How to Form a Professional Corporation in Georgia (2024 Guide)

Steve Bennett
Business Formation Expert  |   Fact Checked by Editorial Team
Last updated: 
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Forming a Professional Corporation in Georgia

If you would like to start and learn how to form a corporation in Georgia, there are a few things that you should do now. However, in a professional corporation, professionals must create a special organizational structure to establish a professional or service corporation. Among the appropriate professions to organize a professional corporation in Georgia are accountants, physicians, engineers, architects, and attorneys.

Forming a professional corporation in Georgia or any business organization needs a certain number of steps. In this article, Webinarcare Editorial Team is going to share those steps. Keep in mind that these are general procedures. Depending on local law, it may be modified. For instance, your professional corporation may be subject to city or county-based rules.

What is a Professional Corporation in Georgia?

A professional service corporation (PSC), often known as a professional corporation (abbreviated as PC), is a particular type of organization that is permitted by state law to allow owners of specifically licensed professions to practice in the Georgia. A professional corporation’s owner is answerable for their own negligence or wrongdoing but is not held personally liable for the actions of other owners. The abbreviation PC or P.C. is frequently used to denote professional corporations.

This structure allows professionals to enjoy some of the benefits and protections of a traditional corporation while maintaining their professional status and abiding by the regulations of their respective licensing boards.

LegalZoom is the recommended corporation formation if you are thinking of forming a professional corporation from scratch. However, you can always start an LLC in Georgia, if you changed your mind.

WEBINARCARE EDITORIAL TEAM

How to Form a Professional Corporation in Georgia

To form a Professional Corporation in Georgia for the professional service you provide, you must follow a few steps that include verifying if you are qualified for a PC, naming your business, hiring a Registered Agent, filing the Articles of Incorporation, outlining an operating agreement, requesting for an EIN, opening a bank account, getting a business license, and filing for an Annual report and taxes.

Step 1: Verify If You Are Qualified for a Professional Corporation

In forming a professional corporation in Georgia, you should know if you are qualified. There are specific professions that are allowed to form a professional service corporation, including-

To provide your service, you must be qualified and have a license. In most cases, you can now form a professional corporation after finishing your studies, passing the exam, and receiving your license. If you work in an industry that does not provide a license or professional certification, you should consider starting an LLC or corporation.

Step 2: Name your Professional Corporation in Georgia

After you have decided to form a professional corporation in Georgia, you must choose a name for your corporation. Here are some pointers to consider when naming your professional corporation.

  • The business name should have the word PC, frequently followed by the name of the principal owner in place of Inc or LLC. (Example. John Doe, MD, PC)
  • Limit of restricted words that need a license.
  • A unique name is needed with no match
  • No confusion with a government entity name.

In Georgia, if you do not wish to file your professional corporation right away but want to hold the name that you have decided on, then you can reserve your corporation name for 30 days. You must file a name reservation application in the Georgia Secretary of State to keep the name.

If not already present, a professional corporation, professional association, service corporation, or professional service corporation must be included in the name. You may register your business under a different legal name if your preferred legal name is unavailable. Once you’ve decided on a name, you can apply for Georgia DBA (doing business as). This way, you can run a clinic or law firm under your name.

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Step 3: Choose the Georgia Registered Agent

The next step in forming a professional corporation is hiring a Registered Agent, who accepts legal paperwork for your business. This person or business will receive important tax forms, legal documents, all notices of lawsuits, and other official government correspondence in Georgia. Forming a professional corporation for your service will be easier if you have Registered Agent in Georgia.

Alternatively, you can serve as your own Registered Agent if you have the time. Usually, in Georgia, a Registered Agent costs is ranging from $50 – $150. To make it easier, you can hire Georgia Registered Agent Services for your professional corporation.

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Step 4: File the Articles of Incorporation in Georgia

After you hire a Registered Agent to form a professional corporation, the next step is to file the Georgia Articles of Incorporation. In writing the Articles of Incorporation, the business name, owner’s contact information, corporation address, and Registered Agent contact information, should be written. Include the names of all co-owners as well. All owners must demonstrate that they have the necessary licenses to practice the profession in question.

