Prerequisites
- A licensed clinician who will own the entity, verified: active license, no disciplinary action, clear on OIG LEIE and SAM.gov
- Your state’s permitted entity form confirmed — see your state page
- A name that satisfies professional entity naming rules
- A registered agent in the state of incorporation
- Healthcare counsel engaged
Steps
1
Clear the name with both authorities
Check availability with the secretary of state and compliance with the licensing board’s naming rules. Most states require a designator — “P.C.”, “Professional Corporation” — and some restrict the name to licensed owners’ surnames or require board approval of a trade name.Reserve the name if the state permits it. File a DBA separately if your brand differs from the legal name.
2
Obtain licensing board pre-approval, if required
Several states require a certificate or approval from the professional board before the secretary of state will accept the filing. New York routes professional entity filings through the State Education Department; Arkansas requires a medical board certificate.Budget 4–8 weeks in pre-approval states. Check your state page before assuming a same-week filing.
3
Appoint a registered agent
Required in the state of incorporation. If you’ll expand, consider a national vendor now — see Choose registered agents across states.
4
File articles of incorporation
Must include:
- A professional purpose clause limiting the corporation to rendering the specified professional service
- A licensee ownership attestation stating all shareholders are licensed
- Share structure, one class of common stock, a modest number of authorized shares
- Registered agent and registered office
- Incorporator (should be the clinician or counsel, never the MSO)
5
Hold the organizational meeting and adopt bylaws
By written consent is fine. Elect directors and officers — all licensees where the state requires it — adopt bylaws, authorize share issuance, and authorize opening bank accounts and naming signers.File the consents in a minute book. These records are evidence the PC is a real, separately governed entity, which is exactly what a CPOM challenge attacks. See Maintain corporate formalities.
6
Issue the stock certificate with a restrictive legend
Issue shares to the clinician. The certificate must carry a restrictive legend referencing the stock transfer restriction agreement. Without the legend, a transferee could argue they took free of the restriction.Execute the transfer restriction agreement at or immediately after issuance. See Draft the stock transfer restriction.
7
Get the EIN
Free and same-day from the IRS at irs.gov. The responsible party is the clinician-owner. Do not pay a third-party service for this.Save the CP 575 confirmation letter. You will need it for banking and every payer enrollment, and the legal name on it must match what you use everywhere else.
8
Register with state tax and labor agencies
State income tax withholding and unemployment insurance registration, since the PC will employ clinicians.
9
Raise the S-election question with your CPA
A PC taxed as a C-corporation that is a personal service corporation faces a flat 21% federal rate under IRC § 11(b), with no graduated brackets. Many elect S status. The Form 2553 deadline is tied to the tax year — missing it costs a year.
Verify it worked
- State-stamped articles of incorporation in hand
- Entity shows as active and in good standing on the secretary of state’s website
- Bylaws and organizational consents in the minute book
- Stock certificate issued, with restrictive legend
- CP 575 EIN letter received, with the legal name recorded exactly as printed
- State tax and employer registrations confirmed
Common failure modes
The legal name must match everywhere. The CP 575, the W-9, NPPES, the payer applications, and the bank account must all carry the identical legal name. Name mismatch is the leading cause of first-claim rejections, and resolving it means re-filing enrollment with every payer.