Q: I need to make my corporation a professional firm for licensing, how is this accomplished in Minnesota?
Thank you to a client who owns a Minnesota corporation for that great question! True to their name, professional corporations (PCs) are corporations owned and operated by licensed professionals. You can designate your corporation as a professional entity when filing your Articles of Incorporation or elect the status after the fact. We’ll walk you through the process in this guide.
What is a Professional Corporation?
A Minnesota professional corporation is very similar to an conventional Minnesota corporation in most ways: able to issue stock, run by a board of directors and appointed executives. They both pay corporate income tax, provide liability protection for shareholders and owners, and are even created with the same paperwork (with a small addition to create a professional corporation).
What sets a professional corporation apart from a conventional corporation are two major factors: licensing and malpractice liability.
- Licensing: In Minnesota, the only entities that are allowed to practice a licensed profession (other than a sole proprietor or general partnership) are those which comply with the Minnesota Professional Firms Act and the rules the relevant state licensing board sets for that profession. Professional corporations, professional LLCs and professional limited liability partnerships are the entities covered in the Professional Firms Act.
A Minnesota professional corporation can only provide professional services if all owners and employees performing the services are appropriately licensed in the specified practice. Further, every share of stock in the corporation must be owned by someone licensed in that profession.
- Malpractice Liability: As with a regular corporation, shareholders and members are protected from personal liability for business debts—a shareholder can’t be sued and lose personal assets over a suit against the company.
That protection has a major exception, however—an exception that is itself a sort of protection for other owners and shareholders. Individual professionals may be sued for malpractice without other members or the corporation itself being held liable. If a doctor is responsible for malpractice, the other doctors in the professional corporation won’t be at risk for damages for that individual’s actions.
What constitutes professional services in Minnesota?
Under Minnesota Statute § 319B.02.19, professional services include: medicine and surgery, physician’s assistants, chiropractic services, registered nursing, optometry, psychology, social work, marriage and family therapy, professional counseling, dentistry and dental hygenics, pharmacy, podiatry, veterinary medicine, architecture, engineering, surveying, landscape architecture, geoscience, interior design, accountancy, and law.
How to Form a Minnesota Professional Corporation
You follow the same steps and use the same Minnesota Articles of Incorporation form ($135 by mail, $155 for expedited in-person service and online filings) to create a professional corporation as you would a conventional one.
The big difference is that a professional corporation’s Articles of Incorporation must state that the firm is subject to and will elect to operate under Minnesota Statute 319B0.1 to 319B.12 (which can also be referred to as the Minnesota Professional Firms Act in that statement). A professional firm must also include a list of the professional services it is authorized to provide.
Are there rules for naming a professional corporation?
Yes, a professional corporation’s legal name must include one of the following: “Professional Corporation,” “Professional Service Corporation,” “Service Corporation,” “Professional Association,” “Chartered,” “Limited,” “P.C.,” “P.S.C.,” “S.C.,” “P.A.,” or “Ltd.” A professional corporation also may not imply superiority in any way, and must be distinguishable from the names of any other entities in the state.
Where do I send my Articles of Incorporation?
Articles of Incorporation can be filed in-person or by mail:
Minnesota Secretary of State – Business Services
First National Bank Building
332 Minnesota Street, Suite N201
Saint Paul, MN 55101
You can also file Articles of Incorporation online through the Secretary of State’s Business & Liens portal.
I already formed a corporation, how can I change it to a professional one?
If you want to change an existing corporation into a professional corporation, this can be accomplished by filing an Amendment to your Articles of Incorporation with the Minnesota Secretary of State ($35 for normal domestic service, $50 for foreign corporations, and an additional $10 fee to file online).
You simply need to add the same statement as above regarding being subject to the Minnesota Professional Firms Act, as well as a list of the professional services that will be provided by the corporation. You will also likely need to amend the corporation’s name to reflect the requirements of a professional corporation.
Maintaining professional firm status in Minnesota
You and all other owners of the professional corporation will need to keep your Minnesota professional licenses current and in good standing. A valid license is required when rendering professional services. You will also need to maintain good standing with the Secretary of State by filing your Minnesota Annual Renewal.