A professional corporation, or PC, is an organization of professionals (i.e. physicians, attorneys, etc.) that require a license to operate. Professional corporations come together for the purpose of providing a single professional service. These organizations are most often regulated by specific boards, such as a State Board of Pharmacy or a State Bar for Attorneys. In most states, a professional corporation operates under a single director who is a licensed professional.

PCs are treated as small businesses under tax codes and limit a member’s personal liability for claims and debts. Read further about Professional Corporations here for a more thorough glance into the advantages and disadvantages.

What Professions Are Best Suited for Professional Corporations

Businesses that provide professional services are best suited for PCs. The rules and requirements of certain professions may vary from state to state. The types of jobs ideal for PCs include but may not be limited to:

  • Physicians and healthcare professionals (i.e. dentists, nurses, optometrists, pharmacists, etc.)
  • Lawyers
  • Accountants
  • Engineers
  • Speech Pathologists
  • Social Workers
  • Veterinarians
  • Consultants
  • Architects
  • Chiropractors
  • Counselors
  • In some states, actors and those that provide entertainment services

How to Form a Professional Corporation

If you find yourself in the company of likeminded professionals who perform the same service as you, you may decide that joining together in a professional corporation is the right business decision. Forming a professional corporation requires certain legal processes in addition to the typical procedures for forming a corporation.

  1. Find out if you qualify as a professional service corporation for federal tax purposes. Call your state’s filing office (usually the Secretary of State or the Corporation Commissioner) to find out which professionals are required to operate as professional corporations in your state. Some states allow these professionals to incorporate as a regular corporation. Find links to your state government here.
  2. Find the appropriate state licensing bodies for your profession. There are often additional professional corporation rules set by state boards or regulatory bodies of each specific profession. These rules must be met before continuing with the formation of a PC. License123.com is good resource to find out which licenses are required in your state and to find information on your state regulatory boards.
  3. Name your business, and complete a professional service name search to ensure that your desired name isn’t already taken. This search can be done through your Secretary of State as well as on the Federal Trademark Search System (learn more about searching and filing with the USPTO here). Also, keep in mind that many states require you to include “Professional Corporation,” “P.C.” or “PC” in your business name. Other states also require you to include the name of the profession in the business name, such as “Jones Physicians, P.C.”
  4. Draft your Articles of Incorporation. Articles of Incorporation include the rights and responsibilities of directors, information about shares and further rules of the corporation. These are different than the articles of standard corporations because PC articles usually require approval from the proper state licensing body before you can file with the Secretary of State. These articles typically must also include a licensed professional’s signature as the incorporator, including their license number. This makes the process a bit lengthier than the process for standard corporations.
  5. Draft your Corporate Bylaws. The bylaws cover the day-to-day operations and specifically how the corporation will be run. It outlines shareholder and director duties. It is important to note that only licensed professionals can be shareholders, directors and/or officers of a professional corporation.
  6. File appropriate documents, and pay necessary fees with your professional state regulatory body, if required (see #2).
  7. File appropriate documents in your state, and pay any filing fees with your state and local governments. This includes your Articles of Incorporation.