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

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

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

Forming a professional corporation in Louisiana 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 Louisiana?

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 Louisiana. 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 Louisiana, if you changed your mind.

WEBINARCARE EDITORIAL TEAM

How to Form a Professional Corporation in Louisiana

To form a Professional Corporation in Louisiana 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 Resident 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 Louisiana, 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 Louisiana

After you have decided to form a professional corporation in Louisiana, 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 Louisiana, 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 60 days. You must file a name reservation application in the Louisiana 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 Louisiana 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 Louisiana Resident Agent

The next step in forming a professional corporation is hiring a Resident 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 Louisiana. Forming a professional corporation for your service will be easier if you have Resident Agent in Louisiana.

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

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Step 4: File the Articles of Incorporation in Louisiana

After you hire a Resident Agent to form a professional corporation, the next step is to file the Louisiana Articles of Incorporation. In writing the Articles of Incorporation, the business name, owner’s contact information, corporation address, and Resident 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 Louisiana may be done with four ways, online, by mail, fax, and in person. The Articles of Incorporation fee may vary from different state. However, in Louisiana, it costs $75 for filing online, fax, in person and by mail. 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 to State of Louisiana Secretary of State, P.O. Box 94125, Baton Rouge, LA 70804. Drop it off in person to 8585 Archives Ave., Baton Rouge, LA 70809. Fax it to 225-932-5314.

Step 5: Write an Operating Agreement in Louisiana

An operating agreement in Louisiana 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 Louisiana

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

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

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

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

  • 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.
  • Louisiana 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 Louisiana

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 Louisiana

In Louisiana, you must submit a report. The owners’ and Resident 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 (anniversary date) in the Louisiana Secretary of State.

