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

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

If you would like to start and learn how to form a corporation in Indiana, 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 Indiana are accountants, physicians, engineers, architects, and attorneys.

Forming a professional corporation in Indiana 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 Indiana?

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 Indiana. 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 Indiana, if you changed your mind.

WEBINARCARE EDITORIAL TEAM

How to Form a Professional Corporation in Indiana

To form a Professional Corporation in Indiana 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 Biennial report and taxes.

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

In forming a professional corporation in Indiana, 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 Indiana

After you have decided to form a professional corporation in Indiana, 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 Indiana, 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 120 days. You must file a name reservation application in the Indiana 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 Indiana 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 Indiana 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 Indiana. Forming a professional corporation for your service will be easier if you have Registered Agent in Indiana.

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

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Step 4: File the Articles of Incorporation in Indiana

After you hire a Registered Agent to form a professional corporation, the next step is to file the Indiana 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 Indiana may be done with two ways, online and by mail. The Articles of Incorporation fee may vary from different state. However, in Indiana, it costs $30 for filing online and by mail. Create an account/Log in to the SOS site, get the online form, fill it, and submit online. For offline filing, Send the form by mail to Department of Secretary of State Business Services Division, 302 West Washington Street, Room E018, Indianapolis, IN 46204.

Step 5: Write an Operating Agreement in Indiana

An operating agreement in Indiana 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 Indiana

The next step is to form the first board of directors for your PC in Indiana. All of the initial directors must provide the owner with their contact information. The owner must keep records and submit them by the Indiana 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 Indiana, you must have Three 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 Indiana 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 Indiana.

After the operating agreement’s documentation, you should get or request an Employer Identification Number (EIN) in Indiana. 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 Indiana 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 Indiana 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 Indiana 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 Indiana

Before your professional corporation operates in Indiana, you must have Indiana 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 Indiana 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 Indiana

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 Indiana tax classification for the taxes that an LLC in Indiana 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 Indiana.

  • 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.
  • Indiana 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 Indiana

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 Biennial Report in Indiana

In Indiana, you must submit a report. The owners’ and Registered Agent’s names and contact details are listed in the Biennial Report. Also, it should include all of your yearly financial activity. You must submit the report every 2 years in the Indiana Secretary of State.

