Secretary of State registration
Most engineering firms are required to register with the Secretary of State in the state in which they do business. Registration generally occurs when your business entity is formed. If you offer services in another state you may also need to register as an out-of-state or foreign entity and comply with that state’s unique name, corporate structure, and ownership requirements.
Once you have registered with the Secretary of State, your firm can apply for an engineering firm license through the state’s engineering board. In some states, however, firms must receive board approval before registering with the Secretary of State.
Engineering firm licensing (Certificate of Authorization)
Many states require engineering firms to obtain an engineering firm license (sometimes referred to as a Certificate of Authorization or Certificate of Authority). This is issued by the state engineering board.
Some entities may need to obtain more than one certificate. For example, in New York, a business entity that is permitted to provide professional engineering and land surveying services in the state must get two Certificates of Authorization — one for each type of service.
If your firm has more than one branch, you may need to register each location with the state engineering board.
Business structure restrictions for engineering firms
Some states restrict certain business structures from legally providing engineering and other professional services.
For example, in California, engineering limited liability companies are not recognized. If you start an engineering company in the state, the only entities available to you are a sole proprietorship, partnership, limited liability partnership, or corporation.
Meanwhile, in North Carolina, all corporations or limited liability companies — whether in-state or out-of-state — that were incorporated after June 5, 1969, must qualify in the state as Professional Corporations or Professional Limited Liability Companies.
Name requirements and restrictions for engineering firms
When naming your engineering firm, you must consider the state’s business entity naming laws. These requirements vary by state but generally include the following rules:
- Your business entity’s name must be distinguishable from another name already in use by an incorporated business or business registered to do business in that state.
- The name must also include your business type. For example, most states require the name is followed by an identifier, such as “Incorporated,” “Corporation,” or “Limited Liability Company” — or abbreviations of these.
Certain states have unique naming requirements that limit the names under which an engineering firm can operate. A professional engineering license or Certificate of Authorization may be denied if your firm name conflicts with state requirements.
For example, in California, if your business name contains the name of a person, that individual must be licensed as a professional engineer, architect, land surveyor, or geologist registered under the Geologist and Geophysicist Act. If you have an out-of-state business but have a branch in California, your business name can include the name of a person not licensed in the state — if that individual is properly registered and licensed in another state.
Designated engineer firm and individual engineer licensing
In many states, you must assign all engineering decisions to an engineer in responsible charge (or an engineer under their supervision) before you can obtain a Certificate of Authorization. If that responsible person leaves the firm, you must notify the engineering board and appoint a replacement.
If you have more than one branch, each office must designate a registrant to oversee professional services in that location.
Some states require that all personnel of a business be licensed in-state as a professional engineer.
Ownership requirements for engineering firms
Some state ownership regulations require having one or more officers or employees of the entity be designated as responsible for engineering activities and licensed as a professional engineer. (Often, they must also be licensed as a professional engineer in that state.)
Ownership requirements for engineering firms vary by state.
For example, in Illinois, professional corporations and professional LLCs that practice professional or structural engineering must be 100% owned by licensed engineers or other designated professionals (e.g., architecture or surveying professionals) if they are licensed to offer the services of the other professions. A corporate entity is not permitted to hold ownership interest in a professional corporation or LLC.
Maintaining compliance
Staying on top of licensing laws and regulations requires careful management. To maintain the good standing of your firm, you must ensure you file renewal applications on time, manage qualifier licenses, track your firm’s continuing education credits, and update records with state agencies.
Here’s a checklist of business license renewal requirements to bear in mind:
- Licenses must typically be renewed every one to two years.
- If your firm has been censured by a state licensing board, you must disclose this in your renewal.
- Keep track of individual engineer licenses, especially engineers in responsible charge.
- Track any continuing education credits.
- If your business undertook certain activities, such as a change or closure of a location, M&A, or added a new product or service, you may need to obtain additional licenses or cancel others.
Over time, your business licenses may also need to be amended, and it’s critical that your firm maintains accurate records with each state agency. For example, if there was a change to your corporation or LLC — such as a name change — you may need to amend your formation document (Articles of Incorporation or Articles of Organization). You must also notify or file the change with the issuing license or registration agencies. Some states require that you obtain prior approval from the board of engineers for a name change.
A change in the qualifying professional employee or responsible charge can also trigger a compliance action. When that individual changes or leaves, you must update your business license to reflect the change. To do this, file an application with the governing board notifying them of the removal of that party and the name of the new qualifying professional.
Note: In California, if you leave a business where you were in responsible charge of the professional services, then you must file a Disassociation Record form.
Engineering businesses must also keep up with annual report requirements to remain in good standing. This includes filing delinquent reports for any businesses that were dissolved during the year.
Learn more
For engineering 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 engineering 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 needs, please contact us.
