Professional Corporations

Overview

For more detailed information on these topics, visit the Education Center

• Every state has laws that permit or require certain licensed professionals to form a professional corporation. The legal structure is the same as a business corporation: shareholders, directors and officers.
• Unlike a business corporation, the officers, directors, and shareholders are generally all required to be licensed professionals. 
• Licensing board regulations specify the requirements for corporate names, use of any fictitious business names, and any requirement to register as a professional corporation with the licensing agency.
• There are substantial limitations on the limited liability protection for shareholders in a professional corporation. Many licensing agencies require licensees to provide malpractice insurance. Secondly, most, if not all, states have a public policy that every individual is legally responsible for damages that are caused by his or her personal negligence or other misconduct. No limited liability entity will provide a shield against personal liability in these circumstances.
• Apart from these special requirements, a professional corporation is usually regulated under a state's general corporation law just like a regular business corporation.
• All states allow one person to form a professional corporation and be the only shareholder, director and fill all required office positions.
• Just as in a regular business corporation, a professional corporation may choose to be taxed either as a C Corporation or an S Corporation.