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Professional Design Firm Registration.

Professional Design Firm Registration.

Professional Design Firm Registration.

I have been trying to get my PE or SE licenses in various states so that we can expand our business geographically.  I have been noticing that many states also require Professional Design Firm Registration.

So it would seem that to practice engineering in, say, Texas, one would have to pay the annual (or biannual or whatever) fee for the PE license, and also pay a fee for the Professional Design Firm (PDF) Registration.

1. Do all states require both PE/SE license and PDF Registration?

2. Are there cases where PDF Registration is not required - even in the states that do typically require PDFs?

3. What is the reason for requiring both?

RE: Professional Design Firm Registration.

1.  Most states require engineering firms to be authorized to practice engineering in their state if, as a business entity, they promote their services in that state or if any of their engineers provide engineering services in that state.  It might be called an engineering business license, a professional services license, or a certificate of authorization to practice.

2.  I believe it is usually required, though you might get away without it if you are not regularly practicing there and the engineer who does the work is licensed there.

3.  Different rules in the typical statutes apply to business entities and individuals.  As an example, in my home state, if an engineer works for a business entity, ALL reports, opinions, documents or other defined "engineering works" must be signed and sealed; however, an individual practicing and licensed in the state need only sign and seal such for public record.

Yes, becoming licensed as a business entity to provide engineering services is a minor revenue producer; however, that is not the primary reason that it is required.  One very good reason is to keep the playing field level...so if you're from out of state and you practice engineering in the state, you should be subject to the same rules as those who are in the state and practicing.

Another reason for licensure of business entities is that most licensing boards have limited enforcement powers, so they require licensing to keep you under their umbrella of enforcement capability.  To explain this further, the only thing they can do to a non-licensed company for violation of a statutory rule or law regarding the practice of engineering is to write a "cease and desist" letter. To a licensed company, they can levy fines and penalties.

RE: Professional Design Firm Registration.

Yes - many states require it - sometimes it is called a COA - Certificate of Authority.  

I think it just another tax.. Even Tennesee calls it a "user tax" - at least they are upfront about it and they charge $400 per year - I think!

RE: Professional Design Firm Registration.

Follow-up question....

Suppose you fit into Ron's #2 answer where the engineer is licensed in a particular state, but the firm is not.  If you do a job there, will your firm's insurance company "cover" that work?

Obviously it could vary from company to company, but would an insurance company have an "out" to say they are not responsible to cover work done in a state where the firm does not have a COA?

RE: Professional Design Firm Registration.

An insurance company will do their hardest to get out of any payments and will find any loopholes to do so.

RE: Professional Design Firm Registration.

Professional liability insurance is not contingent upon proper licensing. They'll try to use it, but would likely still cover, as long as you are acting on behalf of the company.

Be careful though!!  Some states have "joint and several liability" statutes that can hang the engineer of record as well as the company, individually.  If you are practicing without the umbrella of the company, you will likely be personally liable.

RE: Professional Design Firm Registration.

It may depend on the State, but in Georgia, the annual COA fee is $15.00; not much of a revenue generator.  I think the primary reason is to ensure that a firm that is practicing engineering has a State registered engineer in their local office.  In Georgia, that registered engineer has to be present on a regular basis in the local office.  An out of state engineer may practice if licensed in the State, but a firm is not allowed to have a local office without an on-site registered engineer.  The main information required for a Georgia COA is the Company name, office address and the name of the full-time engineer responsible for office operations.  A friend's small firm was issued a cease and desist order here in Georgia because he was the only registered engineer on staff.  He was called up for Guard duty in Iraq and tried to review reports over the internet.  A competitor complained and the State of Georgia told him that was unacceptable and the firm could not practice engineering unless there was an on-site engineer.  Fortunately, he was able to hire a local PE to act in that capacity.

RE: Professional Design Firm Registration.

We would not intend to have offices in all the states.  We would do business out of the only office we have.  We would definitely have a licensed engineer for the state we were doing business in.

Does that mean that an out-of-state engineer could practice in Georgia without a COA?  If not, the thing I wonder about is why do you need COA if you have the PE/SE license?   

It would seem the licensing of the engineer allows the state to levy fines and disciplinary actions on the engineer.  This would also require the engineer to follow the same rules as in-state engineers.

RE: Professional Design Firm Registration.

As far as I can tell, the main purpose of licensing corporations is simply revenue.  There's no real qualification involved, other than hiring people that are already licensed anyway.

The $400 thing in Tennessee is a professional privelege tax, unrelated to corporations.

RE: Professional Design Firm Registration.

As a structural engineer in Washington, owning a firm of my own, I have to:

1.  Be licensed with the state board and pay my biennial licensing fee.

2.  Since the business is registered as a Corporation, I have to:

     a.  Pay my yearly licensing fee to the state, and

     b.  Be registered with the Washington State Board as an engineering Corporation.

3.  If I was in the City of Everett, I would also have to pay for a city business license.  I am not.

If my business was only a sole proprietorship, my professional license would be sufficient.

Bottom line is, check in the state and locale that you reside and do business to see what is required, as it varies considerably.

Mike McCann
MMC Engineering

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