What is a Rhode Island professional corporation? It’s a formal business structure that allows licensed professionals to form a corporation dedicated to providing certain skilled services. 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.
Also known as PCs, professional corporations are entities owned by licensed professionals. It’s common for a group of qualified professionals, such as physical therapists, to set their sights on opening a joint practice. Here’s how to form a Rhode Island professional corporation in just a few easy steps.
Doctors, lawyers, attorneys, and engineers are licensed professionals along with numerous other licensed vocations. If you have one of these credentials, you can start a professional corporation or a standard Rhode Island LLC since Rhode Island doesn’t have a formal PLLC option.
LLCs are easy to form, but professional corporations offer more liability protection, which is important for licensed professionals. Your corporation will need shareholders. The Articles of Incorporation that establishes your business requires you to stipulate how to distribute shares. You’ll need to decide who to appoint to the board of directors and how they’ll manage your business.
Be open to a variety of business names since the top choice for your new company name might already be taken. Your name must include one of the following words: professional corporation, limited, or incorporated. Certain abbreviations like P.C. are also acceptable according to the Rhode Island Business Corporation Act.
To check availability, search the Secretary of State’s business information database. Once you’ve selected a suitable name, you have the option to reserve it through the Secretary of State for 120 days per state law. You can also use our domain name service to help you claim a website with a matching URL address.
A resident agent, called a registered agent in most states, is an individual who receives legal documents, including subpoenas and summons, on behalf of the company. Agents also receive official correspondence from the Secretary of State, and they’re required for all Rhode Island professional corporations.
Registered agents must have a physical location within the state, and the entity must be available during business hours. ZenBusiness can assist with sourcing a Rhode Island registered agent and help with other compliance services. While you can be your own registered agent, hiring a commercial provider saves time and lets you focus on serving your clients.
You can’t launch a professional corporation without filing your Articles of Incorporation. These are a set of formal legal documents requiring vital details about your venture. You’ll need the name of your registered agent, your contact details, the initial amount of stock, and the names of the shareholders. All of this information is public record, so it’s important to supply accurate information.
You can complete this process yourself, designate another shareholder, or hire a professional incorporator to handle the process. You can file online, by mail, or in person at the Secretary of State office in Providence. There’s a $230 filing fee for PCs with less than 75 million shares. Checks are required for mail applications. Credit card payments are accepted online, and multiple payment options are available in person.
Corporate records are needed to comply with government regulations and to protect your business reputation. Corporate records are basically a formal log of company-wide decisions, operations, contracts, actions, and meetings. These records are required to comply with state and federal requirements.
Next, it’s time to form a board of directors. It must be comprised of licensed professionals in the same field, and can include the PC’s incorporator as one of its initial directors. After the first board meeting, the PC is free to vote on and appoint new qualified directors.
Every company should have a set of internal rules to ensure a solid foundation for growth. Corporate bylaws stipulate the various roles of each board member and the management structure. In short, the bylaws indicate how the company runs. Incorporating the smallest details in your bylaws can prevent disputes down the line. The bylaws should be kept in your corporate record.
Board meetings are required to clearly define company structures and roles. These board meetings will determine various action points and should be noted on your public records. The initial board meeting is important for ratifying bylaws and making tax elections.
Professional corporations have various tax obligations at the federal, state, and local level. When businesses first launch, they are given a C corporation status. C corporations need to file a RI1120C form and pay the annual business tax. Rhode Island’s business corporation tax is normally 7% of net income.
There are different tax laws for S corporations since shareholders are taxed only as individuals with this arrangement. To file your tax returns, all businesses need an Employer Identification Number from the IRS. The EIN is equivalent to a Social Security number for a business. ZenBusiness can help you apply for one today.
To operate your PC, you need to make sure that you have the correct industry-specific licenses for your profession. In Rhode Island, there’s no general statewide license. Credentials may be granted by local authorities or industry-specific boards. Use our business license report service to learn more about these requirements.
In business, you need to protect your company and assets. It goes without saying that a range of insurance policies should be taken out. General business insurance is recommended, and malpractice insurance is mandatory for health care providers. Don’t forget to look into workers’ compensation insurance, which is required for most businesses with one or more employees.
To open a business bank account, you must have an EIN. You’ll likely need your Articles of Incorporation or another document showing that you have authority to open an account for 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 or are looking to register a domain, our goal is to help you succeed. Check out our services and contact us today to see how we can help you grow your company.
The filing fee for the Articles of Incorporation needed to form a professional corporation in Rhode Island is $230 if your organization has less than 75 million shares. Payment options vary depending on whether you’re filing by mail, online, or in person. Additionally, all corporations must file a Rhode Island annual tax report, which carries a $50 fee. It’s important to check if there are other miscellaneous costs involved during the filing process.
In Rhode Island, you’re not legally required to hire a lawyer. When it comes to business matters, it’s always good to consult a lawyer for advice and to draft documents. It’s best to cover all bases when establishing a professional corporation.
Yes. Licensed professionals can form an LLC that provides professional services since Rhode Island does not have a specific PLLC designation. Forming an LLC offers more flexibility in regard to taxation and is less stringent with management. It’s also quite straightforward to form. On the downside, it doesn’t offer as much legal or financial protection from losses and liabilities.
No. Shareholders, directors, and appointed officers need to operate within the same field. The only leeway is with written approval from an industry-related regulatory board.
By default, corporations are registered as C corporations. You’ll be taxed as a C corporation unless you file an S corporation election. The change from a C corporation to an S corporation can be done shortly after forming your corporation or later. You’ll need confirmation from all shareholders and paperwork from the IRS. Your business must meet stricture requirements for the number and type of shares and shareholders.
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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