Learn How to Form an Louisiana Professional Corporation

Determine whether a Louisiana professional corporation structure is right for you

All businesses should consider a formal entity structure, but there are some that would do better as a corporation than other types. See the ZenBusiness entity guide to see what’s right for you.

If your career requires you to obtain a license before you can practice, you may be able to form a professional corporation. This allows you to form a joint practice with others in your field.

The biggest advantage to forming a professional corporation is that it protects each individual from the malpractice of others. Essentially, if one member commits malpractice, the others won’t be held responsible, which can provide financial protection.

In Louisiana, there are only a few industries in which a professional corporation can be formed. A few examples include social work, medicine, dentistry, law, architecture, and nursing. Each eligible profession has its own chapter in the 12th Title of Lousiana’s Revised Statutes detailing who can form a PC, and what restrictions they must abide by.

In many states, professionals wanting to offer their services can form a professional limited liability company (PLLC). Unfortunately, Louisiana doesn’t have this structure. A standard Louisiana LLC is an option, although all members must be professionally licensed in their industry. This structure doesn’t offer the same level of protection that a professional corporation does, but it can provide added flexibility at tax time.

The ownership and management of professional corporations is determined by the structure set forth in the Articles of Incorporation and/or corporate bylaws, which may be determined by the board of directors. It should also be noted that all of your board members must be licensed in the corporation’s main industry.

Choose a name for your professional corporation

Once you’ve determined that a professional corporation is the right structure for you, you’ll need to come up with a name. There are a few restrictions for naming a professional corporation in Louisiana.

For starters, your name can’t include words that refer to certain industries unless your corporation represents those industries. For example, a corporation practicing law can’t include medical-related words or phrases. Some suitable examples include “A Professional Corporation,” “A Professional Medical Corporation,” “A Medical Corporation.” Some may also use the ending “Limited” or “Ltd.” For more specific guidelines, see Title 12 of the Louisiana Revised Statutes.

Research your name

Once you’ve thought of a name, you can use the Louisiana Secretary of State’s commercial database to run a preliminary search to see if it’s available (you can’t use a name that’s too similar to an existing Louisiana business). Once you’ve found a name for your new corporation, you can reserve it to ensure that no one else takes it before you’re ready to file. You can hold your name for 120 days using ZenBusiness’s name reservation service.

You may also want to see if a domain name is available for the business name you’ve chosen. You can use ZenBusiness’s domain name service to do this quickly and easily.

Select a Louisiana registered agent

Louisiana requires all businesses to have a registered agent. The registered agent of your corporation is the individual or entity designated to receive all your business’s legal documents, including subpoenas and notices from the Secretary of State. They’re also responsible for making sure the business receives them.

You can serve as your own registered agent, as can any legal adult that physically resides in Louisiana. But it’s a good idea to use an outside service to keep things separate and organized while maintaining compliance. This also eliminates the need for you to be available at your office during all normal business hours, as registered agents are required to be.

Complete your Louisiana Articles of Incorporation

Next, you’ll need to file the Articles of Incorporation with the Louisiana Secretary of State. You can file the Articles of Incorporation yourself, with your board, or you can have an entity file them on your behalf.

The Articles of Incorporation are the documents that officially register your business as a corporation in the state. As such, they can be time-consuming and complicated to file.

The cost to file the Articles of Incorporation is $75, with additional fees for expedited processing. Fees can be paid by check or money order or by credit card with a $5 surcharge. You can file online, by mail, by fax, or in person.

Establish a corporate record in Louisiana

Louisiana requires professional corporations to keep a permanent record of every board meeting and important decision the company makes. This record can be stored physically or digitally at the corporation’s place of business or in another secure location.

Designate a Louisiana professional corporation board of directors

One of the first items you should include in your corporate record is the designation of the board of directors. As required by state law, your board of directors must be individuals sharing the same profession as the one your corporation was created for. These appointments should be recorded as part of your incorporator’s statement.

Create Louisiana corporate bylaws

The first order of business for your appointed board of directors is to determine your corporation’s bylaws. Similar to an operating agreement for an LLC, a corporation’s bylaws are the rules and procedures it will follow. This includes how it operates internally as well as how it conducts business. It should include everything from how directors are selected to how you’ll handle your board meetings.

Bylaws aren’t required, although it’s a good idea to have them. You may need them to prevent and resolve disputes, and some financial institutions, including the Small Business Administration, require them for opening corporate bank accounts and receiving loans.

Hold your first board meeting

Once your professional corporation is formed, you’ll need to hold your first official board meeting. During this meeting, you’ll want to approve your bylaws and determine how your business will operate. This can include who’s responsible for what.

It’s important to set up a way to record and store every detail of your board meetings for future reference. This can help you comply with state regulations and prepare information for your annual reports and other filings.

Handle Louisiana tax obligations

Federal Requirements

To operate a professional corporation in Louisiana, you’ll need to get an Employer Identification Number (EIN). The IRS issues this number to identify your organization. You can apply for this directly through the IRS, or you can also use our EIN service if you prefer. You’ll need this number to file corporate tax returns, hire employees, and open bank accounts.

State Requirements

In addition to federal taxes, your corporation will also need to file state income taxes in Louisiana. You may also need to pay a corporate franchise tax. For more information, contact the Louisiana Department of Revenue or a qualified accountant.

Local Requirements

Most cities and parishes in Louisiana have their own local taxes that you’ll need to be aware of. You can contact your local revenue departments to find out which taxes you may need to collect and remit.

Obtain Louisiana business licenses and permits

Depending on where and what kind of business your corporation plans to conduct, you may also need certain licenses and permits. It’s important to understand that forming a professional corporation simply establishes the structure to limit your personal liability. It doesn’t negate the need for business licenses and permits on the local, state, and federal levels.

Unfortunately, there are no all-inclusive resources that can tell you exactly what you need because requirements vary by location and industry. As a business owner, it’s your responsibility to determine which licenses and permits you need to legally operate your business. Our business license report service can get you started.

Acquire insurance for your Louisiana professional corporation

If you plan on having even a single employee, Louisiana state law requires you to have workers’ compensation insurance or permission to self-insure. You can learn more by contacting the Louisiana Workforce Commission.

While not required, it’s wise to obtain a general liability insurance policy to protect against general legal claims that aren’t related to your professional services.

Lastly, you may need specialized insurance policies relevant to your particular industry. For example, medical professionals will want to look into malpractice insurance and enroll in the Louisiana Patient’s Compensation Fund. It’s always worth checking with an insurance professional to ensure that you have the right coverage for your needs.

Open a business bank account

You’ll want to have a separate business account dedicated to your professional corporation. This allows you to keep your business transactions separate from your personal ones. This can save you a lot of headaches later when filing your corporate and personal tax returns. Have your business documents, EIN, personal identification ready when you apply.

Ready to start your business?

At ZenBusiness, we are proud to support small businesses through a variety of different tools and services. Whether you need a registered agent service, want to reserve a business name, or are looking to register a domain, our goal is to help you stay on the road to success. Check out our services and contact us today to see how we can help you grow your company.