FAQs

What is a professional corporation in Louisiana?
A professional corporation in Louisiana is a business entity that provides professional services, such as legal, medical, or accounting services.
How do I form a professional corporation in Louisiana?
To form a professional corporation in Louisiana, you must file Articles of Incorporation with the Louisiana Secretary of State.
What are the requirements to form a professional corporation in Louisiana?
To form a professional corporation in Louisiana, you must have at least two shareholders who are licensed to provide professional services in the state.
How long does it take to form a professional corporation in Louisiana?
The time it takes to form a professional corporation in Louisiana can vary but is typically around 2-3 weeks.
Do I need to file for a Louisiana business license for my professional corporation?
Yes, you will need to obtain a business license from both the parish and city where your professional corporation will be located.
Do I need to create bylaws for my professional corporation in Louisiana?
Yes, a professional corporation must have bylaws that outline how the corporation will operate in Louisiana.
How do I file the necessary paperwork for a professional corporation in Louisiana?
You can file the necessary paperwork for a professional corporation in Louisiana online at the Louisiana Secretary of State website.
What is the cost to form a professional corporation in Louisiana?
The cost to form a professional corporation in Louisiana varies depending on the type of services your corporation will provide and any associated legal fees.
Can a foreign corporation operate as a professional corporation in Louisiana?
Yes, a foreign corporation may operate as a professional corporation in Louisiana if it meets the state’s requirements and is authorized to do business in Louisiana.
How many directors does a professional corporation in Louisiana need?
A professional corporation in Louisiana needs at least one director.
Who is eligible to be a shareholder in a professional corporation in Louisiana?
To be a shareholder in a professional corporation in Louisiana, you must be licensed to provide professional services in the state.
Can a professional corporation in Louisiana have non-licensed employees?
Yes, a professional corporation in Louisiana can have non-licensed employees such as administrative staff.
Is an official Louisiana address required for a professional corporation in Louisiana?
Yes, a professional corporation in Louisiana must have a registered agent and an official address within the state.
Is liability limited for shareholders in a professional corporation in Louisiana?
Yes, the liability of shareholders in a professional corporation in Louisiana is limited to the amount of their investment in the corporation.
Can a professional corporation in Louisiana offer other services besides professional services?
No, a Louisiana professional corporation may only offer services related to the licensed professional services of its shareholders.
Who can own a professional corporation in Louisiana?
Shareholders of a professional corporation in Louisiana must be licensed to provide professional services in the state.
Can a professional corporation in Louisiana be taxed as an S corporation?
Yes, a professional corporation in Louisiana may elect to be taxed as an S corporation for federal tax purposes.
What is the ongoing maintenance required for a professional corporation in Louisiana?
Ongoing maintenance for a professional corporation in Louisiana includes annual reports and tax filings.
Can more than one professional corporation be formed between the same group of professionals in Louisiana?
Yes, multiple professional corporations can be formed between the same group of professionals in Louisiana.
How is a professional corporation in Louisiana different from a standard corporation?
A professional corporation in Louisiana is a corporation that provides professional services and is owned by licensed professionals.
Can a professional corporation in Louisiana provide services in other states?
It depends on the state’s laws where a professional corporation will be providing services, but, in most cases, a Louisiana professional corporation will need to register with each state to do business there.
Can a professional corporation in Louisiana convert to a LLC?
Yes, a professional corporation in Louisiana can convert to an LLC but will need to file the appropriate paperwork with the Secretary of State.
Are there limits on how much stock a shareholder can hold in a professional corporation in Louisiana?
There are no limits on how much stock a shareholder can hold in a professional corporation in Louisiana.
Can a professional corporation in Louisiana be publicly traded on the stock exchange?
No, a professional corporation in Louisiana cannot be publicly traded on the stock exchange. It must remain a private entity.
What happens when a shareholder leaves a professional corporation in Louisiana?
When a shareholder leaves a professional corporation in Louisiana, their stock may be sold to another licensed professional or the shareholders may decide to dissolve the corporation.
Can a professional corporation in Louisiana file for bankruptcy?
Yes, a professional corporation in Louisiana can file for bankruptcy and it will need to do so as a corporation and not as a licensed professional.
Must a professional corporation in Louisiana use a specific corporate name?
Yes, the name of a professional corporation in Louisiana must comply with the state’s naming requirements and include terms such as “LLC, “Inc.”, or “P.C.”
Can a professional corporation revoke the corporate status in Louisiana?
Yes, a professional corporation in Louisiana can dissolve by filing Articles of Dissolution with the Louisiana Secretary of State.
What happens to the assets of a dissolved professional corporation in Louisiana?
After paying off any remaining debts or obligations, the remaining assets of a dissolved professional corporation in Louisiana will be distributed to the shareholders based on their percentage of ownership in the corporation.
What are the requirements for forming a professional corporation in Louisiana?
The requirements for forming a professional corporation in Louisiana vary depending on the specific profession. Generally, you will need a valid license to practice in the state, an operating agreement, and a registered agent located in Louisiana.
What certifications do professional corporations need to obtain in Louisiana?
Professional corporations in Louisiana may be required to obtain certain certifications or licenses, depending on their profession. For example, the Louisiana State Board of Medical Examiners requires medical professionals to obtain a license to practice medicine.
Can a professional corporation be owned by non-licensed individuals in Louisiana?
No, a professional corporation in Louisiana can only be owned by licensed professionals in the same field of practice.
How many people can own a professional corporation in Louisiana?
There is no limit to the number of owners a professional corporation in Louisiana can have, so long as they’re all licensed in the same field of practice.
Can a Louisiana professional corporation convert to a different type of business entity?
Yes, a Louisiana professional corporation can convert to another type of business entity, but you’ll need to follow the Louisiana Secretary of State’s procedures.
Is it expensive to form a professional corporation in Louisiana?
The cost of forming a professional corporation in Louisiana depends on the specific requirements for the profession. You can expect to pay a few hundred dollars in fees and expenses.
Do I need a lawyer to form a professional corporation in Louisiana?
While it is not legally required to have a lawyer to form a professional corporation in Louisiana, it is highly recommended to consult with an attorney who specializes in corporate law and can advise you on the specific regulations and requirements for your profession.
What is the liability protection for professional corporations in Louisiana?
Professional corporations in Louisiana offer limited liability protection, which means that a shareholder’s personal assets are generally safe from the corporation’s creditors.
How do I choose a name for my professional corporation in Louisiana?
You’ll need to follow Louisiana Secretary of State’s rules for Business and Trade Names, which may include restrictions on using certain words or phrases, such as “Corporation,” “Incorporated,” “Assoc.,” etc.
Can I operate a professional corporation under an assumed name in Louisiana?
No, a professional corporation in Louisiana cannot legally operate under an assumed name.
What are the reporting requirements for professional corporations in Louisiana?
Professional corporations in Louisiana are required to file annual reports with the Louisiana Secretary of State’s office.
Can professional corporations in Louisiana sell shares publicly?
No, professional corporations in Louisiana cannot sell their shares publicly, since their ownership is limited to licensed professionals in the same field.
Can a professional corporation in Louisiana merge with another corporation?
Yes, a professional corporation in Louisiana can merge with another corporation, but it needs to follow relevant Louisiana laws, regulations, and procedures for a smooth merge.
Can you offer other goods or services in addition to professional services in a professional corporation in Louisiana?
Yes, you can offer other goods or services in your Louisiana professional corporation, but it depends on the regulation and requirements applicable to your profession.
What should I know about the governing document of a professional corporation in Louisiana?
A professional corporation in Louisiana should have an operating agreement, which outlines how the corporation is run and provides guidelines for the corporation’s day to day management.
Can a professional corporation in Louisiana have employees?
Yes, a professional corporation in Louisiana can have employees, as long as they’re properly licensed in their field and the corporation meets all required guidelines.
Can a professional corporation in Louisiana issue stock options or warrants?
Yes, they can issue stock options or warrants.
Are there tax benefits for professional corporations in Louisiana?
Professional corporations in Louisiana have tax benefits like deducting the officer’s salary or employee benefits just like an LLC or an S-corp, depending on how it is structured.
Can a professional corporation in Louisiana operate in multiple states?
Maybe, the corporation may be required to register to do business in other states and be extra taxes and fees accordingly.
Can officers or employees in a Louisiana professional corporation transfer their shares to other non-licensed individuals?
No, transfer of shares can’t happen as only licensed individuals in the profession can legally hold shares under Louisiana regulations.
Can Louisiana professional corporations issue two or more classes of shares of stock?
No, issuing multiple series or diversified shares can’t happen as per Louisiana regulation.
Do I need to file taxes at the Federal, State, and Local level for my Louisiana professional corporation?
Yes, the corporation must follow all rules at the federal, state, and local levels like any other corporation.
How quickly can an additional owner join into ownership shares after formation?
New ownership can be added as per formal guidelines once all necessary rules and procedures are typically adopted.
What qualifications does a Louisiana attorney require to participate in professional corporations of lawyers?
Members of the Louisiana’s Bar Association could participate in owning and operating law professional corporations.
What fees and taxes are imposed by the Louisiana government when one forms a professional corporation?
The application base fee upon the formation of a professional corporation in Louisiana is $75. Further fees and costs vary depending on the profession and corporation structure adopted.

