Understanding Professional Corporations
A professional corporation is a legal entity created to provide professionals with the option of operating their business under the structure of a corporation, while also receiving the benefits of limited liability protection. It’s a separate entity from its owners, meaning it can own assets, enter into contracts, and sue and be sued. It also pays its taxes based on its own financial profile.
Benefits and Limitations of Professional Corporations
Professional corporations offer a range of benefits, such as limiting the liabilities of owners, protecting their assets, and providing tax advantages. They also enable professionals to offer services to the public conveniently and efficiently. However, there are some restrictions associated with professional corporations, such as additional paperwork, required fees, and legal requirements. Additionally, the types of services that can be provided by a professional corporation often varies between jurisdictions.
How to Form a Professional Corporation
Forming a professional corporation is a detailed process that involves different steps such as obtaining a valid business license, filing for corporations, and creating organizational documents. The process is mainly completed through state governments, and each state has their own regulations and requirements regarding the formation and operation of professional corporations.