Both a professional corporation (PC) and limited liability company (LLC) are incorporated legal entities. PCs and PLLCs offer many of the same advantages as regular corporations and LLCs. Click on the FAQ tab on this page or the article noted below to learn more about the taxation of PC corporations and professional limited liability companies. A PLLC is the professional version of the standard company structure known as a Limited Liability Company, or LLC. An LLC can be opened by pretty much anyone who wants to run a business and protect their personal assets.
- If you’re an attorney in an LLP, for example, you can’t be sued personally if one of your business partners commits negligence in a legal case.
- By doing so, it provides liability protection for each member and practitioner of the group.
- Further, depending on what state you live in, you may not have the option of opening a PLLC for your professional practice.
- These different classifications might offer more tax benefits for you than a PC, but check with your accountant to confirm which incorporation structure is best for you.
- A DBA registration in Michigan is valid for five years, and users of the TESS database of the USPTO can determine whether a business name is available.
Key Benefits of Professional Corporations
- A disadvantage, however, is that members of an LLC are generally required to carry a high level of malpractice insurance.
- A professional corporation is a legal entity created by a group of professionals like doctors, accountants, and architects.
- LLC is a cost-effective option for sole business owners to gain personal liability protection and then attract extra business members should they need to.
- In this way, each remaining professional shares in the management responsibilities and profits without any liability for each other’s malpractice actions.
This is why professionals often find a professional corporation more advantageous since they are held liable only for their own actions. You must get in touch with the appropriate government department or agency that manages business registration in your region if you want to obtain a certified authentic copy of the articles of incorporation. A certified copy can normally be requested online or by mail, and there might be a charge for the service.
What is a professional corporation (PC)?
PC stands for “Professional Corporation,” while LLC is a sort of business company that shields its owners from responsibility. A DBA registration in Michigan is valid for five years, and users of the TESS database of the USPTO can determine whether a business name is available. People must file articles of incorporation and acquire all required licenses and permits before they may form an LLC. Individuals can confidently launch and run their enterprises by comprehending these terms and conditions. This type of company is authorized to issue shares to the public and has a limited liability, meaning the owners’ personal assets are protected in case the company experiences financial difficulties.
Company formation: PC vs. LLC
Only licensed professionals providing similar services can form a professional corporation. Doing business collectively without taking on other shareholders’ liabilities is a major advantage to forming a professional corporation. PC or “P.C.” stands for “Professional Corporation”, a specialform of corporation which retains some personal liability for theprincipals of the business. Ordinarily restricted to licensedprofessionals such as doctors, attorneys, and publicAccountants.
This structure is often used by small businesses, family-owned enterprises, or entrepreneurs who want to maintain control over their company. A professional corporation allows licensed practitioners to do business together without being liable for each other’s malpractice. However, this entity type also requires annual maintenance, such as what does pc stand for in business registration renewal in the state. Though LLCs are treated as pass-through business entities for federal taxes, some states also impose extra franchise taxes on LLCs. A professional corporation (PC) is a business entity type, whereas an S-corporation is a tax classification. A professional corporation is a legal entity created by a group of professionals like doctors, accountants, and architects.
What is a Professional Corporation?
Additionally, a PC or PLLC must typically be organized to solely provide the services of the licensed practitioners. PCs are taxed in a way that comes with both advantages and disadvantages. For example, PC employees have higher contribution limits on retirement plans. PCs can provide health and life insurance benefits tax free and can receive deductions for additional benefits like disability insurance. On the other hand, PCs are taxed at a flat rate that makes it disadvantageous to hold funds in the corporation, where they will be taxed at a higher rate.
What is a PLLC?
Designation, which is also “pass through” and comes with some other restriction, or C-Corp. Pass through taxation means that the company income isn’t taxed at the corporate level, rather only as income taxes when the owners file their own personal taxes. This limits the burden of double taxation, which is a big consideration for small businesses. Organizing a professional corporation is not necessarily the only option. Another reason is LLCs and professional limited liability companies (PLLC) both provide limited liability protection, the same as a PC, but are easier to operate.
Without PC protection, they can be held personally liable for your malpractice, but when your practice is structured as a PC, only the doctor who commits the malpractice is liable. One primary interpretation of PC in business is a Professional Corporation. This is a specific type of pot for professionals similar to doctors, lawyers, accountants, masterminds, and engineers.
The other dominant interpretation of PC in business refers to a Personal Computer. A personal computer is a multi-purpose computer whose size, capabilities, and price make it feasible for individual use. Particular computers have revolutionized the business world, enabling businesses to automate processes, maintain records, communicate encyclopedically, and efficiently conduct exploration. In conclusion, when you see “PC” after a business name, it’s likely that it stands for Public Corporation or Public Limited Company.
One advantage to professionals is that LLC members (as the LLC participants are called) can consist of different types of entities, such as individuals and corporations. So, a doctor in a solo practice and a PC of doctors could join an LLC that has other doctor members as well. A disadvantage, however, is that members of an LLC are generally required to carry a high level of malpractice insurance. Many people see “PC” after a group of lawyers’ names, and therefore they assume a PC company is a legal term or is related to lawyers. It is a legal term in the sense that a professional corporation is a legal entity that provides professionals with certain tax and legal advantages.
In general, most states allow professions that require licenses to set up PCs. This typically includes doctors, veterinarians, chiropractors, dentists, attorneys, architects and accountants. At least one shareholder must be licensed in the state, although not all the shareholders need to be. If you plan to do business in more than one state, it’s likely you’ll need to set up a new PC for each state. A regular corporation can be registered by anyone who meets the criteria.
What is better LLC or PC?
However, incorporation opens up a company to more investment opportunities down the road. Further, depending on what state you live in, you may not have the option of opening a PLLC for your professional practice. LLCs are popular among small business owners because they are relatively simple to set up and require little paperwork to maintain. Corporations, on the other hand, have a much higher administrative burden and regulations they need to abide by.
These different classifications might offer more tax benefits for you than a PC, but check with your accountant to confirm which incorporation structure is best for you. 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. The main reason to set up your business as a PC is to limit your personal liability from lawsuits and business debts.