8981 / What are some of the advantages and disadvantages of the professional corporation (PC) structure?

In certain states, groups of professionals performing services in specified fields (such as medicine, accounting and law) are not permitted to establish a traditional corporation that would eliminate the personal liability of the individual professionals entirely. These groups may wish to form a professional corporation in order to obtain some of the benefits of a corporation, such as personal protection against corporate debts, although each individual can still be held liable for his or her own malpractice. While the PC structure does not allow the individual to escape liability for his or her own professional malpractice, it does protect each individual from liability incurred by other members of the group.

Further, the PC structure allows the group to obtain the benefit of perpetual corporate existence, so that the business will continue if one or more members leaves the PC (in the partnership context, there is always the possibility that the partnership may need to be dissolved if one or more partners leaves or dies).

Like any other corporation, double taxation is a primary disadvantage of the PC structure. The PC itself is subject to tax, and the individual owners are subject to tax when the PC profits are distributed.