A Professional Corporation is a corporation created under state law to practice a particular profession as corporate entity. Professional Corporations are limited to services that may only be rendered pursuant to a license or certification. A Professional Corporation may be taxed as a C or S Corporation. Generally, only a professional licensed individual is permitted to practice the profession of the professional corporation. For example, the shareholders of a Professional Law Corporation may only be licensed attorneys.
A professional may not form a corporation to limit their malpractice liability. As a result, the shareholders personal assets are subject to any professional obligations from the professional’s services. However, shareholders are not liable for the corporation’s nonprofessional debts and obligations, such as rents, loans or contracts with vendors. Most professions require practicing professionals to maintain malpractice insurance within specified limits.
The formation of a Professional Corporation is very similar to the formation of a general corporation. Dissimilarities include certain restrictions on names and registration with the particular licensing board.
The following businesses may incorporate as a professional corporation:
(This list is not exhaustive)
Accounting
Acupuncture
Architecture
Chiropractic
Dentistry
Engineering
Law
Medicine
Nursing
Optometry
Osteopathy
Pharmacy
Physician Assistants
Podiatry
Psychology
Veterinarians
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