PC Corporation

Professional Corporation (PC)

What It Is

A Professional Corporation (PC) is a type of corporation designed for licensed professionals such as doctors, lawyers, accountants, and architects. It allows these professionals to form a business entity while complying with state licensing regulations. Only individuals holding the same professional license can be shareholders in a PC.

Pros

• Limited Liability (Mostly): Protects personal assets from business debts and obligations, but you remain personally liable for your own malpractice.
• Tax Planning Options: Can elect S-Corp status to save on self-employment taxes, with flexible salary, benefits, and retirement planning.
• Professional Credibility: Adds legitimacy to your practice, and in some states, it’s mandatory for certain professions.
• Continuity: The business can continue even if an owner leaves or passes away.
• Benefit Packages: Easier to set up retirement plans and health insurance for yourself and employees.

Cons

• Personal Liability for Malpractice: You remain personally liable for your own professional negligence, though protected from other owners’ mistakes.
• Stricter Rules: All shareholders must hold the same professional license, with extra compliance requirements.
• Double Taxation (C-Corp): Without S-Corp election, profits are taxed at the corporate level and again when distributed as dividends.
• Higher Costs: Filing fees, annual reports, and licensing fees are more expensive than simpler structures.
• Limited Ownership Options: Cannot include non-licensed investors or partners.

Bottom Line

A PC is ideal for licensed professionals seeking liability protection and tax flexibility, but it doesn’t shield you from personal malpractice claims. Malpractice insurance is still necessary, and compliance requirements are stricter than for LLCs or general corporations.