The Minnesota Professional Firms Act
What does a certified interior designer have in common with a dentist? How about a marriage therapist and an architect? A veterinarian and an accountant? A foot doctor and a social worker?
Each of these is an occupation; each provides a professional service; and each may elect to be governed by the Minnesota Statute Chapter 319B Minnesota Professional Firms Act (MPFA). In Minnesota, a company becomes a “professional firm” by electing to be governed by the MPFA. The MPFA offers protection from non-professionals who try to interfere with the judgment of professionals. Under the MPFA, professional service firms include:
Medicine and surgery
Marriage and family therapy
Dentistry and dental hygiene
Certified interior design
If your business operates as a “professional firm,” then you need to know about the MPFA. When first forming your business, you had to decide whether it would be a corporation, limited liability company (LLC), or limited liability partnership. Corporations and LLCs are governed by their own organizational statutes; owners of those businesses can choose to remain governed only by their respective statutes or they can choose to opt-in to the MPFA. The MPFA regulations apply in addition to those of the organizational statute.
However, the professional licensing boards of veterinarians, lawyers, and chiropractors require filing under the MPFA. If you operate a professional firm in one of these areas and have not elected the MPFA, you can be penalized for the unauthorized practice of your profession. Penalties for unauthorized practice might include personal liability for company debt or unenforceable contracts leading to inability to collect fees.
Limitations under the MPFA
Electing to enact the MPFA places limitations on your professional firm. Before your business can offer a professional service, you need to file an initial report with the appropriate licensing board. Among other things, be prepared to provide your business’s organizational documents, the business’s name and address, the names and addresses of the business owners, and a statement declaring all employees, agents, and independent contractors furnishing professional services are actually authorized to do so as in at least one of the professional service categories listed above. To continue providing services without a hiccup, your business must file an annual report to update the information on the initial report. The initial report will run you $100, but each annual report is only $25.
When naming your business under the MPFA, you cannot choose a name that implies superiority and the name must end with a description such as “Limited” or “Professional Association.” Names like “Minnesota’s Premier Podiatry ” or “Top Dog Dental” would be inappropriate.
Every professional service provider must be certified or licensed with the appropriate licensing board, and only licensed professionals may own the firm. Any decision involving professional judgment cannot be delegated to a person who is not a licensed professional or to a person whose license has been suspended or revoked.
If your business offers professional services, get in the know about the MPFA.
John Saunders is an experienced real estate and business attorney. He focuses his practice on advising business owners and licensed professionals with succession planning and transitions as well as their general corporate matters.
Emilee Walters is our first Avisen Legal Fellow alum and a third-year law student at St. Thomas School of Law. Emilee is an Avisen Fellow exploring a legal career in business law.