Professional Corporation

A Professional Corporation , or a PC, is a corporation where the owners provide professional services, such as doctors, accountants, consultants, and architects. Professionals are treated as small businesses under the tax code. Most operating as sole proprietorship or partnerships, and are subject to the same tax rules as other similar businesses. Simply, in a professional corporation, the owners perform services for the business as employees.

Professional Corporations benefit the owners by branding them as professional. PCs provide the same limited liability protection as other entities, except for professional malpractice. Professionals are held personally liable for their professional actions.

Professional Corporations are taxed like regular C-Corps. Any income retained is subject to the corporate tax rate, while any salaries paid to employees are considered tax-deductible expenses. However, Professional Corporations frequently pay out all business income to shareholders in the form of salaries, bonuses, and fringe benefits, reducing corporate taxable income to zero. Shareholders and employees must still pay personal income tax on any income they have received.

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Tax Breaks

For many the primary advantage of a Professional Corporation is access to tax breaks that are not available to unincorporated businesses.

Perpetual Existence

Unlike sole proprietorships and partnerships, which legally dissolve when an owner dies or leaves the company, professional corporations continue operations without interruption.


Professional Corporations can provide health and life insurance as a tax-free benefit to their employees by establishing a Voluntary Employees’ Beneficiary Association. As well as receiving further tax deductions for disability insurance, dependent care and other fringe benefits provided to employees.


Professional Corporations may enable shareholders and employees to avoid personal liability for another employee’s negligence.

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