what is an attorney professional corporation

A professional corporation is an entity established by a specific type of professional, such as an attorney, doctor, architect, or veterinarian, to provide a service related to their profession. Professional corporations are registered according to the governing laws of a specific state.

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What is a professional corporation in law?

Professional Corporations. In many states, professionals who want to incorporate their practices must create what's called a professional corporation. In many states, people in certain occupations (for example, doctors, lawyers or accountants) who want to incorporate their practice can do so only through a "professional corporations"...

Do you need an attorney to form a professional corporation?

With all the distinct and specific laws that revolve around your professional service and forming a professional corporation, you need an attorney who specializes not just in Professional Corporations but in your type of service! Work with us to form your specific professional corporation.

Is a professional association a corporation in Texas?

For example, in Texas, professional associations are unique structures. Although their legal framework is based in Texas corporate law, they’re not technically “true corporations”, rendering them separate but similar to PCs.

What is an example of a professional corporation?

Typically, each individual organization limits their membership to one profession or grouping of professions. For example, a group of doctors who have their individual medical practice can form a professional corporation if their business is to practice medicine.

What is the purpose of a professional corporation?

Professional corporations provide a limit on the owners' personal liability for business debts and claims. Incorporating can't protect a professional against liability for his or her negligence or malpractice, but it can protect against liability for the negligence or malpractice of an associate.

What is a professional corporation considered?

A professional corporation is an entity established by a specific type of professional, such as an attorney, doctor, architect, or veterinarian, to provide a service related to their profession. Professional corporations are registered according to the governing laws of a specific state.

What is the difference between a professional corporation and an LLC?

The difference between LLC and PC is straightforward. A limited liability company (LLC) combines the tax benefits of a partnership and the limited liability protection of a corporation. A professional corporation (PC) is organized according to the laws of the state where the professional is licensed to practice.

Who can normally use a professional corporation?

Anyone can form a regular C-corporation or S-corporation, whether they're the sole owner of the business or have business partners. A professional corporation can also have one or more owners, but is reserved for licensed professionals.

What does PC mean for a lawyer?

professional corporationA professional corporation is organized under the laws of the state in which it is formed. Unlike a regular corporation, a PC for lawyers requires that each director, shareholder and officer be licensed to practice law. Further the legal PC may only provide services in its field.

What is the difference between a corporation and a professional corporation?

While traditional corporations their professional corporations are mostly similar, there is one key difference: with professional corporations (such as C Corps), owners are protected from legal claims made against their business, unless the claim was a result of the owner's own mistake.

What is the advantage of a professional corporation?

The main advantages of organizing as a professional corporation, as outlined above, include tax benefits and transferability of ownership. However, the flat corporate tax rate prevents shareholder/employees from retaining earnings in the professional corporation, which may limit opportunities for expansion and growth.

How is a PC taxed?

PCs are subject to a 35% flat federal tax rate on their corporate earnings, which can be a disadvantage since C corporations are taxed at 15 to 34% for their earnings below $100,000.

What is a PC vs PLLC?

PC v. The difference between a PC and a PLLC is ultimately the same as the difference between a regular corporation and a regular LLC. One major difference is how these entities are taxed. The PLLC has a few options for taxation, and all of them are likely to save ownership money compared to a PC.

What does CPA PC mean?

"PC" after a company's name stands for "professional corporation," a type of corporation used by professionals such as lawyers, accountants and doctors because of the limited liability and tax advantages it provides.

What happens to a professional corporation when the owner dies?

Unlike sole proprietorships, corporations do not die automatically when a business owner dies. Instead, when a corporation owner dies, their estate becomes the new owner of the business. This could result in your executor being responsible with managing not only decisions for your estate but also your business.

Who can own a PC in California?

In a California professional medical corporation, at least 51% of the shares must be owned by a licensed physician or surgeon, and only up to 49% of the outstanding and issued shares may be held by a (1) doctor of podiatric medicine; (2) psychologist; (3) registered nurse; (4) optometrist; (5) marriage, family, and ...

