More About Professional Corporations
More About Professional Corporations
*Note before reading: In this article, we use the term ‘firm’ as many architects use this term when discussing their business and trying to find information online. However, this article refers specifically to architecture corporations (as that is what is permitted in California). Please be aware that when we use the terminology firm, we are talking to a corporation specifically, and not the four types of entities that are normally associated with the legal term ‘firm.’
One of the biggest and most challenging questions that an architect looking to run a company must address is: “How do I name my architecture firm in California?” If so, what must you know to avoid delays and mistakes in your application?
It is important to know first and foremost how to name your architecture firm as every state has its own rules. In many cases, architects end up making costly mistakes because of the lack of information on how to establish their architecture firm.
Rushing the process unequipped may leave you exhausted, only to end up getting rejected if your documentation is incomplete or if your firm name does not follow the state guidelines. Instead of getting started on time, you could wait a few more weeks or even months before you can operate properly. These issues not only affect your timeline but also your budget.
If you start it off with a series of mistakes, your dream of becoming your own boss may hang in the balance.
In California, there are certain rules and guidelines you need to follow. The name of your architecture firm (again referring to corporation) depends on the type of corporation you choose – a General Stock Corporation or a Professional Corporation. Knowing how to set up your architecture firm (corporation) properly will speed up the process. Meaning you can actually start focusing on what you love and know how to do sooner, rather than getting stuck in the legal red tape.
What Does Your Business’ Legal Entity, Such as General Stock Corporation or Professional Corporation, Have to Do with Your Business Name?
Many businesses in California can operate in the form of an LLP (Limited Liability Partnership), LLC (Limited Liability Company), or PC (Professional Corporation). However, architects may not operate their practice as a limited liability company. Architects are one of the few business types that can form either a General Stock Corporation (S- or C- corp) or a Professional Corporation (S- or C- corp). The name you want for your architecture corporation will depend on the type of corporation you choose, for which different rules apply.
NOTE: Many people want to form a limited liability company–on the surface it looks attractive. Many people will do a simple Google search, see that it seems like if you are breathing you can easily form an LLC (where as a corporation is more complicated), and then set-up their business as an LLC. But then they end up realizing that they aren’t legally able to be an LLC and they have to not only start over, but take care of the costly mistake they made.
Think of it as building a house with the wrong foundation. You think you are good to go and then the city tells you “Nope– that’s not allowed.” So now not only did you invest time and money into building the house, you have to invest time and money into tearing down the house, and then invest MORE time and money into rebuilding the house from the ground up. We’re talking 3x the cost of if it had just been done correctly in the first place.
How Do I Name My Architecture Firm in California As A General Stock Architectural Corporation?
As a General Stock Architectural Corporation, you are free to choose your architecture firm name provided it is not misleading or does not resemble an existing registered corporate name. Make sure NOT to include words, such as:
- Bank
- Trust or trustee
- Industrial loan
- Investment
- Loan
- Thrift
- Cooperative
- Olympic or Olympia
- Architect or Architects
The biggest kicker you may notice is that if you choose to form a General Stock Corporation: you are not allowed to use the words ‘Architect’ or ‘Architects’ in the name of a General Stock Corporation. Generally, you want your business name to clearly show what you do– you are an architect!
For a General Stock Architectural Corporation, it’s not necessary for architecture company names to have a corporate designator. This include words such as ‘Inc.,’ ‘Corp.’, ‘Corporation’ or other words indicating corporate status.
How to Name An Architecture Firm That Is A Professional Architectural Corporation
For Professional Architectural Corporations, special name style rules apply. These corporate name requirements are regulated by the California Corporations Code, Business and Professions Code, the California Code of Regulations and the California Architects Board.
It is important to make sure that the name you chose satisfies the requirements of state codes and agency rules. Failing to comply with these rules may result in redrafting all your corporate formation documents. Aside from that, most state regulatory agencies will view your non-compliance as unprofessional conduct and you may risk your chances of getting approved. It is easy to miss a rule when naming your architectural firm, especially if you do not have legal assistance.
If you want to be spot on, it is best to seek help from recognized business attorneys to ensure you do not miss an important rule.
What Are The Name Style Rules For A Professional Architectural Corporation?
According to the Business and Professions Code, section 5610.3, the name of a professional architectural corporation can only use the name or last names of the following:
- present, former, or prospective shareholders
- persons associated with a predecessor, partnership, or other organization
- persons associated with the name or names appeared in the name of the predecessor organization
And may also add or use the words:
- “Architect”, “Architects,” “Architectural Corporation”
And lastly much include words and/or abbreviations that denote corporate existence such as:
- ‘Inc.’
- ‘Corp.’
- ‘Corporation’
- etc.
Per the rules of the California Secretary of State, the Secretary of State will reject applications that fail to meet the name style rules for Professional Architectural Corporations.
Name Your Architecture Firm The Right Way With The Help of an Attorney
You are free to take on the entire naming process, but you may be risking a great deal of time and resources if your Articles of Incorporation are rejected. Time is always of the essence when it comes to business. Imagine the amount of time and money that you could lose if you fail to comply with the state’s requirements.
On the other hand, picture yourself in your new office welcoming your new clients shortly after finishing the application process. By wasting no time and following the California business laws, you can generate profits more quickly compared to doing things off the cuff.
The best approach to ensure precise and law-compliant submissions is to hire the services of a corporate attorney specializing in the formation of corporations. Get things done right so you can get started with your architecture firm.
Incorporation Attorney can help you with architecture firm names and the rest of the formation process. Our team will assist you every step of the way. Call us to know more about how Incorporation Attorney can help build your architecture corporation.
