A California professional corporation provides a tool for certain licensed professionals to conduct business. As with other corporations, the professional corporation shields personal assets from liability and corporate debts. Understand how a California professional corporation works.

California professional corporation in the process of forming

California professional corporation in the process of forming

What Is A California Professional Corporation?

Members of certain professions such as lawyers, doctors, accountants, and engineers may form a California professional corporation (also known as a “PC”). Typically, these types of entities provide services only through licensed professionals.

A professional corporation conveys limited liability to its members just as a regular corporation. However, in most cases the corporation does not convey limited liability for the malpractice of the individual members. Ideally, professionals manage that type of risk through malpractice insurance policies.

Also, a California professional corporation must do standard corporate maintenance, such as timely filing a Statement of Information.

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More About Setting Up A California Professional Corporation

A California professional corporation may have to register with a state agency. For instance, a law firm would have to register with the State Bar of California. Other professions would register with the relevant agency or licensing agency.

Also, in some cases California law imposes naming requirements on professional corporations. To wit, an architecture firm may have to include the name or last name of the licensed architect plus the word “architects”. These rules vary and change, so it is crucial to seek professional counsel prior to selecting a name for your business.

Members of a California professional corporation should also think careful about tax issues and whether or not to choose to be taxed as an S-corporation or not. See also, California Franchise Tax Board information about S-corporation election.

 


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