Do I Need To Form A Florida Professional Service Corporation
The Professional Service Corporation: A Deeper Swoop Into Florida Statute Chapter 621
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The P.A., or P.L.Fifty.C. is a corporate structure specifically designed for various licensed professionals who wish to hang their shingle and offset their own practise. Fla. Stat. Ch. 621, besides known every bit the Professional Service Corporation and Limited Liability Company Act proscribes certain benefits to those corporations and its members that merely the P.A. or P.50.L.C. are entitled to.[one] The vaunted "P" later the name of the corporation connotes that the visitor renders a professional service through its members, all of whom are licensed to practice in their specific fields. This article analyzes Chapter 621 and the certain advantages afforded to professional services corporations, and why incorporating as a PA or PLLC is a considerable option for a professional person deciding how he or she wants to construction their practice.
Simply Professionals of the Same Field Can Accept an Ownership Interest in a PA/PLLC
Fla. Stat. Ch. 621 works in congruence with Fla. Stat. Ch. 607 (The "Florida Business Corporation Act") and Fla. Stat. Ch. 605 (The "Florida Revised Limited Liability Visitor Human action"), however, it provides several distinctions distinguishing a PA or a PLLC from other corporations. The main distinction with the PA or PLLC compared to other corporate structures is that organizing/incorporating as a PA prohibits nonprofessionals or professionals of a different field to obtain an ownership interest in the entity. Fla. Stat. § 621.05; see also In re Adams, 389 B.R. 762 (Bankr. G.D. Fla. 2007) (prohibiting professionals who have a membership interest in a professional person services corporation from owning its interest as tenancy by the entirety with a nonprofessional spouse).
Additionally, the Human activity prohibits whatever professional service corporation from issuing "any of its capital stock to anyone other than a professional corporation, a professional person limited liability visitor, or an individual who is duly licensed or otherwise legally authorized to return the same specific professional person services as those for which the corporation was incorporated." Fla. Stat. § 621.09. Also, no shareholder or member of a professional service corporation can sell or transfer his or her shares except to (a) another professional service corporation; or (b) another professional of the aforementioned field. Fla. Stat. § 621.eleven. That means if you are a law firm, for case, only lawyers tin have an ownership involvement in the practise, which is separate from a non professional service corporation incorporated under Fla. Stat. Ch. 607, such as local mom and pop shop, or other business organisation ventures where any person no matter their occupation tin can have an ownership interest in the company.
An reward lies if a creditor attempts to go subsequently the PA/PLLC. Because most of the fourth dimension, the creditor (such as a bank) is non of the same profession as the PA/PLLC, thus the creditor is unable to levy shares of the PA. The corporate structure thereby acts every bit a grade of asset protection for its members insulating its shares from collection by nonprofessional creditors.
Members of a PA or PLLC are Non Liable for the Corporations Debts
Similar to an Inc. or an LLC, members shareholders, officers, and directors are not personally liable for the PA or PLLC's corporate debts or other business liabilities. This holds important if a creditor attempts to obtain a judgment against a PA or whatsoever debts. See Porlick, Poliquin, Samara, Inc. v. Compton, 683 Then.2d 545 (Fla. 3d. DCA 1996) (holding that the president of a law firm organized as a professional person service corporation was not personally liable for corporation's contractual debt to pay an engineering expert). However, members should know that the corporate construction does non shield them from personal liability for malpractice. Members are liable for their own "individual acts of negligence, wrongful acts, or misconduct or for acts committed by employees nether their direct supervision." Fla. Stat. § 621.07. The professional person service corporation itself can also be held liable for the misconduct of 1 of its members. Id. However, other members of the professional person service corporation volition almost likely not exist personally liable for the misconduct of another member, except for in egregious circumstances.
Conclusion
Incorporating equally a PA or a PLLC has certain advantages for professionals that tin can only exist obtained by incorporating nether Affiliate 621. If you lot are a professional, and looking to start your ain do, or a do looking to re-organize its corporate structure, the professional person service corporation is a route worth because compared to other mediums such every bit the LLC or a traditional corporation.
[1] This commodity does not outline the taxation benefits afforded to Professional person Service Corporations.
Source: https://www.jimersonfirm.com/blog/2019/11/the-professional-service-corporation-a-deeper-dive-into-fla-stat-ch-621/
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