Filing the Articles of Incorporation in Georgia may be done with three ways, online, by mail and in-person. The Articles of Incorporation fee may vary from different state. However, in Georgia, it costs $100 for filing online and $110 for filing it by mail and in person.. Get the online form from Secretary of State, fill it up, and submit. Don’t refresh the page during the process. It will erase everything. . For offline filing, Send the form by mail or drop it off to Corporations Division, 2 Martin Luther King Jr. Dr. SE, Suite 313 West Tower, Atlanta, Georgia 30334..

Step 5: Write an Operating Agreement in Georgia

An operating agreement in Georgia is a document that contains all of your company’s organizational details. It is optional to draft an operating agreement in most states. Yet, having one as an internal document is strongly advised. The operating agreement includes information like-

  • About Business
  • Members and management
  • Capital contribution
  • Profit Distribution
  • Change of membership
  • Dissolution

Step 6: Designate the PC Board of Directors in Georgia

The next step is to form the first board of directors for your PC in Georgia. All of the initial directors must provide the owner with their contact information. The owner must keep records and submit them by the Georgia Secretary of State. As a shareholder and owner, you must ensure that a provision for appointing a new director is included in the By-laws. In Georgia, you must have One directors in forming your Professional Corporation.

Step 7: Write the Corporate Bylaws

Now that you are done forming the team of the board of directors, the next step is to draft corporate bylaws. Corporate bylaws are the basic rules that control a corporation. It includes the organization’s structure, processes, laws, and rules. As a result, all personnel, managers, and corporation members must obey the firm’s rules.

Creating comprehensive corporate bylaws requires specific knowledge about the company, its structure, and operations. However, I can provide you with a general outline of what corporate bylaws usually include. It is crucial to consult with Georgia Business Attorney or a legal expert to ensure that your bylaws comply with the laws and regulations governing your jurisdiction and industry.

  • Name and Purpose of the Corporation
  • Registered Office and Agent
  • Shareholders
  • Board of Directors
  • Officers
  • Committees
  • Indemnification and Insurance
  • Conflict of Interest
  • Records and Reports
  • Amendments
  • Miscellaneous

Step 8: Hold the First Board of Directors’ Meeting

Gather the board of directors for the first meeting after drafting the corporate bylaws. This meeting will conclude with the appointment of directors to manage the company’s daily operations, approval of the bylaws, selection of the corporation’s financial reporting year, and approval of the stock issue. Minutes should be taken at all board meetings and kept with the company’s records.

Step 9: Request an EIN in Georgia.

After the operating agreement’s documentation, you should get or request an Employer Identification Number (EIN) in Georgia. The tax ID for your professional corporation will be an EIN. The Internal Revenue Service can provide an EIN (IRS). It has nine digits and is comparable to a social security number. Nevertheless, EIN is different from SSN. Only business-related tasks, primarily filing general taxes, are performed using it. The form needs to be filled out and submitted online to the IRS.

The application of an EIN in Georgia can be through the following:

  • Apply Online- The online EIN application is the preferred method for customers to apply for and obtain an EIN.
  • Apply by Fax- Taxpayers can fax the completed Form SS-4 application to the appropriate fax number), after ensuring that the Form SS-4 contains all of the required information.
  • Apply by Mail- The EIN application Form SS-4 can be filed via mail. The processing time frame to receive the mail is four weeks.
  • Apply by Telephone-International Applicants – International applicants may call 267-941-1099 (not a toll-free number) from 6 a.m. to 11 p.m. (Eastern Time) Monday through Friday to obtain their EIN.

After you have your EIN number, you can benefit in several ways. It will give your professional corporation the absolute advantage necessary to operate at full capacity without encountering legal or judicial issues.

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Step 10: Open a Bank Account and Prepare for Taxes.