The Difference Between a Professional and General Corporation

Everything You Need to Know about Professional Corporations

What is professional corporation?

A professional corporation is a corporation that comprises different types of professionals such as doctors, lawyers, architects, accountants. Accountant An accountant plays a very crucial role in an organization, regardless of whether it is a multinational company or a small, domestic one. The. , engineers, psychologists, etc.

What should a professional corporation name include?

Ideally, the corporation should include the words “professional corporation” in the proposed name and should include the exact spelling, punctuation, or abbreviation designating the profession, such as M.D. or P.C. 3. Obtain local approval.

What happens if one owner is found to have engaged in professional malpractice?

If one owner is found to have engaged in professional malpractice, he/she will have unlimited personal liability for their own acts. However, if an accuser can demonstrate that the professional corporation engaged in the malpractice as a whole, then the owners of the corporation are held liable.

What is the purpose of articles of incorporation?

In that document, the organizers must state clearly the intent to operate as a professional corporation. The articles of incorporation should also state the purpose of the corporation, which is the service or product that the corporation will offer.

What are the different types of businesses?

Types of Businesses There are four main types of businesses to choose when forming a company: sole proprietorships, partnerships, limited liability companies, and corporations.

What is the first step in creating a professional corporation?

The first step when creating a professional corporation is to draft the articles of incorporation. Articles of Incorporation Articles of Incorporation are a set of formal documents that establish the existence of a company in the United States and Canada. For a business to be.

Do professional corporations pay the same tax as regular corporations?

Professional corporations are taxed at the same tax rate as regular corporations, and the owners are required to pay the FICA tax instead of the self-employment tax.

What Types of Professions Usually File Under Professional Corporation Laws?

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.

How are Professional Corporations Different From Other Types of Corporations?

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.

Do I Need a Lawyer for Help With Professional Corporation Issues?

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.

Who is required to incorporate as a professional corporation?

The list of professionals required to incorporate as a professional corporation, or personal services corporation, is given below: health care professionals (audiologists, dentists, nurses, opticians, optometrists, pharmacists, physical therapists, physicians, and speech pathologists) Of course, this is a general list.

What is a business attorney?

A business attorney can also answer many of the questions you may have about setup and liability for business in your area. They can also make any requirements from a board of directors to stock shares and more.

What professions use a PC?

Generally speaking, they include accountants, engineers, healthcare professionals, lawyers, psychologists, social workers, and veterinarians. Typically, each individual organization limits their membership to one profession or grouping of professions.

Can a licensed professional be relieved of liability for malpractice?

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.

Is a professional corporation necessary?

A professional corporation status can be essential in some business models. If state laws allow you to register your business corporation accordingly, it could eliminate many hassles. Each situation has to be evaluated individually, though.

Can a group of doctors form a professional corporation?

For example, a group of doctors who have their individual medical practice can form a professional corporation if their business is to practice medicine.

Do I need to carry a certain designation in my company name?

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.

What is the purpose of a professional corporation in California?

When you form a Professional Corporation in California, you must state which specific profession your company/corporation will be practicing in the Articles of Incorporation. This will be stated as the purpose, in the following language:#N#The purpose of the corporation is to engage in the profession of [Description of Profession, e.g. Dentistry] and any other lawful activities (other than the banking or trust company business) not prohibited to a corporation engaging in such profession by applicable laws and regulations. This corporation is a professional corporation within the meaning of California Corporations Code.#N#Part of the reason for this rule is that because each profession has different requirements and restrictions. There is no ‘General’ Professional Corporation. Your company would be formed as a corporation specifically connected to one profession.

What is a professional service?

“Professional services” refers to any type of professional services that requires a certification, license, or registration authorized by the Business and Professions Code, the Chiropractic Act, or the Osteopathic Act in order to be carried out legally.

What does "licensed" mean in the Chiropractic Act?

It means a person who is licensed under the provisions of the Business and Professions Code, the Chiropractic Act, or the Osteopathic Act to render the same professional services as will be rendered by the corporation of which they are, or intend to become, an officer, director, shareholder, or employee.