Also Read

How to Save Money While Forming Louisiana Professional Corporation

One of the initial steps to reduce costs while forming a Louisiana Professional Corporation is by conducting thorough research. Understanding the legal requirements and ensuring compliance with state regulations can help potential corporation owners avoid unnecessary expenses that may arise from incorrect or incomplete paperwork. By delving into readily available resources online and seeking guidance from legal experts, entrepreneurs can stay well-informed and save precious dollars.

Collaborating with professionals who are knowledgeable about the specific requirements for forming a professional corporation can also prove beneficial. Hiring an attorney or a business consultant who specializes in this area can guide and streamline the process, saving time and potentially reducing expenses. Their expertise can help individuals steer clear of errors that may result in costly corrections or delays. While this might entail an upfront expense, the long-term savings and peace of mind that come from working with experienced professionals are invaluable.

Moreover, conducting a thorough evaluation and comparison of the services and fees offered by different service providers is essential. Numerous companies offer assistance in forming professional corporations while charging varying rates. By seeking multiple quotes and clearly understanding the scope of services offered for each price, entrepreneurs can make informed decisions based on their budgetary needs and overall requirements. Taking the time to review these alternative possibilities may unleash surprising affordable options, without compromising on quality.

Another potential avenue to explore in pursuit of savings is to maximize the use of technology and automation. Several software and online platforms can streamline the incorporation process, allowing individuals to handle various tasks themselves instead of outsourcing them. However, caution must be exercised to ensure that necessary legal and regulatory steps are appropriately addressed. Nonetheless, utilizing technological solutions when viable can significantly reduce costs traditionally associated with legal and administrative assistance.

Additionally, one must not overlook the potential benefits of networking and seeking advice from experienced professionals within the same industry. Engaging in discussions and learning from their experience may unveil innovative ways to optimize efficiency and limit expenditures. Building relationships with like-minded individuals can open doors to affordable resources, partnerships, and potential cost-saving collaborations.

Finally, maintaining a clear record of all expenses and seeking professional advice regarding potential tax deductions is critical. Expenses related to forming a professional corporation can often be categorized as legitimate deductions, which may translate into significant tax savings. By utilizing all available ways to claim deductions, entrepreneurs can offset some of the costs associated with incorporation.

Understanding the complexities and potential pitfalls of starting a professional corporation in Louisiana is crucial in ensuring a smoother and cost-effective process. Careful planning, conducting diligent research, seeking expertise when necessary, utilizing technology sensibly, and exploiting networking opportunities are all valuable strategies. Embracing these approaches will empower prospective corporation owners with knowledge, equip them with savings strategies and enable them to establish a successful professional corporation without breaking the bank.

Conclusion

In conclusion, forming a professional corporation in Louisiana 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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