You should open a business bank account as soon as you have applied for and received your Employer Identity Number because you will use this account for yourself, your clients, and your staff. Check out the Best Banks in Georgia for you to decide on which bank you are going to open an account.

Due to your organization’s increased legality and liquidity, having a US business bank account may make conducting business in Georgia easier. Most banks require an EIN for businesses other than sole proprietorships to open a business bank account. Also, keeping your accounts separate will prevent you from merging your personal and business finances. Also, filing taxes is simpler when you have an EIN. You can expect to pay employee and corporate taxes when you form a professional corporation.

Step 11: Get a Business License in Georgia

Before your professional corporation operates in Georgia, you must have Georgia Business License first. A business license is a formal document issued by a state government agency that allows you to conduct business in the geographic area governed by that agency. The cost of business licenses and permits in Georgia ranges from $50 – $300. You must check with the local authorities to see if any special licenses or permits are required.

Step 12: File Your Taxes in Georgia

Finally, you’ve arrived at the final process. Remember to file your taxes when you have obtained a business license and are ready to begin operations. To avoid a large tax bill, you should begin paying taxes quarterly as soon as possible. Each state has different tax requirements. Start examining the Georgia tax classification for the taxes that an LLC in Georgia must pay.

Main Characteristics of a Professional Corporation

In forming a Professional Corporation, the main characteristics must be distinguished before forming it. These are the general characteristics of forming a Professional Corporation in Georgia.

  • Limited Liability Protection: A professional corporation provides its owners, shareholders, or members limited liability protection like a regular corporation. This means the shareholders’ personal assets are generally protected from business debts, obligations, and lawsuits, except in malpractice or professional negligence cases.
  • Georgia Licensing Requirements: All shareholders must typically be licensed professionals in the same field in a professional corporation. The corporation must also comply with specific state regulations and licensing requirements that govern the profession.
  • Governance and Management: A professional corporation is governed by a board of directors, who the shareholders elect. The board appoints officers to manage the day-to-day operations of the corporation. All directors and officers must be licensed professionals in the same field as the corporation.
  • Taxation: Professional corporations are taxed as C corporations, where the corporation pays taxes on its income, and shareholders pay taxes on dividends received from the corporation. However, some professional corporations may be eligible for S corporation status, allowing pass-through taxation. Income, losses, deductions, and credits flow to the shareholders, who report this information on their income tax returns.
  • Restrictions on Ownership and Transfer of Shares: Professional corporations often restrict the ownership and transfer of shares to ensure that only licensed professionals in the same field can become shareholders. This helps maintain the professional nature of the corporation and adheres to state licensing requirements.
  • Malpractice Liability: While a professional corporation provides limited liability protection for general business debts and obligations, it does not shield shareholders from liability for their own malpractice or professional negligence. Shareholders can still be personally liable for their actions in providing professional services.

In summary, a professional corporation is a specialized corporate structure designed for licensed professionals, offering limited liability protection and a formal governance structure while adhering to state licensing requirements and regulations.

Maintain Professional and Business License in Georgia

You must maintain or renew your professional license regularly now that you have established your professional corporation. Even if your company is well-established, it is only meaningful if you have a valid operating license. And it makes no difference if your professional license is still valid for a year or two, but your business license has already expired.

Make time at least once a year to check the status of your licenses. You won’t miss anything important this way. You can address any issues that arise.

Filing Annual Report in Georgia

In Georgia, you must submit a report. The owners’ and Registered Agent’s names and contact details are listed in the Annual Report. Also, it should include all of your yearly financial activity. You must submit the report every 1 year (between 1st January and 1st April) in the Georgia Secretary of State.

