Under Article 7 of the Occupational Code, a public accounting firm generally must have a State license to practice public accounting. “Firm” includes a limited liability company, a corporation, a partnership, and another legal entity. In order for a firm to obtain a license, individuals who are licensed in good standing as certified public accountants must directly or beneficially hold at least a simple majority of the equity and voting rights of the firm.
Until recently, there was no statutory requirement specifically pertaining to equity and voting rights for a professional limited liability company (PLLC) or a professional corporation (PC) to practice accounting. Reportedly, in these cases, the Department of Licensing and Regulatory Affairs (LARA) applies the standard set forth in Article 7 of the Occupational Code for other types of business entities.
Gov. Rick Snyder, on August 15, signed two bills that make it easier for public accountancy firms to incorporate in Michigan. House Bills 4334 and 4654 revise existing law that required all members of PLLC or shareholders of PC to be licensed in their respective fields. The bills amend the law to allow accounting firms to organize as a PLLC or a PC without having each member, manager, or shareholder licensed as an accountant.
Specifically, the Acts amend the Business Corporation Act, to permit a PLLC or a PC, respectively, to practice public accounting if more than 50% of the PLLC’s or the PC’s equity and voter rights were held directly or beneficially by individuals licensed or otherwise authorized to practice public accounting under Article 7 of the Occupational Code.
“Certified public accountancy firms that choose to incorporate as a PLLC or PC will now have greater flexibility when making hiring decisions, which will help them grow their business and better serve their customers,” Snyder said.
This article was written by law clerk Roger Leshinsky. Please contact Demorest Law Firm if you have any questions.
