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Introduction
Forming a professional corporation (PC) in Arizona can be an excellent choice for professionals looking to establish their own business entity. A professional corporation provides limited liability protection and tax advantages to its shareholders. For those planning to form a professional corporation in Arizona in 2023, this guide will outline the step-by-step process and important considerations.
1. Understanding a Professional Corporation
A professional corporation is a specific type of business entity formed by individuals providing professional services. Licensed professionals such as doctors, attorneys, accountants, and architects typically use this entity structure. A professional corporation provides a level of limited liability protection to its shareholders, shielding their personal assets from the company's liabilities.
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2. Selecting a Name for Your Professional Corporation
Choosing a name for your professional corporation is an essential step. It should comply with Arizona's naming guidelines, which include using the words "Professional Corporation," "P.C.," or "P.Corp" at the end. Additionally, verify that the desired name is unique and not already registered by another entity. Conducting a name search with the Arizona Secretary of State's office can help ensure your chosen name is available.
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3. Drafting and Filing Articles of Incorporation
To form a professional corporation in Arizona, you must draft and file Articles of Incorporation with the Arizona Corporation Commission (ACC). Include necessary information such as the corporation's name, address, purpose, and duration. Describe the services your professional corporation will offer and the licensed professionals associated with it.
4. Appointing a Registered Agent
In Arizona, professional corporations are required to appoint a registered agent. The registered agent is responsible for receiving legal documents, such as lawsuits or official correspondence, on behalf of the corporation. The registered agent must have a physical address in Arizona. Many professional corporations choose to employ a registered agent service for convenient document handling.
5. Obtaining Licenses and Permits
Professional corporations in Arizona may require additional licenses or permits depending on the nature of their services. Licensed professionals within the corporation already hold their professional licenses, but verify if any supplementary licenses or permits are necessary. Consult the licensing board relevant to your profession or the Arizona Department of Licensing and Occupational Regulation for definitive guidance.
6. Complying with Arizona Shareholder Requirements
An arizona professional corporation has certain shareholder requirements. The majority of shareholders or directors within the corporation must be licensed professionals in the same or related field. The Arizona Board of Accountancy, Arizona Medical Board, or other relevant licensing boards can provide specific requirements for different professions.
7. Preparing Bylaws and Shareholder Agreements
Creating bylaws is crucial as they serve as the corporation's internal rules and regulations. Bylaws outline how the corporation will be governed, shareholder rights, meeting procedures, and how decisions will be made. Additionally, shareholders should consider drafting shareholder agreements to establish their rights and obligations outside of the bylaws. It is advisable to consult an attorney experienced in corporate law to ensure these documents align with legal requirements.
8. Conducting an Initial Shareholder Meeting
After all the necessary paperwork is filed, an initial shareholder meeting must be conducted. During this meeting, important decisions such as the election of directors and officers are made. Additionally, any remaining documents, such as the bylaws and shareholder agreements, can be reviewed and ratified.
9. Adhering to Ongoing Compliance Requirements
Forming a professional corporation doesn't end with the filing of initial documentation. Arizona imposes certain ongoing compliance requirements. Professional corporations should file an Annual Report with the Arizona Corporation Commission by the specified deadline. Additionally, maintaining proper records of meetings, minutes, shareholder updates, and financial statements is essential for compliance purposes.
Conclusion
Forming a professional corporation in Arizona can provide immense benefits for licensed professionals seeking to establish their practice. By following the steps outlined in this guide, you'll be off to a great start in launching your professional corporation in Arizona in 2023. Remember to consult with a qualified attorney or business professional to ensure compliance with specific legal requirements.
*Disclaimer: The content of this article is for informational purposes only and should not be taken as legal or professional advice. Seek guidance from a qualified attorney or business professional for your specific situation.*
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