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Professional Corporation (PC)

August 26, 2011

John Jastremski Presents:

 

Professional Corporation (PC)

 

Definition

A professional corporation (PC) is a type of corporation whose shareholders are members of designated professions. PCs are created under state law. Each state specifies by statute the professions eligible to form PCs. For taxation purposes, a PC can designate itself as either a C corporation or an S corporation.
Prerequisites

  • Must meet the basic requirements for a corporation
  • Minimum number of shareholders may be required under state law
  • Must generally have only shareholders from a specific, eligible profession

Key Strengths

  • Allows licensed professionals to take advantage of limited liability features of a corporation
  • Offers centralized management
  • Possesses continuity of life
  • Provides tax advantages

Key Tradeoffs

  • May be relatively difficult and expensive to form and maintain
  • Restrictions on ownership
  • Restrictions on transferability of interests
  • Specific tradeoffs for C corporations and S corporations

Variations from State to State

  • Each state specifies by statute the professions eligible to form PCs

How Is It Implemented?

  • Complete requirements to establish corporate status as prescribed by state law
  • Obtain an employer identification number (EIN) from IRS and state, if necessary
  • Follow state formality requirements to maintain corporate status, if necessary
  • Make S corporation election by filing Form 2553 with IRS, if necessary
  • File appropriate tax returns

 

This material was prepared by Broadridge Investor Communication Solutions, Inc., and does not necessarily represent the views of John Jastremski, Jeremy Keating, Erik J Larsen, Frank Esposito, Patrick Ray, Robert Welsch, Michael Reese, Brent Wolf, Andy Starostecki and The Retirement Group or FSC Financial Corp. This information should not be construed as investment advice. Neither the named Representatives nor Broker/Dealer gives tax or legal advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. The publisher is not engaged in rendering legal, accounting or other professional services. If other expert assistance is needed, the reader is advised to engage the services of a competent professional. Please consult your Financial Advisor for further information or call 800-900-5867.

 

The Retirement Group is not affiliated with nor endorsed by fidelity.com, netbenefits.fidelity.com, hewitt.com, resources.hewitt.com,  access.att.com, ING Retirement, AT&T, Qwest, Chevron, Hughes, Northrop Grumman, Raytheon, ExxonMobil, Glaxosmithkline, Merck, Pfizer, Verizon, Bank of America, Alcatel-Lucent or by your employer. We are an independent financial advisory group that specializes in transition planning and lump sum distribution. Please call our office at 800-900-5867 if you have additional questions or need help in the retirement planning process.

 

John Jastremski is a Representative with FSC Securities and may be reached at http://www.theretirementgroup.com.

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