_Note: This article provides general information and does not constitute legal advice. Consult with a qualified attorney for professional advice regarding your specific situation._
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Forming a professional corporation (PC) in South Dakota can provide many advantages for professionals, such as doctors, lawyers, architects, and accountants. By forming a PC, professionals are able to combine their skills and resources while enjoying certain legal protections and tax benefits. This guide will outline the steps required to form a professional corporation in South Dakota.
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1. Understand a Professional Corporation (PC)
Before diving into the process of forming a professional corporation, it is imperative to understand what a PC is. A professional corporation is a special type of business entity that allows licensed professionals to form a corporation to practice their respective professions. The activities of a PC are limited to the services provided within its area of expertise.
2. Choose a Suitable Name and Legal Structure
The first step in forming a professional corporation is selecting an appropriate name for the business. The name should be unique and not confuse clients with other existing entities. Additionally, the chosen name should comply with the South Dakota Secretary of State's requirements for legal names.
Next, decide the legal structure of the PC. In South Dakota, professionals have two legal structure options: limited liability company (LLC) or professional corporation (PC). Consult an attorney to decide which structure is best for your specific needs before proceeding.
3. Draft Articles of Incorporation
Articles of Incorporation serve as important legal documents that must be filed with the South Dakota Secretary of State. These articles outline the purpose, structure, and management of the professional corporation. It is important to consult with an attorney to ensure that the articles comply with all legal formalities and requirements.
Some key information that should be included in the articles are:
- The corporation's name and address.
- The corporation's primary purpose or profession.
- The names and addresses of initial directors and officers.
- The duration of the corporation (ongoing, limited term, etc.).
- The organizational structure (board of directors, officers, etc.).
4. Obtain Required Licenses and Permits
Professionals forming a PC need to ensure they possess the necessary licenses and permits required to practice their respective profession in South Dakota. The professional licenses should be obtained before proceeding with the formation of the PC. Contact the appropriate licensing or regulatory board for your profession to determine which licenses and permits are necessary.
5. File Articles of Incorporation
Once the articles of incorporation have been drafted and reviewed by an attorney, they must be filed with the South Dakota Secretary of State. The filing can be completed online or by mail.
When filing the articles, you will need to provide:
- The completed Articles of Incorporation form.
- The filing fee (check the Secretary of State's website for the current fee).
- Any additional documents requested by the Secretary of State.
6. Obtain an Employer Identification Number (EIN)
After successfully filing the articles of incorporation, it is necessary to obtain an Employer Identification Number (EIN) from the Internal Revenue Service (IRS). The EIN functions as the PC's identification number for tax purposes. The EIN can be obtained by completing an online application on the IRS website.
7. Comply with Ongoing Reporting Requirements
Once the PC is formed, there are ongoing reporting requirements that need to be fulfilled to remain in compliance with South Dakota laws. This includes filing an Annual Report with the Secretary of State and maintaining proper records of meetings and resolutions.
Conclusion
Forming a professional corporation in South Dakota requires careful planning and attention to legal formalities. By following the steps outlined in this guide, professionals can set up a professional corporation and enjoy the benefits it offers. Remember, consulting with an attorney familiar with South Dakota laws is crucial to ensure compliance and adherence to all requirements.
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