Architecture firm business licensing and other legal requirements

The architecture industry is highly regulated by every state in the country. If you plan to practice as a firm, you must comply with different architecture licensing and certification rules.

Registering with the state architecture board

All states require individual architects to have an architect license. Furthermore, many states require businesses that provide architectural, interior design, or landscape architectural services to obtain an architecture firm license or register with the state architectural board.

In the states where your architecture firm is not required to obtain a license, you may need to license one person in your firm in that state. In these states, you may only need to notify the architecture board that you want to practice.

Designated architect

As part of the process for registration or licensing of an architect firm, some states require that a firm has a “designated architect”. A designated architect is typically responsible for all final architectural decisions on behalf of the firm with respect to work performed in the state.

A designated architect must be registered to practice in that state and hold a position of responsibility within the business structure such as a:

• Partner – if you operate a Partnership or Limited Liability Partnership
• Manager – if you operate a Limited Liability Company
• Director – if you operate a Corporation or Professional Service Corporation
• Controlling principal of other business structures

The designated architect may be required to take an examination or qualify by reciprocity with a state in which they are already licensed.

Business structure restrictions

In some states, not all business structures may legally provide architectural and other professional services.

For example, in New York, generally, licensed professionals may not set up a general business corporation (S Corp or C Corp) to provide professional services. They must form either a professional corporation (PC), design professional service corporation (DPC), or a professional limited liability company (PLLC).

In California, architectural services may be offered by a general corporation (S Corp or C Corp), registered limited liability partnership, or professional corporation. However, LLCs are not allowed to provide architectural services.

Name requirements and restrictions

When it comes to a company name, you must consider a state’s business entity and industry-related naming requirements. Architectural/design firm license applications may be denied if your firm name conflicts with the specific requirements of a state.

Legal entity naming requirements, vary by state, but can include rules such as:

• The name of a legal business entity must be distinguishable on the record of the state government. That means that it can’t be substantially like another name already in use by a business incorporated or registered to transact business in that state.
  
  
• Your name must show your business type. Most states require that the company name be followed by a specific identifier, such as "Corporation", "Incorporated", or an abbreviation such as "Inc." or "Corp" for corporations, "Limited Liability Company" or the abbreviation of "LLC" for LLCs, "Limited Partnership" or the abbreviation "LP" for limited partnerships, or "Limited Liability Partnership" or the abbreviation of "LLP" for limited liability partnerships.

States may also have unique name requirements which may limit the names under which your architectural firm may provide services, such as requiring and restricting the use of certain words, requiring approval from the state architecture board, and so on.

For example, in Nevada, any request to use the plural term "architects," "registered interior designers" or "residential designers" must have more than one Nevada registrant employed by the firm.

The rules can also depend on the type of entity you choose. For example, in California, a General Stock Corporation (S Corp or C Corp) may use the terms “architect”, the term “architecture”, or a variation of the term “architect” or “architecture”. A registered Limited Liability Partnership (LLP) may not use the word architect or similar in its business name.

Your firm may decide to do business under an assumed name (or DBA, “doing business as”) rather than its legal entity name. Keep in mind that:

• You must follow every state’s specific DBA requirement for your business type.
• You must follow the state’s specific naming requirements for architecture businesses.
• Some states even require registering in multiple locations, like the county or city where you’re doing business.

Ownership requirements

States may have ownership requirements for architecture firms, such as having at least one owner or member who is a licensed architect in the state. These requirements can vary by state and by business entity type.

For example, in Pennsylvania, a limited liability partnership must meet the following requirements:

• At least two-thirds of the partners are licensed under the laws of any state to practice architecture, engineering or landscape architecture.
• At least one-third of the partners is licensed under the laws of any state to practice architecture.
• At least one partner is a licensee of the Board.

A standard business corporation in Pennsylvania must have:

• At least two-thirds of the directors licensed in a state to practice architecture, engineering or landscape architecture.
• At least one-third of the directors licensed in a state to practice architecture.
• At least one director is a licensee of the Board.
• At least two-thirds of all classes of voting stock issued and outstanding at any one time are owned by architects, engineers or landscape architects.
• At least one-third of each class of voting stock issued and outstanding at any one time are owned by individuals licensed in a state to practice architecture.

Maintaining business license compliance

Maintaining compliance with architecture business licenses requires diligent tracking and coordination.

As part of maintaining good standing of your firm’s licenses, you must file renewal applications, manage qualifier licenses, update records with agencies, and track continuing education credits.

Business license renewals are required every one to two years. Your firm must bear the following in mind:

• If your firm has been the subject of disciplinary action by a state licensing board, you must disclose this in your license renewal.
• Track renewals of your architect licenses, especially for architects in charge.
• Have a system in place to track continuing education credits.
• Certain business activities and changes can trigger licensing changes. For example, if you moved location, exited a market, underwent M&A, or added a new product or service.

Any amendments to your business entity (ex. corporation, LLC) may require you to amend your formation document (Articles of Incorporation, Articles of Organization). For example, if your corporation or LLC underwent a name change, you will have to file articles of amendment for the change to be legally effective. You will also need to notify or file the change with issuing license or registration authorities. Certain states also require any name change to be approved by the board of architects.

When the qualifying professional changes or leaves your business, you will need to update your business license to reflect the change. This typically involves filing an application notifying the governing board of the removal of the old qualifying party and the designation of the new.

Lastly, to remain in good standing, it's important to fulfill all annual report requirements. This includes filing delinquent reports for businesses that were dissolved during the year. 

CT Corporation can help

For architectural firms, licensing and entity management will always be complex. But with the right technology and support, your firm can navigate these complexities with confidence, agility, and efficiency.

Outsourcing business registration and license research, applications, management, and renewals can help you take the pressure off internal resources. By working with a full-service management provider who specializes in the efficient processing of business licenses, permits, and registrations, you can free up your time to focus on starting and growing your business while ensuring you keep up with changing compliance requirements.

For more information on CT Corporation services and how we can streamline your business licensing, please contact us.

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