FAQs

What is a professional corporation (PC) in Indiana?
A PC is a type of corporation designed for professionals in certain fields, such as attorneys, doctors, and accountants.
What is the benefit of forming a PC in Indiana?
The primary benefit of forming a PC in Indiana is that it provides liability protection to its owners.
What types of professionals can form a PC in Indiana?
In Indiana, certain licensed professionals, such as doctors, lawyers, and accountants, can form a PC.
How do I form a PC in Indiana?
To form a PC in Indiana, file the necessary paperwork, including articles of incorporation, with the Indiana Secretary of State.
Can I form a PC on my own or do I need an attorney?
While it is possible to form a PC on your own in Indiana, it’s recommended to seek the advice of an attorney who is experienced with this process.
What information do I need to file for a PC in Indiana?
You will need to provide basic information about your profession, your business, and your shareholders or owners to file for a PC in Indiana.
How long does it take to form a PC in Indiana?
The length of time it takes to form a PC in Indiana can vary depending on a number of factors, but typically the process takes a few weeks.
Is it possible to have a single-owner PC in Indiana?
Yes, it is possible to have a single-owner PC in Indiana.
Do Indiana PCs have to obtain any special permits or licenses?
Depending on the profession of the PC, it may be required to obtain special permits or licenses to operate in Indiana.
Can employees of a PC be protected from personal liability?
Employees of a PC in Indiana are generally not protected from personal liability, unlike owners.
What is the tax structure for Indiana PCs?
Indiana PCs are taxed like any other corporation, using the corporate tax structure.
Can a PC have shareholders from outside of Indiana?
Yes, a PC in Indiana can have shareholders from anywhere in the world.
Can I convert an existing business to a PC in Indiana?
Yes, you can convert an existing business to a PC in Indiana.
Is forming a PC in Indiana more expensive than other types of corporations?
The cost of forming a PC in Indiana is typically similar to that of any other type of corporation.
Can all licensed professionals in Indiana form a PC?
Not all licensed professionals in Indiana are authorized to form a PC; only certain professions are eligible.
Are PCs in Indiana required to carry professional liability insurance?
Though it’s not required by state law, carrying professional liability insurance is standard practice and strongly advised for PCs in Indiana.
What happens to my personal assets if my PC is sued in Indiana?
If your PC is sued in Indiana, only your business assets are typically at risk—not your personal assets.
Do PCs in Indiana have the same reporting requirements as other corporations?
Yes, PCs in Indiana have the same general reporting requirements—such as filing annual reports—as any other corporation in the state.
Is it possible to dissolve or terminate my PC in Indiana?
Yes, it is possible to dissolve a PC in Indiana by following a specific set of legal procedures.
Can one individual own multiple PCs in Indiana?
Yes, it is possible to own multiple PCs in Indiana.
Are PCs in Indiana protected from lawsuits or legal disputes?
PCs in Indiana are not protected from litigation or legal disputes, but the corporation’s structure can help limit liability.
Do PCs in Indiana require a board of directors?
PCs in Indiana are not always required to have a board of directors. It can depend on a number of factors, such as the size of the entity.
Are PCs in Indiana required to hold annual meetings?
PCs in Indiana are not required to hold annual meetings, but it is often beneficial in terms of management and shareholder involvement.
Do PCs in Indiana need to obtain a business license?
In Indiana, most business types are required to obtain a state or local business license, including PCs.
Can a PC in Indiana limit its liability for malpractice claims?
No, PCs cannot limit their liability for malpractice claims in Indiana; lawsuits can still be filed against a PC’s professionals.
Are there any age or educational requirements for forming a PC in Indiana?
No, Indiana’s requirements for forming a PC do not include specific age or education requirements.
What is the difference between forming a PLLC versus a PC in Indiana?
In Indiana, a PLLC (Professional Limited Liability Company) and PC have similar legal protections but operates under different tax structures.
What is the difference between a C-Corp and a PC in Indiana?
In Indiana, a C-Corporation is open to any kind of business while PCs are closed to only professional services firms, including medical practices, architects, or law firms.
What is a professional corporation in Indiana?
A professional corporation (PC) is a type of corporation formed by licensed professionals in Indiana such as doctors, accountants, and lawyers.
What is the process of forming a professional corporation in Indiana?
To form a professional corporation in Indiana, you must first submit Articles of Incorporation to the Indiana Secretary of State and obtain a Certificate of Incorporation.
Can a professional corporation operate in multiple states if it is formed in Indiana?
Yes, a professional corporation formed in Indiana can operate in multiple states provided it registers with and complies with each state’s specific requirements.
What are the requirements for forming a professional corporation in Indiana?
To form a professional corporation in Indiana, the business must be incorporated with a proper name and fulfill state filing requirements and other regulations to receive a certificate of incorporation.
Can a professional corporation have shareholders in addition to licensed professionals?
No, shareholders of a professional corporation in Indiana can only be individuals licensed by the state in a relevant profession.
How is a professional corporation in Indiana taxed?
A professional corporation in Indiana can either be taxed as a C corporation or as an S corporation. Keep in mind, S corporations pass through tax information to shareholders on individual income tax returns, while C corporations don’t pass through taxes to owners.
What are the consequences of not registering a professional corporation in Indiana?
Not registering a professional corporation in Indiana can result in strong legal and financial consequences which could include costly fees and legal penalties, in the form of suspension and fines.
How quickly can a professional corporation in Indiana be formed?
The timeline for incorporating a professional corporation in Indiana depends on how fast you’re able to pull the necessary documents together. Processing times may range from days to a few weeks.
Is there any difference between incorporation and formation?
No, “Incorporation” is a synonym for “formation,” when reterringto creating a corporation in Indiana.
How much does it cost to form a professional corporation in Indiana?
The fees involved in forming a professional corporation in Indiana can vary depending on the services required (like certifying documents etc), and may range from just a few hundred dollars up to a couple thousand dollars.
Is a professional corporation allowed to offer different kinds of professional services?
No, a professional corporation in Indiana can only offer services that fall within its scope of practice; otherwise, the corporation may lose its license and face legal consequences.
Can a professional corporation in Indiana be a non-profit organization?
No, a professional corporation in Indiana must pay taxes as a non-profit if it practices in accord with IRS code and Indiana state received their approval.
How long can a professional corporation keep its license in Indiana?
The manner in which the license retention and the duration lie within Indiana issued statute’s domain that charges the treating governing body within that given health profession council in state.
Who approves the certificate of incorporation of a professional corporation in Indiana?
The Articles of Incorporation intended for professional corporation sponsorship, like any other for-profit corporation endorsement, go to the Secretary of State’s office in order to be licensed.
Can someone own a professional corporation outright?
No, only a properly certified owner of a specific credentialing board is qualified to title their supported enterprise as a professional corporation.
Does Indiana state law require maintaining and managing professional corporation records and documents?
Yes, the State of Indiana requires that professional corporations maintain records of their Board of Directors and Shareholders meetings, alongside diverse oversight internal documentation.
What is the time for filing renewable corporate paperwork for professional corporation licensees in Indiana?
Each corresponding governing health Council decides upon its own inspection timescale. Many, in practice, turn over processing rights and duties to Secretary State’s Office via its affiliated secondary issuing licensing board to handle.
How soon would someone want to prepare to file for an advantageous tax election for incorporation?
From a tax perspective, You will need to pick an authenticated election within 2+- months before expiration of the year before reflecting the requested year (or change the requested year via amend procedure and Protocol), be mindful that planning ahead requires addressing the finer details of more in-depth tax matters.
Who’s eligible to form a professional corporation in Indiana?
Eligibility is simple
What documents should a professional corporation in Indiana file annually for state department of revenue purposes?
The Indiana state tax yearly filings depend on the methodology of tax selection, services types provided, employee number benchmarks, level of distributions matters (just for C corporations ) and diverse decision making.
Are professional corporations required to have annual shareholder meetings in Indiana?
While a professional corporation must document every shareholder meeting and ensuing resolutions, the State of Indiana itself does not require annual shareholder meetings results production outside of routine reporting requirements.
Is Indiana a preferred state for incorporating a professional corporation?
Approximately 1/3rd of all American-made IPs cluster within the Hoosier state. In recent history, professionals have hybridized for ideal balances between state-licenses stateside versus designating a permanent place of federal/ patent level patent rights specificity.
What are the benefits to forming a professional corporation in Indiana VS in other states?
Indiana as a newly conventionalizing educational and economic powerhouse presents every incentive advantages afforded such description to start-up founders across the board.
What information is required to be in the Articles of Incorporation of a professional corporation in Indiana?
Among much information that need to be taken into considerations mention including Professional avenues or occupations taking part in the venture/IP including domain of target markets, stated duration of potential businesses, registered agent names and the signature testament of crucial incorporator roles amongst others for lucid conveyance of points and plan of action for viability.
Are there any state-level obligations upon the professional corporation in addition of incorporation paperwork?
An amalgamation or substitute of extra guiding regulation coming through committees of example Purdue-affiliated accrediting board finds no reliable basis, conversely expected in mandates focus to ensurance at high priority viewing the constitutional propriety ground rules which effect attainment of demonstrated conscientious practice guarantee for assisting in livelihood protection in focus of high readiness improvable endeavors.

