What are Professional Corporations

In most states, services offered by professionals like physicians, attorneys,
certified public accountants (CPA), architects, veterinarians, insurance agents,
etc., can only be rendered through corporations referred to as professional
association (PA) or professional service corporations (PC). These professional
service corporations are usually governed by specific rules under state
incorporation statutes. One specific advantage of such corporations is that
professional income gained in this corporation is only subjected to a significantly
lower tax rates as compared to professionals who get their incomes individually

The Articles of Incorporation of professional service corporations must specifically
state that their main purpose is to practice a specific profession. They are not
allowed to engage in other businesses, but they are given the freedom to invest in
various investments like real estate, stocks and bonds, mortgages, etc.
Professional service corporations can also choose to change their purpose to any
other legal purposes, but they will no longer exist as a professional service

Persons of the same profession are the only ones allowed to become
shareholders of professional corporations. If a particular shareholder suddenly
loses his/her right to practice his profession, the corporation must immediately
sever the shareholder’s employment as well as any other financial interest that
the shareholder has with the corporation. If a severed shareholder continues to
take part in the corporation’s affairs, the state will take the necessary measures
to dissolve the said corporation.

Professional corporations are not allowed to use the words “company”,
“corporation”, or “incorporated” in its company name. Instead, the words
“chartered”, “professional corporation”, or “professional association” may be
used in its place, or they may opt to place the initials “P.C.” or “P.A.” in their
company name.


Professional service corporations have very specific requirements required in most states before they can be established. A specific language is required for this type of corporation, particularly with regard to their Articles of Incorporation,Corporate Charter, and bylaws. With this regard, it would be best to get legal assistance from an attorney when choosing to go into this kind of corporation.