A Georgia professional corporation is one that’s set up and run by licensed professionals. It offers a higher level of legal protection compared to an LLC, and it has a different tax structure. However, it can be more complex to set up. Here’s what you need to know about forming one.
Determine whether a Georgia professional corporation structure is right for you
All businesses should consider a formal entity structure, but there are some that would do better as a corporation than other types. See the ZenBusiness entity guide to see what’s right for you. A professional corporation in Georgia is a corporation formed by licensed professionals in the state of Georgia. A limited liability company (LLC) combines the tax benefits of a partnership with added liability protection.
You have to study both options and consider the current size and future plans of your business. Small owner-managed businesses may prefer LLCs to avoid corporate formalities. On the other hand, if your business is larger and plans to attract financial investors, starting a Georgia PC may be advisable.
How will ownership be divided?
The ownership of the corporation is divided into shares with the owners referred to as shareholders. Each shareholder is issued a number of shares corresponding to their percentage of ownership.
How will the PC be managed?
The shareholders appoint a board of directors that’s responsible for devising strategies to drive the company forward. The directors then elect officers to help run the corporation on a day-to-day basis.
Choose a name for your professional corporation
Choosing a name for your professional corporation is an essential step in the incorporation process. The name should meet the legal requirements set by the state and communicate the type of business you are in. One of the most important legal requirements is including the words “associated,” “professional association,” or “professional corporation,” or an approved abbreviation, such as “P.C.”
Your preferred name might already be taken, so you first need to check its availability. You can search for the availability of names through the Corporations Division business name database. If you find a good available name and don’t want someone else to claim it before you finish filing your paperwork, you also can reserve the name for a fee online at the Georgia Corporations Division website or by filing a Name Reservation Request by mail. If you’d rather have us do that for you, all you have to do is visit ZenBusiness’s name reservation page to submit your preferred name.
You may also want to think about finding a domain name that aligns with your business name so that your website can be found more easily. Visit ZenBusiness’s domain name registration service to secure a domain name that matches your Georgia professional corporation’s name.
Select a Georgia registered agent
After choosing your name, you’re required by law to appoint a registered agent who will receive legal notices on your PC’s behalf. Anyone, including yourself, a shareholder, or an officer in your corporation, can serve as the registered agent. The main requirements are that they are authorized to conduct business in Georgia, have a physical office address, and are available during regular business hours.
To avoid complications and save time, you can engage the services of a proven registered agent provider, such as ZenBusiness’s registered agent services, to help you stay in compliance.
Complete your Georgia Articles of Incorporation
Georgia Articles of Incorporation are the documents used by the state of Georgia to register professional corporations. An incorporator is responsible for ensuring a corporation gains legal recognition by filing and submitting the Articles of Incorporation.
The incorporator can either be one of the initial directors or an agency specializing in this line of work. Since Georgia doesn’t provide forms for the Articles of Incorporation, you’ll need to draft your own, which can be tedious. If you complete the process yourself, the filing fee for the Articles of Incorporation is $100 online and $110 for paper submissions. Multiple payment options are available depending on how you file.
You must also publish a notice of intent to incorporate in a local newspaper once a week for two consecutive weeks, including the corporation’s name, name of the registered agent, and address of the registered office (i.e., the location of the registered agent) in Georgia. For further instructions, see the “Publication of Notice of Intent to Incorporate” section of the Filing Procedures for Forming a Georgia Corporation on the Georgia Secretary of State website.
Establish a corporate record in Georgia
Georgia requires all professional corporations to document and keep a permanent record of all important decisions. These records should be kept in a secure location. Information might include your Georgia Articles of Incorporation, bylaws, stock transfer documents, and minutes of meetings.
Designate a board of directors
Once they’re elected, information about the board of directors should be submitted in a signed document and filed in the corporate record. This board will serve until the first annual general meeting in which the shareholders will elect a new board. Members of this board must be professionals in the field in which the PC was formed.
Create corporate bylaws
Corporate bylaws are the internal rules that govern how the Georgia professional corporation will be run. This document should be drafted and signed by the initial directors and filed in the corporate record.
Hold the first board meeting
With the board of directors and corporate bylaws in place, the first meeting can be arranged. During this meeting, the directors will:
- Review and adopt the bylaws
- Appoint corporate officers
- Issue stock
Handle Georgia tax obligations
Federal requirements: You must have a federal tax ID number (EIN) to operate a professional corporation. It’s needed to file corporate tax returns and complete other activities. You can get one through ZenBusiness or the IRS.
State requirements: Your corporation is required to pay corporate income tax. If you apply and qualify to be taxed as an S corporation, profits will only be taxed at the individual shareholder level and not the corporate level. Also, Georgia corporations have to pay a corporation net worth tax. See the Georgia Department of Revenue website for more information.
Local requirements: Contact your local government offices to find out any local tax responsibilities your corporation has.
Obtain Georgia business licenses and permits
Georgia doesn’t issue any general licenses/permits on a statewide level. Licensing typically occurs at the local level or through industry-specific boards. It’s your responsibility to obtain all the necessary licenses and permits for your corporation. Our business license report service can get you started by providing a list of all necessary licenses and permits for your business.
Acquire insurance for your professional corporation
The three main insurance types for your corporation are:
- General business insurance
- Professional malpractice insurance
- Workers’ compensation insurance
General business insurance helps cover costs for property damage claims, medical expenses, and settlements, while professional malpractice insurance protects you from negligence claims. Neither are legally required, but both are recommended. Workers’ compensation offers wage replacement and medical benefits to injured workers. It’s not required if the PC has fewer than three employees.
Open a business bank account
The corporation’s bank account should be separate from those of the owners. Contact your preferred bank, and submit the required documents to open your corporation’s bank account. You’ll likely need your Articles of Incorporation and an EIN.
Ready to kickstart your business?
At ZenBusiness, we are proud to support small businesses through a variety of different tools and services. Whether you need a registered agent service, want to reserve a business name, or are looking to register a domain, our goal is to help you stay on the road to success. Check out our services and contact us today to see how we can help you grow your company.
Georgia Professional Corporation FAQs
What are the filing fees for a Georgia professional corporation?
The fees are $100 for online filing and $110 for mail/in-person filing. Paper filings should be sent with a check or money order payable to the Secretary of State.
Do I need a lawyer to form a professional corporation?
No. However, if you have any doubts or questions, you should consult a lawyer for clarification.
Does Georgia have other professional entity types?
You can start entities such as LLC, general partnerships, and limited liability partnerships, but these aren’t specific to professionals. Georgia doesn’t offer PLLCs.
Can professionals from different fields form a Georgia professional corporation together?
No. The initial founders of a Georgia PC must be licensed professionals in the field for which the corporation was formed. An exception exists for firms specializing in architecture, engineering, and surveying.