What does it mean to be disqualified from a professional corporation?

A “Disqualified Person” means a licensed person who for any reason becomes legally disqualified to render those professional services.

Which boards do not require a certificate of registration?

Professionals that are not required to obtain a certificate of registration to offer their professional services when operating a corporation are those licensed by the following boards: Medical Board of California or any examining committee under the jurisdiction of the board; Osteopathic Medical Board of California;

Can a general partnership be a sole proprietorship in California?

Similarly, you would be restricted in forming a general partnership to operate your professional business with a non-licensed individual. As a licensed professional in California, you may organize your private practice as either a sole proprietorship or a professional corporation or a registered limited liability partnership.

How is a professional corporation or PLLC formed?

Professional corporations and PLLCs are formed in a similar manner to regular corporations and LLCs. They file a formation document with a state business entity filing office. The document is generally called Articles of Incorporation for a professional corporation and Articles of Organization for an LLC.

Ongoing responsibilities of the PLLC and professional corporation

Once you have formed your professional corporation or PLLC, you must comply with the ongoing compliance responsibilities of the governing professional corporation or PLLC law. In the case of a corporation, this includes issuing shares, adopting bylaws, electing directors, holding meetings, filing annual reports, and maintaining a Registered Agent.

What is the purpose of a professional corporation?

The purpose of the corporation must be to provide professional services. All professionals in the corporation must hold the appropriate licenses. For example, all physicians must hold an active license in the state of incorporation.

Why do you need to establish a professional corporation?

It is imperative that you determine what the rules are in your state because individual states may not allow limits on liability even with a professional corporation designation.

What are the formalities of a corporation?

The typical corporate formalities must still be observed when setting up a company as a professional corporation. This includes holding annual meetings and recording meeting minutes, holding a shareholders' meeting, and following any state-required annual filings. The following items may be laid out in corporate bylaws: 1 Handling of funds – There should be a process in place that prohibits the commingling of personal and corporate funds. It may be necessary to spell this out in the bylaws as well as bring it up in the minutes of the first meeting of the board of directors. 2 Setting up bank accounts – The corporation should have its own checking accounts, lines of credit, and credit accounts as needed. In general, a separate corporate resolution may be required to obtain bank accounts for the corporation. 3 Written agreements – A professional corporation should ensure all agreements are preserved in writing. This may include lease agreements for real estate or equipment, employment agreements, and benefits plan agreements.

What happens if a partnership is formed?

However, if a partnership is formed, each partner may be liable for the debts of the partnership and may also be liable for the misconduct or malpractice of the other partners. A professional corporation provides protections similar to that offered by a standard corporation.

How much of a business must be within the field of the corporation declared?

To qualify for this, the IRS requires 95% of the business activities to be within the field that the corporation declared. Additionally, 95% of the outstanding shares must be held by employees, both current and former, who provided services to the corporation.

What is the purpose of a corporation?

The purpose of the corporation must be to provide professional services. All professionals in the corporation must hold the appropriate licenses. For example, all physicians must hold an active license in the state of incorporation.

Do professional corporations have restrictions?

Restrictions on Professional Corporation Formation. While most corporations do have some restrictions placed on them, there are specific restrictions that apply to professional corporations. Since this is not a comprehensive list, it is a good idea to determine which restrictions exist in your state.

What is a professional corporation?

Professional corporations or professional service corporation (abbreviated as PC or PSC) are those corporate entities for which many corporation statutes make special provision, regulating the use of the corporate form by licensed professionals such as attorneys, architects, engineers, public accountants and physicians.

Why do professional corporations organize?

The principal reason why groups of professions choose to organize as a professional corporation is that, unlike a general partnership, an owner is not personally liable for the negligence or malpractice of other owners.

What is a PC or PSC?

The general category of the PC or PSC can be as S-corporation, C-corporation, or LLC, but with subcategorization as a PC or PSC. Legal regulations applying to professional corporations typically differ in important ways from those applying to other corporations.

