A professional corporation (PC) is a special type of business entity that certain professionals can use to offer their services to the public. As with other business types, there are specific steps you must follow to form an Oregon professional corporation. If you’re looking to start a business with other professionals, ZenBusiness offers a number of convenient and affordable services to help you along the way.
Professional corporations are a specific type of corporation organized specifically to offer professional services. Under Oregon law, this includes:
Each of these professions must be properly licensed either under the laws of Oregon or the laws of another state. In addition to those listed above, Oregon’s professional corporation laws apply to any other person providing similar services requiring a license.
So what does this mean? If you fall into any of the above categories and you’re interested in forming a business, a professional corporation might be a good option for you. Certain professions are limited by special sets of rules which prevent licensed professionals from rendering services alongside non-licensed business partners. For example, the Model Rules of Professional Conduct for attorneys prohibit sharing business interests with non-lawyers. PCs allow these professionals to form corporations with other professionals licensed to provide the same services.
Professionals in Oregon can also form limited liability partnerships (LLPs) and professional limited liability companies (PLLCs). Although similar, PCs, LLPs, and PLLCs are different in a number of ways.
Most notably, PLLCs and LLPs have certain tax benefits. Specifically, the IRS taxes professional corporations at both the entity and shareholder levels. Both LLPs and PLLCs avoid this “double taxation,” making them potential options for tax-conscious business owners.
Another major difference is liability protection. Professional corporations offer more robust protection against personal liability than LLPs and PLLCs, but it does come at a cost; PCs are much less flexible when it comes to the formalities required in their day-to-day operations.
There are two parts to choosing a name for your Oregon PC. First, it’s important to check that no one else has the name you want. After spending time and money developing your business, the last thing you want is to discover that someone else has already registered your business name with the state or secured the domain name you want for advertising online.
The second part of naming your Oregon professional corporation is complying with Oregon’s naming laws. Oregon’s professional corporation’s code requires all professional corporations in the state to contain “professional corporation,” “P.C.,” or “Prof. Corp.” Once you’ve picked and cleared your desired name, you’ll be well on your way to forming your PC.
All registered Oregon businesses are required to designate a registered agent. A registered agent’s responsibility is accepting legal documents, like lawsuit documents or subpoenas, and certain other types of correspondence on behalf of the business.
Registered agents must have a physical street address in Oregon rather than a P.O. box. This can make finding a registered agent more complicated. Fortunately, however, you can take advantage of ZenBusiness’s registered agent services to easily get a registered agent for your professional corporation.
In Oregon, the Articles of Incorporation — the governing document that brings your PC to life — must be filed by an incorporator. An incorporator can be any business entity or a person over 18 years old.
Once you’ve filed your Articles of Incorporation, it’s important to keep a copy in a safe place. These documents can form the start of your corporate record, which will include all future important documents generated by your Oregon professional corporation. Such a record usually includes meeting minutes, important contracts, and other internal documentation about the business’s operations.
The Articles of Incorporation allow the incorporators to designate a board of directors that will become effective once the Articles are filed. Alternatively, the incorporators themselves may meet after filing the Articles of Incorporation to designate a board.
An Oregon PC’s bylaws are the rules under which the PC will operate. Bylaws can include information about how to elect board members, information about shares, and more.
The board of directors named in your Articles of Incorporation (or the incorporators, if no board was specified) must meet after filing of the Articles of Incorporation. At this initial meeting, the board must adopt bylaws, elect officers, and resolve any other issues brought up at the meeting.
At this point, it’s time to get your PC ready for paying taxes. To begin, it’s important to obtain an employer identification number (EIN) from the IRS. This is the ID you will use to file taxes, open a bank account, or hire employees for your professional corporation. You can obtain an EIN online directly from the IRS, or take advantage of our EIN service.
By default, Oregon professional corporations pay taxes as C corporations. This means that they pay taxes on their annual revenue once at the entity level, and then again when shareholders pay taxes on their dividends. Professional corporations that meet certain criteria can alternatively elect to be taxed as S corporations. As an S corporation, your PC becomes a “pass-through” entity, meaning that taxes are paid only on the shareholders’ individual tax returns.
Entities conducting business in Oregon may be subject to the state’s property and excise business taxes, along with any local taxes assessed by towns or municipalities. It’s a good idea to consult a tax professional to check that you’re remaining compliant with the various taxes that could apply to your business.
In addition to registering your business with the Secretary of State, you’ll need to obtain the required licenses or permits for your industry. Different industries have different regulatory authorities, and each may have their own specific licenses or permits.
Unfortunately, there’s no master list of the types of permits available; in fact, regulatory authority is often split between federal, state, and local governments. It’s your responsibility to understand which licenses or permits you need and obtain them before conducting business. But we can help by providing you with a business license report summarizing the licenses and permits you might need based on your location and industry.
Oregon requires certain businesses to carry workers’ compensation insurance and commercial automobile insurance. It’s a good idea for most businesses to also obtain small business liability insurance. Additionally, depending on your profession, you may consider purchasing professional malpractice insurance. If you’re unsure which types of insurance you need, consult an insurance professional.
One of the most important steps in getting your professional corporation ready for business is opening a business bank account. Doing so helps you keep your business’s assets separate from your own, protecting them in the process. In addition, having an official business bank account will give you access to more payment and credit options and help your business look more professional. We can help you get started with a business bank account through our partner, LendingClub.
If you want to form a professional corporation but the process seems overwhelming, don’t worry. ZenBusiness offers a number of convenient and affordable business services to help get your Oregon professional corporation up and running. Contact us today to learn more about how we can help you start and manage your own professional corporation.
Filing fees vary depending on what type of business you’re registering. Additionally, filing fees are frequently subject to change and are often inconsistent between paper and online filing options. For the most up-to-date filing fees, check with the Oregon Secretary of State.
No, hiring a lawyer isn’t required to form an Oregon PC. Many small business owners use a lawyer’s services because the lawyer has experience that makes the process easier. However, hiring a lawyer is expensive and often unnecessary. This is especially true considering the number of business services available from companies like ZenBusiness.
Yes. Oregon also allows professionals to form professional limited liability companies (PLLCs). Compared to professional corporations, PLLCs have more flexibility when it comes to how you operate them, and they enjoy pass-through taxation by default. However, PLLCs do offer less liability protection than professional corporations.
Typically, professionals from one field can’t form an Oregon PC with professionals from another field. However, this rule depends entirely on the regulations that apply to each individual profession. If you’re unsure whether you can start a professional corporation with someone in a different field, consult your profession’s code of conduct or other special rules.
The IRS taxes professional corporations as C corporations by default. However, if your business has less than 100 shareholders, only one class of stock, and meets certain other requirements, you can elect to be taxed as an S corporation instead.
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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