While most business entity types are available to everyone, professional corporations (PCs) are a special type reserved specifically for professionals. If you’re interested in forming a New Hampshire professional corporation, ZenBusiness has several resources to make the process as headache-free as possible.
No matter what type of business you’re starting, deciding on the right structure is important. Professionals in New Hampshire actually have two options: professional corporations and professional limited liability companies (PLLCs).
“Professional corporations” allow people who provide “professional services” to form a business and work together. In general, professional services are those that can only be lawfully performed by someone with the proper license or certifications. Examples include:
In short, any profession requiring a license, registration, or other authorization before practicing can form a professional corporation.
So should you form a PC or a PLLC? Realy, it depends on the needs of your business. While similar, PCs and PLLCs do have a couple of key differences. One of the largest is that while PLLCs are easier to form, they don’t offer the same high-level liability protection that a PC does. Another is taxation. Just like their non-professional counterparts, PCs experience “double taxation” — that is, they are taxed at both the entity level and on the owners’ individual tax returns — by default. PLLCs on the other hand are automatically subject to pass-through taxation — the tax liability passes through the corporation and is taxed only on the owners’ individual tax returns.
One way to figure out if a New Hampshire professional corporation is the right structure for your business is to figure out how you will divide ownership between the shareholders and who will manage the company. For example, who will be shareholders and in what proportions? If someone will have a larger number of shares, who will it be? When it comes to day-to-day operations, who will serve as directors?
Naming a professional corporation is a little trickier than just picking something you like. New Hampshire’s professional corporation laws impose certain restrictions on what you can name your PC. Specifically, the name of your New Hampshire PC must end with P.C., P.A., or a similar abbreviation of the words “professional corporation” or “professional association.”
Once you’ve decided on a name, the next step is to make sure no one else is already using it. If you’re planning to build a website to promote your business, ZenBusiness also offers an affordable domain name registration service to help get you up and running.
New Hampshire law requires every professional corporation to have a registered agent. The registered agent receives legal notices and certain correspondence on behalf of your PC.
A registered agent can be either an individual or another business. In either case, the registered agent must be able to conduct business in the state and needs to be available during business hours.
If you’re not sure how to find a registered agent in your area, ZenBusiness can help with our registered agent services. We can connect you with a registered agent in New Hampshire so you can stay compliant with state requirements.
As with other corporations, forming a New Hampshire professional corporation requires filing Articles of Incorporation with the New Hampshire Secretary of State. Your Articles of Incorporation include information such as:
Filing the Articles of Incorporation in New Hampshire requires one or more incorporators. New Hampshire laws permit individuals and business entities to act as incorporators.
Professional corporations must have a board of directors that will designate the officers who will run the business. Although not required, the Articles of Incorporation may include the names of “initial” directors who will finish forming the business after the incorporators file the Articles of Incorporation. If the Articles don’t appoint any initial board members, the incorporators may meet to carry out this function.
Once formed, the board of directors is responsible for appointing officers, adopting bylaws, and carrying out any other business brought before it.
Professional corporations operate pursuant to the rules set out in their bylaws. In general, bylaws govern the specifics of how the PC operates, typically with provisions covering the board of directors, meeting rules, elections, and conflicts of interest.
Once you’ve elected a board of directors, it’s time to hold the first board meeting and establish a corporate record. Your corporate record is the official record of your business’s creation and operation. A corporate record often includes official documents like the Articles of Incorporation, bylaws, and meeting minutes.
It’s up to you how you store this information, but because it may contain sensitive material, business owners often keep multiple copies in different locations for security purposes.
Like all businesses, your new PC now has to pay taxes on its earnings. The first step in this process is obtaining an employer identification number (EIN) from the IRS. You will need an EIN to file taxes, open a business bank, or hire employees.
Once you have an EIN, it’s important to make sure you have at least a basic understanding of the tax obligations of your professional corporation.
The IRS taxes professional corporations as C corporations by default. This means that your PC will pay taxes once on its annual earnings, and then its shareholders will pay taxes again on their dividends.
As long as your PC meets certain requirements, you can elect taxation as an S corporation instead. S corporations are “pass-through” entities. Unlike standard C corporations, the IRS taxes an S corporation’s earnings only once at the shareholder level. But be aware that S corporations enjoy this tax benefit in exchange for much greater restrictions on their size and how they operate.
All businesses operating in New Hampshire must pay the business profits tax (BPT). The New Hampshire Department of Revenue Administration website provides more information about New Hampshire’s business taxes and how to file.
Local municipalities assess a property tax on owners of New Hampshire property. It’s also important to check with your county, city, or other local authority to identify other taxes that may apply in your area.
Because professional corporations are reserved for professionals, making sure they maintain the proper licenses and permits is critical to staying compliant. Which licenses you may need is highly dependent on your industry and the nature of the work that you do.
Unfortunately, there’s no specific place to find which licenses you need. Different levels of government may each have their own license types. As a result, it’s your responsibility to find out and obtain which licenses you need. ZenBusiness can provide you with a business license report summarizing the licenses and permits you will need based on your location and type of business.
As a professional corporation, your business will likely need to acquire specialized insurance specific to your profession. For example, doctors or lawyers operating a professional corporation will need medical or legal malpractice insurance, respectively.
In addition, New Hampshire law requires all employers to provide workers’ compensation insurance. And it’s always a good idea to obtain some form of general liability insurance. Because of the number of insurance options available, consulting with a qualified insurance agent is a good idea if you’re at all unsure about what types of insurance you need.
It’s important to have a business bank account that keeps your business funds separate and distinct from personal funds. Having a business bank account adds credibility to your business. It can also help you keep accurate records for accounting and taxation purposes.
One of the hardest parts of starting a small business is completing all the steps necessary to stay compliant with state law and set up your business for success. But ZenBusiness can help you take some of the guesswork out of this process with our various business services, so you can focus on what’s important.
Whether you need to get a registered agent or open a business bank account, ZenBusiness has you covered.
New Hampshire offers PC filings online, and the fee depends on what types of documents you’re filing. For up-to-date fee information, it’s best to check directly with sos.nh.gov.
A lawyer isn’t required to form a professional corporation in New Hampshire. Properly licensed professionals can form their own PC themselves by filing the proper forms.
Yes. In addition to professional corporations, New Hampshire allows professionals to form professional limited liability companies, or PLLCs. Although similar, PCs and PLLCs are different in how they’re taxed, how they operate, and the level of liability protection they provide.
Yes, but only if the professional fields are related and their respective applicable state professional licensing laws allow it. For example, New Hampshire’s Rules of Professional Conduct for attorneys prohibit practicing in a professional corporation if any nonlawyer is a director or officer or otherwise has an interest in the professional corporation.
By default, New Hampshire PCs are taxed as C corporations. You will only be taxed as an S corporation if you obtain “S” status from the IRS. As long as you meet the requirements for S election under the Internal Revenue Code, you can elect to have your New Hampshire PC taxed as an S corporation rather than a C corporation.
Disclaimer: The content on this page is for information purposes only and does not constitute legal, tax, or accounting advice. If you have specific questions about any of these topics, seek the counsel of a licensed professional.
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