What is a Professional Corporation (PC)?

In many states, people in certain occupations who want to incorporate their practice can create professional corporations (PC) or professional service corporations. A professional corporation consists of different types of professionals, such as doctors, lawyers, architects, accountants, engineers, psychologists, etc. Learn how to set up a professional corporation with our legal guide below.

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Shaheen F. Manshoory is a trial attorney specializing in criminal defense law, specifically litigation of complex criminal matters in state, federal, and juvenile courts, including the defense of professionals, corporations, and high-profile matters. A graduate of SCALE, a two-year, fully accredited, Juris Doctor program at Southwestern School of Law, Mr. Manshoory focused on integrating substa...

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UPDATED: May 7, 2021

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Professional Corporations (PCs), also known as professional service corporations, were created to allow certain kinds of professionals such as physicians, lawyers, accountants, or engineers to do business as a professional corporation.

Keep reading to find out what does a professional corporation mean and what is the difference between a professional corporation and a regular corporation. If you need further legal assistance, just enter your ZIP code below.

What are the advantages of a professional corporation?

Professional corporations are different from corporations because all shareholders in a professional corporation must be members of the same profession involved in the same business if they want to be professional corporation owners. For example, a group of doctors who have their individual medical practice can form a professional corporation if their business is to practice medicine. While there is some limitation on liability surrounding the actions of each partner, the licensed professionals in the firm may not be relieved of liability for their own professional negligence or malpractice. This is the main reason professionals form this type of corporation. They can enjoy sharing management responsibilities and profits without exposing themselves to malpractice actions against the other business owners. Depending on state law, limited liability partnerships (LLPs) may offer the same benefit and may even be more desirable.

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How do I set up a professional corporation?

If you are interested in setting up a professional corporation, be sure you understand the professional corporation requirements of your state. Some states require that each owner hold the same type of business license and will verify this before allowing the corporation to be formed. You may have to carry a certain designation in the company name, such as “PC” for professional corporation. You will also need to draft corporate by-laws. These are the rules of how businesses will operate and be governed. You will need to designate officers and their responsibilities, assign decision-making procedures, and set any terms regarding management and finances. The final step is to register your corporation in your state. It varies, but in most cases, you will pay a filing fee and submit a professional corporation form. If you feel you need help, your local small business association or a corporate attorney can offer assistance. Some states also have guides posted on their websites to help explain the process and the requirements of corporations.

What Are Professional Corporation Examples?

The list of professionals required to incorporate as a professional corporation, or personal services corporation, is given below:

  • accountants
  • engineers
  • health care professionals (audiologists, dentists, nurses, opticians, optometrists, pharmacists, physical therapists, physicians, and speech pathologists)
  • lawyers
  • psychologists
  • social workers
  • veterinarians

What is the Professional Corporation Tax?

Personal service corporations do not get the tax benefits of pass-through taxation. There is double taxation, meaning the corporation must pay a flat tax rate, and the individuals must also pay taxes.

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