When a client comes to us to form a New York business, the first step we take is to evaluate the proposed name of the entity. We confirm that no other entity in New York is already registered with the same name. Second, we make sure the proposed name complies with State laws and regulations issued by the Department of Education and the Board of Regents. There is a third layer of inquiry then, which is largely interpretational and, for that, we often get guidance from the State Education Department and that third issue has to do with a doctrine called the prohibition against corporate practice, as described below.
First stop – laws and regulations. New York’s entity governance laws, i.e., Business Corporation Law, Limited Liability Company Law, Partnership Law, and regulations issued by the Department of Education require that any professional service firm must state within the name the profession(s) to be practiced or services to be provided by such entities. Names of firms that practice multiple disciplines, such as architecture and engineering, must carry a description of all services to be provided. The full and formal name of a limited liability entity must include words or an abbreviation to signify what type of entity it is – Design Professional Service Corporation, Professional Corporation, Limited Liability Partnership or Limited Liability Company.
Further, the Board of Regents Rules state that advertising (and advertising includes a firm’s name) cannot be false, fraudulent, deceptive or misleading. That means, for example, you cannot use the plural word "Architects" in a firm’s name if there is only one licensed architect in your business. The State Education Department has caught people on infractions like this as a result of spotting a firm name on stationery while exchanging correspondence on some other issue entirely. There are also some specific rules, typically found within the entity governance laws, about including the names of dead people and retired people within a firm name.
The second set of rules that governs firm names arises out of the prohibition against "corporate practice" and these conflicts may arise as a matter of interpretation or from a defined set of rules. In New York, like most states, there are two levels of licensing required of design professionals: not only must the individual delivering services be licensed, but the firm must meet certain licensing criteria as well. The prohibition against corporate practice is a reiteration of the principle that only certain types of authorized entities are permitted to provide professional services in New York. If a proposed licensed entity has a name that is identical or even confusingly similar to an existing unlicensed entity, the proposed licensed entity’s name may be rejected by the State Education Department because it suggests an improper relationship with an unlicensed entity. Rejection may also occur if there is a related design professional entity in another state that in and of itself does not meet the criteria to qualify as a permitted design professional entity in New York. So your first shot at naming your firm may not be your last and, although it is not always easy to find, there is usually a reasonable, practical and acceptable solution lurking in the background. As Bill Shakespeare jotted down, "that which we call a rose by any other name would smell as sweet."
The Benefit Corporation is considered a hybrid of a for-profit corporation and a not-for-profit in that the directors do not run the corporation solely to maximize corporate value for its shareholders.
Design professionals all over the world have taken to heart the words famously crooned by Frank Sinatra, "I want to be a part of it, New York, New York."
Starting a business and forming an entity are two different things.
A gratifying part of my business is helping design professionals start their own practices. I usually have a gut feeling about who is going to make it, and who may decide that being an employee wasn’t so bad after all.
I am seeing a lot of action on the Design Professional Service Corporation (DPC) front. The DPC is the only entity in which New York permits non-licensed owners of architecture, engineering and other design professional firms.
Architects and their practices are highly regulated because of their charge to safeguard life, health, property and the public welfare.
Many of my clients and potential clients are in the process of setting up their own design firms.
Starting an architectural firm is a big decision. One of the next big decisions for the architectural entrepreneur is deciding what form of business entity will be appropriate for your current practice as well as your future practice.