Michigan’s Corporate Law for Professional Corporations

Michigan’s corporate law provides a comprehensive framework for various business entities, including professional corporations (PCs). These corporations are specifically structured for licensed professions, such as doctors, lawyers, and accountants, allowing them to benefit from corporate protections while fulfilling state licensing requirements.

Under Michigan law, a professional corporation is formed to offer professional services. The key distinction between a regular corporation and a professional corporation lies in the fact that all shareholders, directors, and officers must hold the appropriate licenses to render the specific professional service that the corporation offers. This requirement ensures that all individuals involved in the management and operation of the business are qualified professionals.

To establish a professional corporation in Michigan, the following steps must be taken:

• Select a Name: The name of the professional corporation must include “Professional Corporation” or abbreviations like "P.C." or "P.A." Additionally, the name must not resemble any existing entities registered in Michigan.
• File Articles of Incorporation: The Articles of Incorporation, which outline the corporation's purpose, structure, and other essential details, must be filed with the Michigan Department of Licensing and Regulatory Affairs (LARA).
• Obtain Necessary Licenses: Each professional providing services through the corporation must possess the requisite state license and provide documentation to this effect.
• Establish Bylaws: Bylaws govern how the corporation operates, including rules for meetings, voting, and management structures.
• Register for Taxes: The professional corporation must obtain an Employer Identification Number (EIN) from the IRS and register for any applicable state taxes.

Once formed, professional corporations in Michigan enjoy several advantages:

• Limited Liability Protection: Like other forms of corporations, professional corporations provide limited liability protection to their owners, safeguarding personal assets from business liabilities.
• Perpetual Existence: Unlike sole proprietorships or partnerships, professional corporations can continue to exist independently of changes in ownership or management.
• Tax Flexibility: Professional corporations may choose to be taxed as an S Corporation, which can help mitigate double taxation on corporate profits.

However, there are also some challenges associated with operating a professional corporation in Michigan. Professionals are still liable for their own malpractice even within a corporate structure, meaning that personal liability remains for services rendered. Moreover, compliance with both corporate formalities and state licensing rules is crucial to maintaining the corporation's standing.

In conclusion, Michigan’s corporate law allows for the formation and operation of professional corporations, providing essential legal structures for licensed professionals. By adhering to the state's regulations and ensuring proper formation and compliance, professionals can successfully leverage the benefits of a professional corporation while protecting their interests.