FAQs

What is a professional corporation in Georgia?
A professional corporation in Georgia is a legal structure specifically designed for professionals such as doctors, lawyers, architects, and accountants to operate their business.
How do I form a professional corporation in Georgia?
To form a professional corporation in Georgia, you will need to file articles of incorporation with the Georgia Secretary of State and obtain a license from the Georgia Secretary of State Board of Examiners of Licensed Professional Counselors, Social Workers, and Marriage and Family Therapists.
What are the requirements for forming a professional corporation in Georgia?
Requirements for forming a professional corporation in Georgia include filing articles of incorporation with the Georgia Secretary of State and obtaining a license from the Georgia Secretary of State Board of Examiners of Licensed Professional Counselors, Social Workers, and Marriage and Family Therapists.
Do I need a license to form a professional corporation in Georgia?
Yes, you will need a license from the Georgia Secretary of State Board of Examiners of Licensed Professional Counselors, Social Workers, and Marriage and Family Therapists to form a professional corporation in Georgia.
Can I form a professional corporation with just one person in Georgia?
Yes, a professional corporation can be formed with just one person in Georgia.
What types of professionals can form a professional corporation in Georgia?
Professionals including doctors, lawyers, architects, and accountants can form a professional corporation in Georgia.
Do I need to be a resident of Georgia to form a professional corporation in the state?
No, you do not need to be a resident of Georgia to form a professional corporation in the state.
What is required on the articles of incorporation for a professional corporation in Georgia?
The articles of incorporation for a professional corporation in Georgia must include the name of the corporation, the name and address of each incorporator, the purpose of the corporation, and a statement that the corporation is a professional corporation.
What is the liability protection provided by a professional corporation in Georgia?
A professional corporation in Georgia typically provides limited liability protection to its shareholders, similar to a regular corporation.
Can professionals in different fields form a professional corporation together in Georgia?
No, professionals in different fields cannot form a single professional corporation together in Georgia.
How much does it cost to form a professional corporation in Georgia?
The cost to form a professional corporation in Georgia varies depending on whether you hire an attorney or not, the complexity of the legal work involved, and the filing fees with the Secretary of State.
Can I use a registered agent service to form a professional corporation in Georgia?
Yes, you can use a registered agent service to form a professional corporation in Georgia.
Do I need to file annual reports for my professional corporation in Georgia?
Yes, you need to file annual reports for your professional corporation in Georgia.
Are there any taxes that need to be paid when forming a professional corporation in Georgia?
Yes, you will need to pay state and local taxes when forming a professional corporation in Georgia.
What is the minimum number of shareholders that a professional corporation must have in Georgia?
A professional corporation in Georgia can have as few as one shareholder.
How long does it take to form a professional corporation in Georgia?
The time it takes to form a professional corporation in Georgia depends on how quickly the documents are filed and processed by the Georgia Secretary of State.
Can a professional corporation in Georgia be taxed as an S corporation?
Yes, a professional corporation in Georgia can be taxed as an S corporation.
How do I open a bank account for my professional corporation in Georgia?
To open a bank account for your professional corporation in Georgia, you will need to provide the bank with your articles of incorporation, an operating agreement if you have one, and any other required documents.
Can a professional corporation in Georgia be a nonprofit?
No, a professional corporation in Georgia cannot be a nonprofit corporation.
Can a professional corporation in Georgia have multiple classes of stock?
No, a professional corporation in Georgia can only have one class of stock.
Can a professional corporation in Georgia be licensed in multiple states?
Yes, a professional corporation in Georgia can be licensed in multiple states.
Can a professional corporation in Georgia have a DBA or trade name?
Yes, a professional corporation in Georgia can have a DBA or trade name.
Can a professional corporation in Georgia provide services outside of its profession?
No, a professional corporation in Georgia cannot provide services outside of its profession.
What happens to a professional corporation in Georgia if a shareholder dies?
If a shareholder dies, the professional corporation’s shares typically pass to the shareholder’s estate.
Can a professional corporation in Georgia have subsidiaries?
Yes, a professional corporation in Georgia can have subsidiaries.
When should I convert my LLC to a professional corporation in Georgia?
You should convert your LLC to a professional corporation in Georgia if you start practicing in a licensed profession.
Can a professional corporation in Georgia be converted to a regular corporation or an LLC?
Yes, a professional corporation in Georgia can be converted to a regular corporation or an LLC.
Can a professional corporation in Georgia issue stock options to employees?
Yes, a professional corporation in Georgia can issue stock options to employees.
