxes
Professional corporations must comply with Tennessee's state tax requirements. Register with the Tennessee Department of Revenue to obtain a Tennessee Tax Identification Number and to obtain guidance on applicable state tax obligations.
Step 10: Secure Business Insurance
Professional liability insurance, commonly known as errors and omissions (E&O) insurance, safeguards against claims and damages arising from professional errors or negligence. Acquire adequate insurance coverage to protect your professional corporation and individual practitioners.
Conclusion
Establishing a professional corporation in Tennessee involves following specific procedures and requirements to ensure compliance with state regulations and promote professionalism within your chosen field. By following this step-by-step guide, licensed professionals can confidently form a professional corporation in Tennessee and embark on a successful business venture in 2023. Remember to consult with legal, accounting, and professional advisors throughout the process to ensure compliance with all applicable laws and regulations.
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