That means that personal assets – like your house – can be treated, for liability purposes, as business assets. People must first select a distinctive company name and submit articles of organization to the secretary of state of their state in order to form an LLC. Some states could also call for filings like a statement of information or an operating agreement in addition to the articles of incorporation.

Similar Corporation Classifications

• One primary interpretation of PC in business is a Professional Corporation.
• In this article, we’ll delve into the mystery and provide you with the answers you’ve been looking for.
• Choosing the right structure can help you limit your tax liability with the IRS and keep more of the money that you earn.
• This typically includes doctors, veterinarians, chiropractors, dentists, attorneys, architects and accountants.

Instead of paying corporate tax rates, shareholders will pay their individual rates on profits. Electing S-corporation status with the IRS allows the business to avoid double taxation that’s imposed on corporations. Limited liability companies (LLCs) are another type of incorporated business entity.

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The general category of the PC or PSC can be as S-corporation, C-corporation, or LLC, but with subcategorization as a PC or PSC. In some states a limited liability partnership offer the same benefit and thus should be considered as a possible business entity by professionals who are forming a business. Many states offer a couple of incorporation options to licensed professionals. Professional limited liability corporations, or PLLCs, provide similar liability protection as PCs, but the incorporating parties are called members instead of shareholders. Limited liability partnerships, or LLPs, don’t necessarily require you to be licensed, but they offer personal protection for you in case one of your partners makes a major mistake. If you’re an attorney in an LLP, for example, you can’t be sued personally if one of your business partners commits negligence in a legal case.

What Does PC Stand for in Business? A Guide to Business Terminology and Legal Requirements

• A professional corporation isn’t allowed to branch out beyond the services for which it was specifically incorporated with the state.
• Unlike other entities, selling a PC is simple and only changes the name of the shareholders.
• Incorporating a professional corporation in your state can cost up to a few hundred dollars.
• It is a legal term in the sense that a professional corporation is a legal entity that provides professionals with certain tax and legal advantages.
• UpCounsel accepts only the top 5 percent of lawyers to its site.

After the LLC is established, it is crucial to get any required company licenses and permissions. To secure the LLC’s separate legal standing and the owners’ liability protection, it is also crucial to keep accurate documents. A “P.C.” is specifically for licensed professionals, while an LLC (Limited Liability Company) can be formed by anyone. Both provide limited liability protection, but the rules and regulations can differ based on the profession and state laws. When these professionals form a P.C., they create a corporation that is specifically designed for providing their specialized services.

Over what does pc mean in business the decades, the part of personal computers has expanded, and they’re now integral to nearly all business operations, irrespective of the size and sector of the association. The other dominant interpretation of PC in business refers to a Personal Computer. A personal computer is a multi-purpose computer whose size, capabilities, and price make it feasible for individual use.

Comparing Other Types of Companies

Stands for Professional Corporation, which is a type of company that allows professionals like doctors and lawyers to work together while protecting their personal assets from business liabilities. Choosing a professional corp might require legal advice from a reputable law firm to ensure you follow all applicable rules and regulations in your state. In many instances, a group of professionals licensed in the same industry forms a group of practitioners.

In a professional organization, owners are only liable for their own malpractice. The corporate earnings are taxed at the corporate rate and again if distributed to shareholders as dividends. CPAs, for example, must renew their CPA license annually and complete the required continuing professional education requirements. LLC members can run the business without any specific skills or certifications. The drawbacks of a “P.C.” can include more regulatory requirements, higher costs to set up and maintain, and potential limitations on the types of services that can be offered.

An LLC taxed as a C-corporation means members become shareholders and don’t pay tax on their profits. Shareholders must all agree to be taxed as an S-corporation and file Form 1120S each year, even though profits and losses are passed to shareholders and taxed at their individual rates. Some states require PCs to file annual reports and pay applicable state fees. Failure to do so can result in shareholders’ suspension from providing services.

For business owners, “P.C.” means they can enjoy certain legal protections, like limited liability. This means that if the business faces legal issues, the personal assets of the owners are generally protected. An LLC is not limited to the type of lawful products or services it may offer. The owners of an LLC do not need to be individually licensed to provide products or services. The LLC itself must be registered and licensed to do business in many jurisdictions. Structuring your business as a PC once meant you had more tax flexibility than many other types of corporations.

This added protection is valuable for professionals working in industries susceptible to malpractice like medicine or law. A certificate of formation, also known as business registration, is an official document that shows a company is legally recognized and allowed to operate in its state. If you need help with LLCs or PCs, you can post your legal need on UpCounsel’s marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies Google, Menlo Ventures, and Airbnb. The corporate structure allows each professional more access to control over the corporation’s operations.

This protection is a significant advantage for those in high-stakes professions where lawsuits can be common. Organizing a professional corporation is not necessarily the only option. Indeed, it is not as popular as it once was due to tax law changes.

Is a professional corporation an S Corp?

With a professional corp, each owner is both a shareholder that owns a portion of the company and an employee of the company. Some states restrict ownership in the professional corp only to those who provide the professional service the business focuses on. This means there are no outside investors unless they are also professionals.

This type of company is authorized to issue shares to the public and has a limited liability, meaning the owners’ personal assets are protected in case the company experiences financial difficulties. Public limited companies are often listed on stock exchanges and are required to follow strict accounting and reporting regulations. The benefits of forming a “P.C.” include limited liability protection, potential tax advantages, and the ability to raise capital more easily.

PC is a solid choice for licensed professionals who want to run a joint venture with others. Unlike other entities, selling a PC is simple and only changes the name of the shareholders. LLCs are attractive to business owners because of the flexibility in how they are taxed. LLCs have many benefits, but complexities like ownership changes make this business structure less attractive for some. For example, three CPA accountants may want to start a joint practice and provide accounting and tax services.

Since tax is already paid on the profits from the company, this is where the term “double taxation” comes from. This means that if the corporation faces legal issues or debts, the personal assets of the professionals involved are generally protected. For example, if a client were to sue the corporation, the professionals’ personal homes or savings would typically not be at risk.

This might be the Secretary of State’s office in the US, for instance. A certified copy can normally be requested online or by mail, and there might be a charge for the service. A certified copy of your articles of incorporation is crucial since it acts as evidence of the legitimacy of your company and contains crucial details about its organization and ownership.

When you have other members in your LLC, the company may be member-managed. This means you make decisions together and distribute money based on the operating agreement and bylaws. Professional corp owners can also opt to be taxed as an S Corp if they qualify as a small business, which comes with the tax benefit of letting them avoid more complex corporate taxes. Professional corps also allow for various corporate tax deductions, retirement plan options, and other benefits. Before you start the incorporation process and file paperwork with your state, here’s what you need to know about these business entity types.