Florida Corporations & Florida LLC's
FLORIDA P.A. $131.95
A professional association is a person or group of people, all of whom are required by law to be licensed in their profession or to acquire other legal authorization, incorporated for the purpose of rendering the same professional service to the public.
Those who are allowed to form professional associations may receive several tax benefits over operating as a sole proprietorship or partnership while at the same time avoid filing a Schedule C with their own IRS form 1040. Expenses that most businesses incur or needlessly avoid because of cost can create huge benefits and tax deductions.
Take for example, the escalating cost of health care which makes it necessary for people to carry health insurance. Sole proprietorships and partnerships currently may deduct only a portion of the health insurance costs from their taxes, which can be excessive to many or prevent obtaining insurance coverage. However, a professional association is able to fully deduct the cost of accident and health insurance plans for its employees and their families. This deduction may allow the cost of reimbursing employees for their uninsured medical expenses. Furthermore, a professional association may be able to deduct the cost of life and disability insurance.
Additionally, the tax deductions for accident and health insurance may be realized by forming a professional association. Moreover, a professional association may deduct up to 80% of the dividends, which it receives from a domestic corporation that is subject to taxation. This differs from a self-employed professional who owns dividend-producing stock which must include the entire amount of dividends in their gross income. Lastly, upon the sale of stock in a professional association, the gain realized would be taxed at a maximum rate of 28%, whereas a self-employed professional could be taxed at a rate as high as 39.6% on the sale of their interest in such a business.
Appropriate use of a Professional Association.
State and Federal Tax law authorize the formation and maintenance of a Professional Association. Although a Professional will be personally liable for their own malpractice, the professional Association will shield the shareholder Professional from the malpractice of the employees, partners and other Professional shareholders, and from countless other general business activities that can occur in a profession. To benefit from the tax advantages as well as the limited liability of a Professional Association, it is vital that contracts, activities, and other details be appropriately tended to so the Professional Association will be treated as a separate entity.Reimbursements. The appropriate use of a Professional Association will limit personal liability of a professional for reimbursements that may be insisted from carriers.
Protection for receivables. Your advisors can easily consult you with the methods to protect your receivables.
Employee liability. Consult your malpractice carrier concerning your employment agreements.
Notify your insurance carriers. Your insurance carriers should be notified that your Professional Association exists. Additionally, your DBA/Fictitious name should be registered with Tallahassee and should be disclosed to your Insurance carriers.
Appropriate maintenance for a Professional Association. You must keep sound financial records, maintain corporate minutes, updated employment agreements, lease agreements, loan agreements and never forget to file your Annual Uniform Business Report with the state. Such maintenance will keep the IRS and creditors at bay.
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