*By George Johnson*
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Forming a professional corporation (PC) in New Mexico can offer several advantages for professionals in regulated industries. By establishing a legal entity separate from their personal assets, professionals can limit their personal liability while enjoying the benefits of a corporation. This article will outline the steps involved in forming a professional corporation in New Mexico.
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Choosing a Name for Your Professional Corporation
Choosing a name is the starting point when forming a professional corporation. In order to comply with New Mexico law, the name must contain specific language that indicates it is a professional corporation. You must include words like "Professional Corporation," "P.C.," or the abbreviation "Prof. Corp." in your chosen name. It's essential to verify the availability of the chosen name by conducting a search through the New Mexico Secretary of State's website.
Creation of Articles of Incorporation
After selecting a name, professionals must draft and file their Articles of Incorporation with the New Mexico Secretary of State's office. These articles act as the PC's constitution and include pertinent details about the corporation, such as the name, address, and business structure. Additionally, you need to include the purpose of the corporation, the registered agent's name and address (a resident of New Mexico), and the number of authorized shares.
Professional Licensing and Certification
To operate as a professional corporation in New Mexico, you must hold the appropriate professional licenses and certifications required by the regulatory boards governing your profession. It's crucial to ensure compliance with these licensing and certification requirements before submitting your articles of incorporation. Failing to comply may lead to the rejection of your application.
Prepare a Certificate of Disclosure for Professional Corporations
As part of the formation process, New Mexico law requires new professional corporations to submit a Certificate of Disclosure to the state's professional licensing boards. This certificate should provide detailed information about each professional involved in the corporation, including their names, licenses, qualifications, and any disciplinary actions taken against them by any states or jurisdictions.
Draft Your Bylaws
A professional corporation's bylaws act as its internal rule book, specifying how the corporation will be governed and managed. While specific bylaw requirements may vary depending on the nature of the profession, they typically cover essential details such as shareholder meetings, director elections, and the roles and responsibilities of officers and directors.
Obtain the Required Licenses and Permits
In addition to professional licenses, you may need to secure additional licenses or permits to legally operate your professional corporation. It's advisable to check with relevant regulatory bodies, such as the New Mexico Regulation and Licensing Department, to identify any specific licenses or permits required for your particular profession.
Holding an Organizational Meeting
After completing the necessary filing, it is essential to hold an initial organizational meeting for your professional corporation. During this meeting, key decisions about the corporation must be made, including the election of directors and officers. Minutes should be kept to document the proceedings of this meeting.
File for Tax Identification Numbers and Pay Taxes
Once the professional corporation is formed, it is crucial to obtain an employer identification number (EIN) from the Internal Revenue Service (IRS). An EIN is similar to a social security number for your corporation and is required for various financial and tax-related purposes. Additionally, you should familiarize yourself with the tax obligations of your professional corporation to ensure compliance with federal and state tax laws.
Comply with Ongoing Corporate Formalities and Reporting Requirements
To maintain your professional corporation's legal status, you must comply with ongoing corporate formalities and reporting requirements. These may include annual filings with the New Mexico Secretary of State, holding regular shareholder and director meetings, maintaining accurate corporate records, and adhering to other filing and reporting obligations.
Summary
Forming a professional corporation in New Mexico requires careful attention to legal and professional regulations. By following the steps provided in this article, professionals can establish a professional corporation that provides liability protection and legitimacy to their business endeavors. Remember, seeking professional advice from an attorney or legal counsel throughout the formation process can help ensure compliance and success in forming your professional corporation.
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