*By John Smith, Esq.*
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If you're a professional in Washington state looking to start your own corporation, you may want to consider forming a professional corporation (PC). A professional corporation allows certain licensed professionals, such as doctors, lawyers, and accountants, to incorporate their practices while still enjoying the benefits of personal liability protection. In this article, we will guide you through the process of forming a professional corporation in Washington.
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Step 1: Choose a name for your corporation
First, you need to choose a unique and distinguishable name for your professional corporation. According to Washington's business regulations, your PC's name must contain the phrase "Professional Corporation" or "Prof. Corp." Additionally, check the Secretary of State's business name database to ensure your desired name isn't already taken.
Step 2: Appoint Officers and Directors
Select individuals who will serve as officers and directors of your professional corporation. These positions typically consist of President, Vice President, Secretary, and Treasurer. It's important to note that in Washington, at least half of the directors must be licensed or practicing professionals in the field in which the corporation is engaged.
Step 3: Draft and file Articles of Incorporation
Next, you will need to prepare Articles of Incorporation. This legal document includes important details about your PC, such as the name and purpose of the corporation, the initial directors and officers, and the number of authorized shares of stock. Attach a written consent to act as a professional corporation, signed by each shareholder, to the Articles. Once drafted, file the document with the Washington Secretary of State.
Step 4: Obtain necessary licenses and registrations
As a professional corporation, you will likely need to acquire additional licenses and registrations specific to your profession. For example, doctors will need to be licensed by the Washington Medical Commission, while attorneys will need to be registered with the Washington State Bar Association. Ensure that you comply with all relevant licensing requirements.
Step 5: Develop corporate bylaws
Developing corporate bylaws is an important step in organizing your professional corporation. Bylaws establish rules and procedures for your PC's internal operations. This includes outlining how meetings will be conducted, guidelines for electing directors, and procedures for adding or removing officers. It's essential to create comprehensive and clear bylaws that reflect your corporation's specific requirements.
Step 6: Hold an initial organizational meeting
Once your corporation is officially formed, you must hold an initial organizational meeting. During this meeting, directors and officers should be formally appointed, bylaws should be adopted, and any other necessary corporate actions should be taken. Make sure to keep minutes of this meeting, as they will serve as a record of your corporation's decision-making processes.
Step 7: Obtain an Employer Identification Number (EIN)
To separate your personal and corporate finances, you will need to obtain an Employer Identification Number (EIN) from the Internal Revenue Service (IRS). This number is used for tax purposes, opening a bank account, hiring employees, and other important financial matters. You can apply for an EIN online through the IRS website.
Step 8: Register for state taxes and other obligations
After obtaining your EIN, you should register your professional corporation for state taxes with the Washington State Department of Revenue. Depending on your profession, you may also need to register with other relevant state agencies that oversee occupational licensing and regulation, such as the Washington State Department of Health or the Washington State Bar.
Step 9: Ensure ongoing compliance
Finally, to stay in good standing, be aware of your ongoing compliance obligations. Submit annual reports to the Secretary of State, pay all required licensing fees and taxes promptly, and comply with any regulatory requirements applicable to your profession. Failure to do so can lead to penalties, fines, or the loss of your corporation's legal status.
Forming a professional corporation in Washington requires careful attention to detail and adherence to the specific regulations governing your profession. Consult with an experienced attorney or professional business consultant to ensure you meet all the necessary legal requirements. By taking these steps, you will be on your way to establishing a legitimate and successful professional corporation in Washington.
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