Can a limited liability partnership have multiple directors?

Professional corporations may have a single director or multiple directors.

Do professional corporations have citizenship?

United States. In U.S. federal subject matter jurisdiction, professional corporations have two citizenships for purposes of diversity, just like ordinary corporations, namely that they are citizens of (1) the state in which they are incorporated and (2) the state in which they have their principal place of business .

What is the conflict between the Business Corporation Act and the Professional Service Corporation Act?

If there is a conflict between the provisions of the Business Corporation Act and the Professional Service Corporation Act, the Professional Service Corporation Act controls. Additionally, a professional corporation organized to engage in the practice of law is subject to all of the applicable rules and regulations of the Illinois Supreme Court.

How many shareholders does a professional service corporation have?

If a professional service corporation has only 2 shareholders, it need have only 2 directors, both of whom must be shareholders. The two shareholders must fill the offices of president, vice-president, secretary and treasurer of the professional service corporation between them.

What is professional service?

A “professional service” is any personal service which requires as a condition precedent to the rendering thereof the obtaining of a license from a State agency or from the United States Patent Office or the Internal Revenue Service of the United States Treasury Department.

Can a professional service corporation use a shareholder's name?

A professional service corporation may continue to use the name of a shareholder who voluntarily withdraws from the professional service corporation if the withdrawing shareholder files with the regulating authority his written permission for the continued use of his name by the professional service corporation.

Can a professional service corporation operate without a license?

No professional service corporation may open, operate or maintain an establishment for any of the purposes for which a professional service corporation may be without a certificate of registration from the regulating authority authorized by law to license individuals to engage in the profession or related professions concerned. Application for such registration must be made in writing, and must contain the name and address of the professional service corporation and such other information as may be required by the regulating authority. Upon receipt of such application, the regulating authority, or some administrative agency of government designated by it, shall make an investigation of the professional service corporation. If the regulating authority is the Supreme Court it may designate the bar or legal association which investigates and prefers charges against lawyers to it for disciplining.

Who is liable for negligence or wrongful acts?

A professional service corporation is liable up to the full value of its property for any negligence or wrongful acts or misconduct committed by any of its officers, shareholders, agents or employees while they are engaged on behalf of the professional service corporation in the rendering of professional services.

Is the Professional Service Corporation Act applicable to attorneys at law?

The provisions of Professional Service Corporation Act are applicable to attorneys at law only to the extent and under such terms and conditions as the Supreme Court of Illinois shall determine to be necessary and appropriate. Articles of a professional service corporation of professional service corporations organized to practice law must contain ...

What is considered a professional business?

Most kinds of businesses are eligible for incorporation, with the notable exception of “professional” occupations. What exactly constitutes as “professional” varies state-by-state, but usually includes individuals of licensed occupations such as doctors, lawyers, and financial professionals.

What is professional association?

What is a Professional Association? Business incorporation is considered an important developmental milestone by many owners. When a business is successfully incorporated, it’s considered an incorporated entity, and owners are granted limited liability from the debts, obligations, and legal matters of the business.

What are the three major categories of professional entities?

The three major categories of professional entities are professional corporations (PCs), professional LLCs (PLLCs), and professional associations (PAs). While PCs and PLLCs are largely similar to their non-professional analogs, PAs are somewhat of an anomaly. The definition of a professional association wholly depends on your local state ...

Is a professional association a separate entity?

Many states (such as Ohio, Mississippi, and Tennessee) use PA and PC interchangeably. However, in a handful of states, like Texas, a professional association is an entirely separate type of business entity. Get Legal Help Today.

Is PA a PC?

It’s important in these situations to consult the experts. For states that consider PAs as their own unique entities, the PA is generally regulated as a PC.

Legal Requirements of A Professional Corporation

• The establishment of a professional corporation is governed by the prevailing laws of the state where the corporation is formed. In certain states, there are restrictions on the type of professionals who may own shares of the corporation. In most cases, professional corporations are limited to professionals in the same field. For example, a corpora...

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