Professional corporation
Encyclopedia
Professional corporations (abbreviated as PC or P.C.) are those corporate entities for which many corporation
statutes make special provision, regulating the use of the corporate form by licensed professionals such as attorneys
, architect
s, engineer
s, public accountant
s and physician
s. Legal regulations applying to professional corporations typically differ in important ways from those applying to other corporations. Professional corporations, which may have a single director or multiple directors, do not usually afford that person or persons the same degree of limitation of liability as ordinary business corporations (cf.
LLP
). Such corporations must identify themselves as professional corporations by including "PC" or "P.C." after the firm's name. Professional corporations often exist as part of a larger, more complicated, legal entity; for example, a law firm
or medical practice
might be organized as a partnership of several or many professional corporations.
, professional corporations have two citizenships for purposes of diversity
, just like ordinary corporations, namely that they are citizens of (1) the state in which they are incorporated and (2) the state in which they have their principal place of business. This is unlike other, similar organizations that are not technically incorporated, such as trade association
s, labor unions, and limited liability companies
, for which citizenship is based on the domicile
of each member.
Corporation
A corporation is created under the laws of a state as a separate legal entity that has privileges and liabilities that are distinct from those of its members. There are many different forms of corporations, most of which are used to conduct business. Early corporations were established by charter...
statutes make special provision, regulating the use of the corporate form by licensed professionals such as attorneys
Lawyer
A lawyer, according to Black's Law Dictionary, is "a person learned in the law; as an attorney, counsel or solicitor; a person who is practicing law." Law is the system of rules of conduct established by the sovereign government of a society to correct wrongs, maintain the stability of political...
, architect
Architect
An architect is a person trained in the planning, design and oversight of the construction of buildings. To practice architecture means to offer or render services in connection with the design and construction of a building, or group of buildings and the space within the site surrounding the...
s, engineer
Engineer
An engineer is a professional practitioner of engineering, concerned with applying scientific knowledge, mathematics and ingenuity to develop solutions for technical problems. Engineers design materials, structures, machines and systems while considering the limitations imposed by practicality,...
s, public accountant
Accountant
An accountant is a practitioner of accountancy or accounting , which is the measurement, disclosure or provision of assurance about financial information that helps managers, investors, tax authorities and others make decisions about allocating resources.The Big Four auditors are the largest...
s and physician
Physician
A physician is a health care provider who practices the profession of medicine, which is concerned with promoting, maintaining or restoring human health through the study, diagnosis, and treatment of disease, injury and other physical and mental impairments...
s. Legal regulations applying to professional corporations typically differ in important ways from those applying to other corporations. Professional corporations, which may have a single director or multiple directors, do not usually afford that person or persons the same degree of limitation of liability as ordinary business corporations (cf.
Cf.
cf., an abbreviation for the Latin word confer , literally meaning "bring together", is used to refer to other material or ideas which may provide similar or different information or arguments. It is mainly used in scholarly contexts, such as in academic or legal texts...
LLP
Limited liability partnership
A limited liability partnership is a partnership in which some or all partners have limited liability. It therefore exhibits elements of partnerships and corporations. In an LLP one partner is not responsible or liable for another partner's misconduct or negligence. This is an important...
). Such corporations must identify themselves as professional corporations by including "PC" or "P.C." after the firm's name. Professional corporations often exist as part of a larger, more complicated, legal entity; for example, a law firm
Law firm
A law firm is a business entity formed by one or more lawyers to engage in the practice of law. The primary service rendered by a law firm is to advise clients about their legal rights and responsibilities, and to represent clients in civil or criminal cases, business transactions, and other...
or medical practice
Medical practice
A medical practice or practice of medicine is the practice of medicine, as performed by a medical practitioner—a physician...
might be organized as a partnership of several or many professional corporations.
United States
In U.S. federal subject matter jurisdictionSubject-matter jurisdiction
Subject-matter jurisdiction is the authority of a court to hear cases of a particular type or cases relating to a specific subject matter. For instance, bankruptcy court only has the authority to hear bankruptcy cases....
, professional corporations have two citizenships for purposes of diversity
Diversity jurisdiction
In the law of the United States, diversity jurisdiction is a form of subject-matter jurisdiction in civil procedure in which a United States district court has the power to hear a civil case where the persons that are parties are "diverse" in citizenship, which generally indicates that they are...
, just like ordinary corporations, namely that they are citizens of (1) the state in which they are incorporated and (2) the state in which they have their principal place of business. This is unlike other, similar organizations that are not technically incorporated, such as trade association
Trade association
A trade association, also known as an industry trade group, business association or sector association, is an organization founded and funded by businesses that operate in a specific industry...
s, labor unions, and limited liability companies
Limited liability company
A limited liability company is a flexible form of enterprise that blends elements of partnership and corporate structures. It is a legal form of company that provides limited liability to its owners in the vast majority of United States jurisdictions...
, for which citizenship is based on the domicile
Domicile (law)
In law, domicile is the status or attribution of being a permanent resident in a particular jurisdiction. A person can remain domiciled in a jurisdiction even after they have left it, if they have maintained sufficient links with that jurisdiction or have not displayed an intention to leave...
of each member.
External links
- "Business & human resources">"Main topics">"Ownership structures" and "Glossary" (searchable) at Nolo: Your Legal CompanionNolo.comNolo, formerly known as Nolo Press, is a publisher in Berkeley, California that produces do-it-yourself legal books and software that reduce the need for people to hire lawyers for simple legal matters such as making wills or writing business partnership contracts...
. Accessed June 26, 2008. - "Small Business Guide: Your Online Resource">"Starting Your Business">"Choosing a Form of Organization">"Starting Corporations"> and "Table of Contents" (searchable) at Business Owners ToolKit: Total Know-How for Small Business Owners. Accessed June 26, 2008.