Also Read

How to Save Money While Forming Indiana Professional Corporation

One essential way to save money while forming an Indiana professional corporation is by conducting thorough research and being well-informed. This step is critical in understanding the specific legal requirements and business regulations applicable to your profession and the formation of your corporation. By taking the time to educate yourself and gather the necessary information, you can avoid costly mistakes and unnecessary expenses later on. Consider consulting with professionals or using reputable online resources to gain a comprehensive understanding of compliance requirements without incurring extravagant consulting or legal fees.

Another cost-saving measure is to carefully manage administrative tasks and paperwork. Many aspects of forming a professional corporation involve various administrative tasks such as filing documents, obtaining licenses, and drafting legal agreements. While it can be tempting to engage expensive legal services to handle all these tasks, consider taking on some responsibilities yourself. For example, do the necessary research to complete the required paperwork on your own, thus minimizing outsourcing costs. Utilize online platforms or templates specifically designed for entrepreneurs, as they often provide guidance and facilitate the process at a fraction of the cost.

Furthermore, collaborating with other professionals or potential partners can help alleviate the financial burden of establishing a professional corporation. By pooling resources and sharing expenses, such as legal fees or marketing costs, professionals in the same field can significantly reduce their financial strain. Exploring potential partnerships not only leads to cost savings but may also enhance networking opportunities and the sharing of expertise, leading to mutual growth for involved parties.

In addition to the strategies discussed above, it is crucial to differentiate between essential expenses that cannot be compromised and those that can be minimized or eliminated altogether. In any business endeavor, some costs are unavoidable, especially those related to legal compliance, licensing, and consulting fees. However, there may be other discretionary expenses that could be postponed until the corporation is established and generating revenue. Identifying and postponing such expenses can significantly minimize upfront costs while ensuring your business is on solid legal ground.

Finally, as you embark on the process of forming an Indiana professional corporation, consider looking for cost-effective tools and software that can streamline and automate essential business functions. Investing in accounting software, productivity tools, or customer relationship management platforms can save time and effort, increase efficiency, and ultimately contribute to cost savings in the long run.

While the process of forming an Indiana professional corporation may inherently involve certain costs, being intentional about cost-saving strategies and informed decision-making will aid entrepreneurs in saving money along the way. By conducting research, managing administrative tasks independently, collaborating with peers, and carefully evaluating expenses, professionals can position themselves for success while staying within a reasonable budget. Starting a business is a financial undertaking; however, careful planning and cost-consciousness will ensure a solid foundation, setting the stage for future growth and prosperity.

Conclusion

In conclusion, forming a professional corporation in Indiana 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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