A professional corporation is a specific type of corporation. Professional corporations allow individuals who are members of the same field to associate with one another for a specific purpose. Professional corporations may be chosen as a structure for incorporating a business because it may be associated with certain benefits, namely limitations on member liability, as well as various tax breaks.
Professional corporations are usually identified by the firm placing the letters “P.C.” or “PC” after listing their firm name. PC’s can sometimes be subject to slightly different regulatory laws than normal corporations.
Professional corporation laws can vary radically by jurisdiction. For example, the filing requirements can involve different deadlines as well as document requirements. Also, some regions actually require certain professionals to file as a PC, while others may simply allow it as a matter of choice.
Generally speaking, practitioners from the following types of fields frequently from professional corporations:
- Public accountants
- Doctors and other health professionals
These types of industries typically require knowledge a specific body of knowledge, as well as extensive experience doing work in the field. Thus, professional corporations can help workers from these professions exchange research ideas and experience with one another. Also, forming a professional corporation can be a way for these types of professionals to increase their marketing abilities and capacities.
As mentioned, PC’s can often be very different from other types of corporations, especially the newer types of corporations classified as limited liability companies (LLC’s). Unlike limited liability corporations, professional corporations often do not provide limited liability for its professional members. That is, individual practitioners in a professional corporation may sometimes be held liable for violations, instead of being “shielded” by the name or governance of the company.
One reason for this may be that professionals are often held to very high standards when it comes to their practice. In order to practice, licensed professionals must often abide by the regulations set forth in their industry. Thus, the professional can’t be relieved of these professional responsibilities simply because they have filed under different corporation laws. On the other hand, individual members usually won’t be held liable for the violations of other members in the corporation.
Professional corporations must abide by a very specific set of filing, incorporating, and regulatory rules. It’s in your best interests to contact a business lawyer if you need assistance with forming or joining a professional corporation. Also, if you are involved in a legal dispute with a professional corporation, your attorney will be able to provide you with sound legal representation during court proceedings.