In Florida, just as in many other states, certain professionals who offer their services to the public are allowed to form a specific type of business entity that reflects the professional nature of their services. The term ‘Professional Association’ (PA) refers to a specific business structure allowed under Florida law that enables licensed professionals to form a corporation for their practice. In the Florida Statutes, this entity is known as a “Professional Service Corporation” and it is permitted to be titled the more common “Professional Association.” Understanding the meaning of a Professional Association, how it differs from other business structures, and the implications of operating as one, is critical for professionals to remain compliant and make informed decisions.

The Professional Association Defined

A Professional Association (PA), under Florida Statutes, is a corporation organized for the purpose of providing a professional service, such as medical, legal, accounting, or other services that require a license to practice. These entities are governed by both the Florida Business Corporation Act and specific statutes pertaining to the regulation of the profession in question.

Key Features of a Professional Association

Licensure Requirement: To form a PA, all incorporators and at least one officer or director must be duly licensed or otherwise legally authorized to render the specific professional services for which the corporation is organized.
Limited Liability: Much like other corporate forms, a PA provides limited liability protection to the professional members. This means personal assets are generally shielded from the PA’s business liabilities.
Tax Considerations: PAs are subject to corporate tax treatment. However, similar to ‘S’ corporations, PAs can elect to be treated as a pass-through entity for tax purposes where income and losses flow through to individual tax returns, avoiding the double taxation scenario.
Name Restrictions: The name of a Professional Association must include specific wording such as “Chartered,” “Professional Association,” or simply “P.A.”, indicating its status as a professional entity.
Restricted Ownership: Shareholders of a PA must be licensed professionals, although some exceptions allow non-licensed individuals to hold shares in specific circumstances, such as through inheritance.

Distinctions From Other Entities

Professional Associations are distinct from Professional Limited Liability Companies (PLLCs). While both are designed for professionals, PLLCs are member-managed entities offering a more flexible operational structure compared to the more rigid corporate governance of PAs. In some instances, Florida law prescribes which type of professional entity certain licensed professionals must choose based on their field.

Importance of Compliance

Not abiding by the rules regulating PAs can have significant implications. If a Florida PA operates without all of its principals being properly licensed, or if unlicensed individuals illegally hold shares, the entity risks penalties including fines or possibly being dissolved by the state.

How to Form a PA in Florida

Forming a PA requires filing the appropriate Articles of Incorporation with the Florida Division of Corporations and complying with any special chartering requirements that the relevant professional board stipulates. Typically, our attorney will advise on a very specific formulation of the corporate purpose to protect the charter as a PA–business activities and management through licensed professionals.

Conclusion

The Professional Service Corporation (aka the P.A.) is a pivotal business form for Florida’s licensed professionals looking to offer their services through a corporate, asset-protected entity. It affords the benefits of a traditional corporation with considerations tailored to the nuances of professional service. It’s crucial that professionals contemplating this route adhere closely to the state’s regulations and requirements, often with the counsel of an experienced attorney. Proper understanding and application of the law regarding Professional Associations ensure not only legal compliance but the secure and prosperous practice of one’s profession under the Sunshine State’s legal and liability-protection framework.