What is the difference between a professional corporation and a limited liability company in Georgia?
A professional corporation in Georgia is specifically designed for licensed professionals to operate their business, while an LLC is not limited to licensed professionals.
Who can form a professional corporation in Georgia?
Licensed professionals such as doctors, dentists, accountants, lawyers, and architects can form a professional corporation in Georgia.
What are the benefits of forming a professional corporation in Georgia?
Forming a professional corporation in Georgia can limit the personal liability of the business owners and can provide tax advantages.
How is a professional corporation in Georgia taxed?
A professional corporation in Georgia is taxed similarly to a regular corporation with profits taxed at the corporate tax rate.
How is a professional corporation in Georgia different from a regular corporation?
A PC is designed specifically for licensed professionals and typically has restrictions on ownership, management, and governance.
Can a professional corporation in Georgia offer services outside of the state?
Yes, a professional corporation in Georgia can offer services outside of the state as long as they meet the licensing requirements of the other state or jurisdiction.
Does a professional corporation in Georgia need to have a physical office?
A professional corporation in Georgia must have its principal office located in Georgia and must maintain a registered agent in the state.
What fees are involved in forming a professional corporation in Georgia?
The fees for forming a professional corporation in Georgia range from $100 to $1,000.
Can a professional corporation in Georgia have more than one licensed professional as a shareholder?
Yes, a professional corporation in Georgia can have more than one licensed professional as a shareholder.
Is there a requirement for how many members can be in a professional corporation in Georgia?
A professional corporation in Georgia must have at least one member, but there is no limit on the maximum number of members.
What are the reporting requirements for a professional corporation in Georgia?
A professional corporation in Georgia must file an annual report with the Georgia Secretary of State and undergo regular inspections by the Georgia Professional Licensing Boards for their specific profession.
Can a professional corporation convert to another type of business entity in Georgia?
Yes, a professional corporation in Georgia can convert to another type of business entity such as an LLC or regular corporation.
Do all shareholders in a professional corporation in Georgia have to be licensed professionals?
No, not all shareholders in a professional corporation in Georgia have to be licensed professionals, but at least one must be.
What happens if a shareholder in a professional corporation in Georgia loses their professional license?
If a shareholder in a professional corporation in Georgia loses their professional license, they must sell their share of the company and cannot work in their profession until they obtain a new license.
Can non-residents of Georgia form a professional corporation in Georgia?
Yes, non-residents of Georgia can form a professional corporation in Georgia, as long as they meet the licensing requirements for their specific profession.
Does a professional corporation in Georgia have to have a separate bank account?
Yes, a professional corporation in Georgia must have a separate bank account to keep business and personal finances separate.
What happens if a shareholder in a professional corporation in Georgia retires or dies?
If a shareholder in a professional corporation in Georgia retires or dies, their shares will be distributed to the remaining shareholders or their heirs, depending on the corporation’s bylaws.
Can a professional corporation in Georgia have multiple practice locations?
Yes, a professional corporation in Georgia can have multiple practice locations as long as they meet the licensing requirements of the other state or jurisdiction.
Can a professional corporation in Georgia have employees?
Yes, a professional corporation in Georgia can have employees, but only licensed professionals can provide the services offered by the corporation.
Can a professional corporation in Georgia sell products, not just services?
Yes, a professional corporation in Georgia can sell products, as long as they relate to the profession they are licensed to provide.
Can spouses who share a professional license both be shareholders in a professional corporation in Georgia?
Yes, spouses who share a professional license can both be shareholders in a professional corporation in Georgia.
Are there any annual meeting requirements for a professional corporation in Georgia?
Yes, a professional corporation in Georgia must hold at least one annual shareholder meeting unless otherwise specified in the corporation’s bylaws.
Do all licensed professionals in a professional corporation in Georgia have to be shareholders?
No, not all licensed professionals in a professional corporation in Georgia have to be shareholders.
Can a professional corporation in Georgia change its legal name?
Yes, a professional corporation in Georgia can change its legal name by filing a name change petition with the Georgia Secretary of State.
What happens when a professional corporation in Georgia dissolves?
When a professional corporation in Georgia dissolves, it must file Articles of Dissolution with the Georgia Secretary of State and must distribute any remaining assets to its shareholders.
How do I renew my Georgia Professional License as an individual?
To renew your Georgia Professional License, you must pay a renewal fee and comply with any continuing education requirements mandated by your licensing board.

