When it comes to legally forming a business in Minnesota, a professional corporation (PC) is a popular structure among licensed professionals, such as doctors, lawyers, architects, engineers, accountants, and more. A professional corporation can limit the personal liability of its shareholders, but it has more formalism and regulatory requirements than other business entities like sole proprietorships or partnerships. In this article, you will learn how to form a professional corporation in minnesota, step by step, including the legal and practical aspects that you should consider along the way.
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Step 1: Choose a Corporate Name
The first step towards forming a professional corporation in Minnesota is picking a name that is distinguishable, not confusingly similar to other corporations on file with the Secretary of State, and includes the word "Professional Corporation," or the abbreviation "P.A." or "PA".
Minnesota law prohibits certain words and phrases in a professional corporation's name, such as those that imply unethical conduct or misleading information, like "expert," "specialist," "experienced," or "the best." You can browse the Minnesota Secretary of State's website to find whether your desired corporate name is available or not. If it is, you can reserve it for sixty days by filing the Application for Reservation of Name electronically or through mail with a filing fee of $35, which is nonrefundable.
Step 2: Draft Articles of Incorporation
Once you have decided on a name for your professional corporation, you must draft Articles of Incorporation, which is a legal document that outlines the purpose of the corporation, its shareholders, directors, officers, and other relevant provisions. In Minnesota, professional corporations must follow specific statutory provisions under the Minnesota Professional Firms Act (Minnesota Statutes §§ 319B.01–319B.12) while drafting their Articles of Incorporation.
Some of the requirements of the Articles of Incorporation are:
- State that the corporation is organized under the Minnesota Professional Firms Act and elects to be a professional corporation.
- State the professional service(s) that the corporation aims to provide, which should match the areas of your shareholders' licenses (e.g., a law firm only for attorneys)
- Provide the names and addresses of its initial shareholders, who must be licensed professionals eligible to provide the stated professional service(s).
- Designate a professional service corporation as the registered agent for the corporation in Minnesota.
- Specify the number and classes of shares, if you decide to issue multiple classes of shares of stock.
- Disclose how you intend to handle the corporation’s dissolution.
For more guidance on the Articles of Incorporation, you can consult an attorney or use templates provided on the Minnesota Secretary of State's website. Once you have drafted Articles of Incorporation, you must get them officially approved by a licensed Minnesota attorney and have them signed by you or a named incorporator before filing.
Step 3: File the Articles of Incorporation
The next step in forming a professional corporation in Minnesota is to officially file the Articles of Incorporation with the Minnesota Secretary of State's office. You can file the Articles of Incorporation online or through mail with a filing fee of $150, processed within two business days in the former and within ten business days for the latter.
While filling out the Articles of Incorporation form, make sure to provide accurate and complete information for your corporation's establishments. If more than one share class is issued to shareholders, transfer restrictions and voting arrangement(s) must be specified by amendments to Article II of the Articles of Incorporation.
Step 4: Obtain Necessary Licenses and Permits
Once the Minnesota Secretary of State approves and processes your Articles of Incorporation, you still need to obtain other licenses and permits to operate legally. Legal requirements vary depending on your corporation type, professional expertise, and location in Minnesota. For example, professionals such as doctors need license and registrations from the Minnesota-stated Healthcare Licensing and Registration (e.g., Minnesota Board of Pharmacy, Board of Dentistry, etc.), whereas Accountants professionals need licenses and registrations from Minnesota Certified Public Accounting (CPA) Board. Professional corporations must also secure all licenses, refunds, etc., before conducting business.
Step 5: Draft Corporate Bylaws
Minnesota law permits professional corporations to draft their bylaws as an internal governing board for operating practices and procedures, day to day management, definition of corporate hierarchy, permission of waivers, veto rights, and resolution of conflicts in business agreements.
While drafting bylaws, it’s essential to consider its compatibility with Area 319B’s Specific Law. It’s always a good idea to consult a licensed Minnesota attorney’s advice to avoid potential problems that may arise with conflict between Minnesota laws (known or unknown) or those applicable federally.
Conclusion
Forming a professional corporation in Minnesota is a relatively formal legal process, but with the clear and consistent guidance available, you can create your own professional corporation properly. The benefits of having a professional corporation include enhanced personal protection from liability and tax benefits. The various legal formalities and mandatory registrations can be tricky sometimes; hence, it is recommended to consult with attorneys or a local team of experts to assist your business interests further.
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