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Incorporating Your Business
Formation & Operation
A professional corporation resembles a business corporation, requiring compliance with corporate law and the rules and regulations of professional licensing bodies. A professional corporation is formed in the same manner as a business corporation, except that it typically has one or several of the following additional limitations, depending on the jurisdiction:
- All shares of stock of the corporation (or a minimum percentage) must be owned and held by individuals licensed in the profession of the corporation.
- At least one incorporator must be licensed in the profession.
- At least one director (or a majority, or even exclusively) must be licensed in the profession.
- The articles of incorporation, in addition to all other requirements, must limit the activities of the corporation to the profession.
- The professional corporation may be required to obtain from the appropriate professional body a certification that the shares of stock are owned by individuals who are duly licensed in the profession.
- Professional corporations are typically required to use the name of the professional as part of the corporate name. They are also required to have the words "Professional Corporation" as part of its legal name.
Period of Existence
A professional corporation has a less stable business life than a business corporation due to the dependence on its members. For example: The death or disqualification of a shareholder or employee may result in the dissolution of the corporation.