If you are thinking about creating a professional corporation (PC), you have a lot to consider. PCs are owned and operated by licensed professionals.
Only those who perform services that require a state license can form an Ohio professional corporation. There is a process to follow to help you decide if a professional corporation is right for you and to help you set it up legally. 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. If you want to learn more about establishing a PC, follow the steps below.
Determine whether an Ohio professional corporation structure is right for you
In Ohio, licensed professionals can form a limited liability company (LLC) or a professional corporation, also called a professional association. These entities can provide professional services as long as each owner or shareholder has a qualifying license. Before you decide if an Ohio professional corporation is right for you, there are some things to think about. Who will run and operate it? How will the shares be divided, and who will manage it? If you decide you’re ready to form your corporation, follow these steps.
Choose a name for your Ohio professional corporation
The first thing you need to do is choose a name. You must make sure that no other corporations or businesses in Ohio are using your desired name by checking with the Secretary of State. However, there are few naming restrictions other than that the name mustn’t be misleading, and it must include the words “Company,” “Co.,” “Corporation,” “Corp.,” “Incorporated,” or “Inc.” as required by Ohio Revised Code §1701.05. Legal associations must contain the words “Co., Lpa” or “A Legal Professional Association.”
The state charges $39 to register and hold a business name for 180 days. You can search for and reserve a business name and reserve a domain name to match it with help from ZenBusiness’s name reservation and domain registration services.
Select an Ohio statutory agent
You’ll need to appoint a statutory agent (known as a “registered agent” in most states) for your professional association. This is someone who will receive legal notices and official documents from the Secretary of State on your behalf. They must have a business office in Ohio and must be available there during all normal business hours. While you might be tempted to be your own statutory agent, it may not be a good idea. If you’re not willing to stay in your office all day, it’s better to appoint someone else to be your statutory agent. ZenBusiness’s registered agent services can help you find one.
Complete your Ohio Articles of Incorporation
The Articles of Incorporation are the official documents that form a corporation. In Ohio, you’ll need to complete and submit your own forms, or you may have an incorporator to handle this task for you. The incorporator is the person who fills out this paperwork and makes sure all the necessary details and information about the corporation are included.
To complete your Articles of Incorporation, you’ll need the following details:
- The name of your company
- The primary profession
- Principal business address
- Effective operating date
- Number, type, and value of the initial shares
- The value of the initial stated capital
- Contact information for your statutory agent
- Signatures from the majority of incorporators
Filing can be submitted either online or by mail with a $99 filing fee. If submitting a paper application, payments should be made by check or money order to the Ohio Secretary of State.
Establish a corporate record in Ohio
Once your corporation is formed, you’ll start receiving mail. Important documents, minutes from board meetings, and other relevant information should be kept with your corporate record. You’ll need to keep all your mail and records organized and easy to find if you need to access them. It’s a good idea to use software that allows you to organize, store, and access your documents and important information in the cloud. You can also choose to organize paper documents in a binder or filing cabinet. For additional assistance, consider signing up for our worry free compliance service.
Designate an Ohio professional corporation board of directors
Your corporation will need a board of directors. You can designate or appoint them before the corporation begins doing business. You may appoint one or more, but usually three, directors depending on the size of the company and number of shareholders. New directors can be added or swapped out at a later time if desired.
Create Ohio corporate bylaws
The directors will need to establish the corporate bylaws. These are the rules that the corporation will follow. They should detail how the business will be run, who will have what powers, and how certain issues will be resolved. Other things that the bylaws should include are:
- How shareholders will vote
- The number of directors who will be appointed
- How the directors will be elected
- Which roles will be appointed
Hold first board meeting
Once the directors have been chosen, then the first board meeting will take place. This is where the planning happens. At the meeting, directors will review the bylaws and designate officers for specific tasks. They’ll also approve the issuance of stocks and decide how the professional corporation will be taxed. The details of this meeting should be recorded and distributed to each board member, so they can approve of them. A copy of these minutes should also be kept in the corporate records to satisfy regulatory requirements.
Handle Ohio tax obligations
Professional corporations in Ohio need to have an EIN to do business. The EIN is a federal Employer Identification Number, it’s how the IRS keeps track of the company. An EIN is needed to pay employees, file taxes, and open business accounts. You can apply for an EIN with the IRS or let ZenBusiness handle this for you.
You’ll also need to decide if the corporation would rather be taxed as a C corporation or S corporation. Most for-profit corporations are taxed as C corporations. In this case, profits are taxed at the corporate level, and shareholders will also be taxed at the personal level. If you choose to be taxed as an S corporation, you must have less than 100 shareholders and need to meet certain requirements to avoid double taxation. Other taxes may be due at the local, state, and federal level.
Obtain Ohio business licenses and permits
Ohio doesn’t require a professional association to obtain a general business license to operate in the state. However, depending on the type of business, there may be other licenses and permits that are needed. You’ll need to find out which licenses and permits are needed for your industry. You can apply for each of them separately. Our business license report service helps you determine these requirements at a glance.
Acquire insurance for your Ohio professional corporation
Ohio requires most corporations with one or more employees to have workers’ compensation coverage, although there are some self-insurance exemptions. You may also choose to have other types of optional insurance to protect your organization, such as general liability coverage and professional malpractice insurance. If you are not sure what type of insurance to get, speak with a professional agent for help choosing the right policy.
Open a business bank account
Once your corporation has been approved in Ohio, you’ll want to open a business account. You’ll need to have your tax information, including your federal EIN and other business documents, on hand to open the account. The business account should be separate from any personal accounts and used only for business purposes.
Ready to start 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 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.
Ohio Professional Corporation FAQs
What are the filing fees for an Ohio professional corporation?
The initial filing fee is $99. If you need expedited service, you may pay between $100 to $300 more. Filings can be submitted online at www.OhioBusinessCentral.gov or mailed to the Secretary of State at the address on the form. Paper applications must be submitted with a check or money order. Credit cards are accepted online.
Do I need a lawyer to form an Ohio professional corporation?
No, you don’t need a lawyer to form a corporation in Ohio, but you may use one if you choose.
Does Ohio have other professional entity types?
Yes, Ohio does have other business entities for professionals, including professional limited liability companies.
Can professionals from different fields form an Ohio professional corporation together?
Professional corporations must provide a particular service. Additionally, counselors and medical professionals may not offer combined services with other unrelated professionals according to state law.