Forming a professional corporation (PC) in Tennessee is a straightforward process that requires careful planning and adherence to the state's rules and regulations. A professional corporation provides a structure for licensed professionals, such as doctors, lawyers, and accountants, to conduct their business while enjoying certain benefits of a corporate entity. This article will guide you through the process of forming a professional corporation in Tennessee, ensuring you meet all necessary requirements.
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Step 1: Choose a Name
Before proceeding with the formation of a professional corporation in Tennessee, you must select a unique name for your corporation. In accordance with state law, the name of your PC should include specific words like "Professional Corporation," "P.C.," or "PLLC" to indicate its professional nature. Conduct a thorough search to ensure your desired name is available and in compliance with Tennessee's naming requirements.
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Step 2: Appoint Directors and Officers
Every professional corporation in Tennessee must have at least one director. The names and addresses of these directors are essential elements in the required certificate of a PC. Once you have chosen your directors, you must elect officers for key positions such as CEO, CFO, Secretary, and others. The director can also hold these roles if desired.
Step 3: Draft and File Articles of Incorporation
To officially form a professional corporation in Tennessee, you must draft and file the Articles of Incorporation with the Secretary of State's office. These articles should include specific information like the PC's name, duration, purpose, and registered agent. You can find the template for the Articles of Incorporation on the Secretary of State's website or consult with an attorney to ensure accuracy and compliance.
Once the articles are completed and properly executed, file them according to the current guidelines established by the Secretary of State. Along with the Articles of Incorporation, you are usually required to submit a filing fee as well.
Step 4: Obtain Licenses and Permits
A professional corporation in Tennessee can only engage in the practice of a specific profession, for which its owners must be duly licensed. Before starting operations, each professional in your corporation must have all the required licenses and permits. Depending on your profession, the licensure process may involve specific training, exams, and fees, so be sure to research and fulfill all relevant requirements.
Step 5: Create Bylaws and other Internal Documents
One of the critical components of forming a professional corporation is developing bylaws and other necessary internal documents. Bylaws establish the rules and procedures for the corporation's governance, covering aspects such as the authority of the directors, rights of shareholders, meeting procedures, and voting guidelines. While not required by law, bylaws provide clarity on corporate functions and protect the corporation's interests.
Consider also creating a shareholder agreement outlining shareholder roles, stock transfers, and dispute resolution mechanisms to ensure harmonious operation and prevent disagreements in the future.
Step 6: Obtain an Employer Identification Number (EIN)
An Employer Identification Number (EIN) is a crucial requirement for any corporation, allowing you to hire employees, open bank accounts, and file tax returns. You can obtain an EIN through the Internal Revenue Service (IRS) by filling out Form SS-4 either online, by mail, fax, or phone.
Step 7: Comply with Tax and Reporting Requirements
Professional corporations in Tennessee are subject to various tax obligations. Register with the Tennessee Department of Revenue for sales tax purposes, and consult with a tax professional to understand your obligations regarding income tax, payroll tax, and any applicable federal taxes.
Additionally, it is important to understand and comply with annual reporting and renewal requirements set forth by both the State of Tennessee and any professional licensing boards governing your industry.
Step 8: Obtain Business Insurance
While not a legal requirement, acquiring suitable business insurance is highly recommended to protect your professional corporation in case of unexpected accidents, lawsuits, or property damage. Speak with an insurance agent experienced in working with professional corporations to determine the most appropriate coverage for your specific industry and needs.
Final Words
Forming a professional corporation in Tennessee is a beneficial step for licensed professionals seeking to establish a formal and protective structure. By following the steps outlined in this guide, you will ensure you meet the necessary requirements and can focus on providing quality professional services within the state.
Remember, it is advisable to consult with an attorney or seek professional advice specific to your field to navigate any complexities pertaining to your profession, as regulations can vary.
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