Have you thought about starting a company to provide services while protecting yourself from liability concerns? 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.
Indiana professional corporations (PCs) are owned and operated by licensed professionals. Only those who perform services that require a state license may form a PC in Indiana. Here’s how to get started.
Determine whether an Indiana professional corporation structure is right for you
An Indiana PC is a structure formed to provide services by professionals who are licensed in the state. Examples include real estate agents/brokers, architects, financial advisors, and health care professionals.
Is a professional corporation the right choice?
If you have a professional license, you can form an Indiana limited liability corporation (LLC). However, this structure doesn’t offer the same level of protection as a PC.
The corporate structure of a PC offers greater liability protections for shareholders, although they are subject to more complex record keeping and reporting requirements.
How is ownership divided?
Once you’ve decided to start a PC, determine how to divide ownership by designating initial shareholders.
How should the PC be managed?
Create an internal management structure for your PC. Your board of directors and CEO are typically at the top of the management structure. The organization flows downward from that point.
Choose a name for your Indiana professional corporation
Choosing a name for your PC can be tricky. Opt for something catchy and memorable that falls within state naming restrictions.
Your company name must include “professional corporation,” “professional service corporation,” “PC,” or the “PSC” designation. The name you choose must align with your business structure and industry. It may only include the word “medical” if its shareholders are licensed physicians.
First, check the Secretary of State’s business database to see if the name is available. If you find one you like that’s available but aren’t yet ready to file, you can reserve the name via the Secretary of State site for 120 days by completing a form and paying a fee. Or, we can handle this for you with the ZenBusiness name reservation service.
Select an Indiana registered agent
Before you can file your Articles of Incorporation, you’ll need to choose a registered agent for your PC. This individual is designated to accept legal notices (such as subpoenas) as well as documents and correspondence from the Secretary of State on behalf of your company.
Your company’s registered agent must have a physical office in the state of Indiana that operates during standard business hours.
You can be your own registered agent, but it requires you to constantly be in your office during normal business hours. Consider instead working with a professional registered agent. ZenBusiness’s registered agent services provide experienced professionals to serve in this role for your company to minimize the inconvenience.
Complete your Indiana Articles of Incorporation
You, an initial shareholder or a professional incorporator can file your Indiana Articles of Incorporation using Form 4159. Once approved by the state, this document makes your PC official. Include the incorporator’s contact information, license specifics, and the name of each member of the initial board. You can file online, in person, or by mail. There’s a $100 filing fee payable by check, money order, or online.
Establish a corporate record in Indiana
A corporate record is an account of meetings and pertinent decisions made by company board members. The official record should be maintained in a safe location, either at the company’s main business site or on a digital platform such as the cloud.
To satisfy legal requirements, your company’s annual report, called a business entity report in Indiana, should be part of the official record moving forward. We also offer a worry free compliance service to help you remain in good standing.
Designate an Indiana professional corporation board of directors
Initial board members or directors are typically designated during an official meeting. The names should be logged on a signed document and included in the corporate record.
This initial board should serve as indicated in the company bylaws or until shareholders elect a new board. Members must be active in the industry serviced by the company and authorized to form a professional corporation by the relevant regulatory agency.
Create Indiana corporate bylaws
The PC’s bylaws provide guidelines for your company to follow for operational purposes and resolving disputes. This document includes parameters on how shareholders participate in voting. It also dictates membership policies for board members and periods of service.
Creating bylaws is a requirement for all corporations registered in Indiana, although they don’t have to be filed with the state.
Hold first board meeting
Now, it’s time to hold your first board meeting with all members. This is the point at which the board of directors should:
- Approve the company bylaws
- Decide on a bank for the business account
- Designate which members will manage the day-to-day interactions of the company
- Choose tax structures
Handle Indiana tax obligations
Tax requirements vary according to federal, state, and local levels when it comes to business reporting and payment obligations.
You’re required to apply for a federal tax ID number for your business. Also known as an Employer Identification Number (EIN), this number enables your company to bring on staff, open a bank account, and file taxes. You can apply for one through the IRS or right here using the ZenBusiness EIN service.
Part of the initial decision-making process is choosing whether the corporation will remain a C corporation (which is the default) or apply to be taxed as an S corporation.
Most PCs are C corporation entities. Their income is taxed at a corporate rate. Shareholders are also taxed individually on their dividends under this structure.
The S corporation option is restricted to corporations with just one class of stock. S corporation filers must have fewer than 100 shareholders, and none of them can be foreign individuals or business entities. This structure avoids double taxation because profits are only taxed at the individual shareholder level, not the corporate level.
Indiana PCs pay state income tax. Depending on the business type, your business may be liable for other state taxes, such as sales tax or unemployment tax. It’s best to check with the Department of Revenue to determine what they might be.
Your company may also be subject to local taxes at the city or county level that apply to your industry and company type. Check with your local Department of Revenue for more details.
Obtain Indiana business licenses and permits
As a registered business owner, it’s your responsibility to obtain all appropriate licenses and permits for your company.
Moreover, Indiana doesn’t have one general business license, and there’s no centralized place to check on licensing requirements.
Licensing requirements may be set at the federal, state, or local level, so do some research on your chosen industry. To save time, try our business license report service.
Acquire insurance for your Indiana professional corporation
Insurance is an important consideration for every PC. Different types of insurance policies apply based on industry type and other factors, such as whether your business has employees.
General business insurance
Although optional, general liability insurance provides an added layer of protection for your business in case of an accident or injury not related to your services. Work with a qualified insurance agent to determine the best policy for your needs. Depending on your industry type, you may need other types of specialized insurance.
Professional malpractice insurance
Professionals are not required by Indiana law to maintain any malpractice insurance.
The one exception is for medical professionals. As a practical matter, most health care practices decide to purchase coverage anyway, as it allows them access to state-run liability reform programs. To qualify, doctors must maintain a minimal level of malpractice insurance.
Workers’ compensation insurance
With few exceptions, most registered businesses in Indiana are required to carry workers’ compensation insurance if they have employees.
Open a business bank account
Once you’ve filed the appropriate paperwork and established your corporate identity, open a business bank account. This ensures that you keep business assets separate from personal expenses. You’ll likely need your Articles of Incorporation, an operating agreement, and your EIN to complete this step.
Ready to launch your new 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 name, 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.
Indiana Professional Corporation FAQs
What are the filing fees for an Indiana professional corporation?
The filing fee for Indiana Articles of Incorporation is $100. You can pay by check or money order if filing a paper application or by credit card if filing online.
Do I need a lawyer to form an Indiana professional corporation?
No, you don’t need a lawyer to form an Indiana PC, but it can be helpful.
Does Indiana have other professional entity types?
Other professional entities available in Indiana include: Sole proprietorships, general and limited partnerships, limited liability companies (LLCs), and nonprofit corporations.
Can professionals from different fields form an Indiana professional corporation together?
Every member involved in the initial formation of a PC must have a professional license in their field. Professionals may form a PC to deliver related or similar services.