Also Read

How to Save Money While Forming Georgia Professional Corporation

Firstly, it is essential to conduct thorough research and understand the fees associated with this process. By familiarizing oneself with the fees and costs, one can plan and budget more effectively. This research should encompass various elements, such as incorporating fees, filing fees, and any potential additional costs that may arise in the process. Armed with this knowledge, professionals can avoid costly surprises and better estimate their financial commitments.

An effective way to save money in the process of forming a professional corporation is to take advantage of online resources and affordable legal services. Many web platforms and online resources provide readily available resources for new business owners. These services often offer customized legal templates and advice at a fraction of the cost that traditional legal services would charge. By utilizing these online tools, professionals can save a significant amount of money without compromising the quality of their legal documentation.

One critical aspect of cost-saving when forming a professional corporation is to avoid unnecessary expenditures. It is vital to differentiate between required expenses and optional add-ons. For example, while it may be tempting to incorporate every additional service offered at the time of filing, it is imperative to evaluate whether these services are truly necessary and will provide long-term benefits. Every additional service or option will drive up the overall cost, so careful consideration is key to saving money.

Another potential area of financial relief is networking and seeking advice from other professionals who have already formed their own Georgia professional corporations. Connecting with experienced individuals in the same industry can provide invaluable insights and possible cost-saving recommendations. The experience and knowledge gained firsthand from these individuals can help aspiring professionals navigate the process more efficiently, potentially avoiding unnecessary complications and fees.

Furthermore, taking care of specific administrative tasks personally can save a substantial amount of money. While the process of forming a professional corporation may seem daunting and complex, some elements can be completed without professional aid. For instance, professionals can handle tasks such as researching business names, obtaining necessary certification, drafting initial legal documents, and submitting forms and applications themselves. By actively participating in these aspects of the process, costs associated with hiring professionals can be minimized.

Lastly, it is crucial to keep up with the latest government regulations and policies related to forming a professional corporation in Georgia. By staying informed about any possible changes or reductions in fees, aspiring professionals can take advantage of cost-saving opportunities. Government websites and relevant professional associations are reliable sources of information for keeping up to date with the latest regulations. Being proactive in this regard can pay off considerably in terms of reduced costs.

Forming a professional corporation in Georgia can be an exciting and challenging process. However, by implementing strategies to save money, aspiring professionals can navigate this process with more ease. By conducting thorough research, exploring online affordable services, differentiating between necessary and optional expenses, seeking advice from experienced individuals, handling certain administrative tasks personally, and staying informed about government regulations, forming a professional corporation can be done while keeping costs at a manageable level. By adopting these approaches, professionals can achieve their goals without compromising their financial stability.

Conclusion

In conclusion, forming a professional corporation in Georgia is a strategic decision for licensed professionals who seek to combine their expertise and services under a single corporate entity. This business structure offers limited liability protection, a formal governance structure, and compliance with state licensing requirements. However, it also comes with certain restrictions on ownership, transfer of shares, and personal liability for professional malpractice. By carefully considering the advantages and disadvantages of a professional corporation, professionals can determine whether this structure aligns with their business goals, regulatory requirements, and risk management needs, ultimately contributing to a more organized, secure, and compliant professional practice.

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