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As one of the fastest-growing states in the U.S., Arizona offers numerous opportunities for professionals across multiple sectors. If you're looking to establish a professional corporation in Arizona, it's crucial to understand the legal requirements and steps involved in the process. In this comprehensive guide, we'll take you through the process of forming a professional corporation in Arizona, starting from the legal aspects to the necessary documents and ongoing compliance obligations.
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What is a Professional Corporation?
A professional corporation, often abbreviated as "PC," is a legally recognized business entity designed specifically for professionals such as attorneys, doctors, architects, accountants, and engineers. Unlike a traditional corporation, a professional corporation provides its owners with certain liability protections against business debts and legal claims, while still allowing them to conduct their professional practice.
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Meeting Legal Requirements
Before you can proceed with forming a professional corporation in Arizona, it's essential to meet the legal requirements outlined by the state. These requirements include:
1. Determining Eligible Professions
Arizona law specifies the eligible professions that can form a professional corporation. These professions typically require licenses issued by a state regulatory authority. Some eligible professions include attorneys, accountants, chiropractors, optometrists, veterinarians, and many more. Consult the Arizona Corporation Commission's website to confirm your profession's eligibility.
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2. Licensure and Compliance
Individual professionals within the eligible professions must ensure they possess the necessary licenses and comply with any specific requirements mandated by their respective regulatory boards. Fulfilling these requirements is crucial before commencing the process of forming the professional corporation.
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3. Selecting an Appropriate Name
Selecting an appropriate name is necessary to distinguish your professional corporation from others. Arizona law requires your professional corporation's name to contain specific words such as "Professional Corporation" or an appropriate abbreviation like "PC" or "P.C." Moreover, the name shouldn't imply that the corporation provides services other than those permissible under its professional license.
4. Choosing Registered Agent
A professional corporation must designate a registered agent located in Arizona to receive important legal documents and notifications on behalf of the corporation. This registered agent must have a physical address within the state and be available during regular business hours.
5. Preparing Articles of Incorporation
In order to formally establish your professional corporation, you need to prepare and file Articles of Incorporation with the Arizona Corporation Commission. These articles typically include essential information such as the corporation's name, purpose, registered agent's details, and the names and addresses of the initial directors.
Forming a Professional Corporation
Once you have met the legal requirements, you can proceed with forming your professional corporation by following these steps:
Step 1: Completion of Articles of Incorporation
Draft the Articles of Incorporation as per the required format. Include all the necessary information mentioned and ensure it complies with the Arizona Corporation Commission's guidelines. You can file the Articles of Incorporation online or mail a physical copy, along with the required filing fee.
Step 2: Payment of Filing Fee
To ensure that your Articles of Incorporation are processed, you will need to pay the applicable filing fee. The current fee for filing Articles of Incorporation with the Arizona Corporation Commission is subject to change, so be sure to check the official website for the most up-to-date information.
Step 3: Obtaining an EIN
After confirming that the Articles of Incorporation have been filed successfully, obtain an Employer Identification Number (EIN) from the Internal Revenue Service (IRS). The EIN is essential for tax purposes and enables you to hire employees, open business bank accounts, and conduct transactions citing the corporation instead of personal details.
Ongoing Compliance Obligations
Once your professional corporation is established, it's crucial to maintain ongoing compliance to safeguard your corporation's legal status. Here are some ongoing compliance obligations:
Filing Annual Reports
Every year, your professional corporation is required to file an Annual Report with the Arizona Corporation Commission. This report contains essential information such as the corporation's address, current directors, and principal office address. Failure to file the Annual Report on time may result in penalties and potential administrative dissolution of the corporation.
Maintaining Proper Corporate Records
As a professional corporation, maintaining accurate and up-to-date corporate records is essential. This includes documenting meeting minutes, board resolutions, major financial transactions, and other crucial corporate activities. Proper record-keeping not only ensures compliance but also strengthens your corporation's credibility.
Renewing Professional Licenses
Each professional within the corporation must renew their licenses as required by their respective regulatory boards. Failure to renew licenses can affect the corporation's status and ability to provide professional services.
Conclusion
Forming a professional corporation in Arizona requires thorough understanding of the legal requirements, meticulous preparation of documents, and ongoing compliance with corporate and professional rules. By following the steps outlined in this guide, professionals can establish and run their professional corporations successfully while protecting their personal assets. However, professional advice from an attorney or business consultant is highly recommended to ensure compliance with all regulations pertaining to your specific profession and circumstances.
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