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Professional Service Corporations: Requirements to Create and Verify

Wednesday, May 1, 2019   (0 Comments)
Posted by: Adrienne Hersh, JD, ICS General Counsel
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Editor's Note: This is a portion of a full article on how to form and license different entities. Members may access the full article here. To read a more in-depth discussion on the differences between the entities, click here.

 

Professional Service Corporations


A professional service corporation is a type of professional corporation that allows the offering of any combination of medicine, including chiropractic; podiatry, dentistry, and optometry through one corporate entity.  The professional service corporation is formed by filing of Articles of Incorporation with the Secretary of State (see instructions below).  This form is specifically intended to form a professional service corporation and must not be confused with Articles of Incorporation for a regular business corporation. If the incorporator forms a regular business corporation, the corporation is not legally authorized to render medical and other health care services.  When creating any business entity for a health care practice, it is always a good idea to make certain the correct form is used, even with the assistance of a professional.

Articles of Incorporation for a professional service corporation in Illinois are found at:  http://www.cyberdriveillinois.com/publications/pdf_publications/bca210_psca.pdf -Form BCA 2.10(PSCA).  NOTE, the form for a regular business corporation is BCA 2.10, which is NOT to be used).  The articles must include in the corporate purpose the specific profession(s) to be practiced and services rendered and must list the street address of all offices at which the corporation intends to practice. The following template language is pre-printed on the Illinois Secretary of State Articles of Incorporation form: 

“Professional Corporation: To practice the profession of _________________________, rendering that type of professional service and services ancillary thereto.
Professional service will be rendered from the following address(es): ___________________________________________________________
Number and Street    City      State    ZIP Code”

The incorporator must complete by filling in the information on the form.  The regular filing fee is $150 plus a franchise tax fee of $25, with an additional $100 for expedited filing.  Professional service corporation applications are not accepted online and must be sent or delivered to the Secretary of State in paper format.  Generally, the wait time for regular processing is 2-4 weeks, or for expedited service, the return can be as fast and the next business day.

When choosing a name, a professional service corporation may use the last name of one or more persons currently associated with it (compare a medical corporation that permits the use of a previous owner).  If the owners want to use a name other than one containing the name or surname of a current shareholder, the corporation must first file form BCA-4.15/4.20 with the Illinois Secretary of State (Application to Adopt, Change or Cancel an Assumed Corporate Name) https://www.cyberdriveillinois.com/publications/pdf_publications/bca415.pdf.  When the application document is received back from the Secretary of State, the corporation owners must file it with the Recorder’s Office in the county in which it is located or has its principal office.  In all cases, the name of a professional service corporation must end with the word "chartered" or "Limited" or the abbreviation "Ltd.", or with the words "Professional Corporation" or the abbreviation "Prof. Corp." or the initials "P. C.".   For a detailed article on filing for an assumed name, see:  https://www.ilchiro.org/news/news.asp?id=289084&hhSearchTerms=%22assumed+name%22

Like all Illinois corporations and medical corporations, professional service corporations must prepare and adopt by-laws (although they are internal documents and not filed with the state).  The by-laws are a guide to the operation of the corporation and usually include elements such as the number and duties of officers and directors, elections of officers and directors, requirements for meetings of directors and shareholders, and any other procedural requirements that are in keeping with the corporation’s Articles of Incorporation and the law.  The ICS recommends seeking professional assistance with the drafting and adopting of by-laws.  There are technical requirements, such as voting and how to take formal action, annual meetings and liquidation of departing or deceased shareholder interests, that are beyond the scope of this article.  Of course, by-laws may be seen as more important in a multi-owner than in a one-owner corporation, but by-laws are required for all professional service corporations. 

Like a medical corporation, in order to conduct business, a professional service corporation must obtain a certificate of registration with the Illinois Department of Financial and Professional Regulation (IDFPR).  A separate application must be filed for each location at which the corporation will maintain offices.  The filing fee is $50 for each location.  If all officers, directors and shareholders are licensed under the MPA and have no disciplinary action pending against them, the Department will issue a certificate with an individual registration number for each office.  The certificate may be revoked if the license of any officer, director or shareholder is revoked or suspended.  For information and forms for registration, see the IDFPR website at:  https://www.idfpr.com/Forms/Online/(060)%20Professional%20Service%20Corporation%20User%20Guide.pdf.  The certificate may be revoked if the license of any officer, director or shareholder is revoked or suspended. 

A professional service corporation is taxed as a separate entity.  It must obtain an EIN, file its own return, and pay its own taxes.  (Information about how to obtain an EIN for all entities is provided at the end of this article.)  The individual owners and employees must also file personal returns and pay tax on their individual income.  

Summary of Initial Documents and Filings – Professional Service Corporation

• Organizational documents (Secretary of State) – Articles of Incorporation required
• IDFPR registration – IDFPR registration required (corporation requires separate license)
• Assumed name – Application to Adopt Assumed Name required if name does not contain owner name (Secretary of State) AND registration of assumed name with county required
• Employer Identification Number (IRS) --EIN required for corporation and corporation taxed as separate entity
• By-laws – Required but internal only; not filed with state

 

 

Editor's Note: This is a portion of a full article on how to form and license different entities. Members may access the full article here. To read a more in-depth discussion on the differences between the entities, click here.

 

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