Classification of Professional Corporations The IRS categorizes professional corporations as C corporations. They are considered taxpayers and must pay income taxes at the corporate rate. In some states, physicians are not allowed to form professional corporations and must instead establish professional associations.

Can a professional corporation elect S corp status?

The corporation can make the election by filing IRS Form 2553: Election by a Small Business Corporation, which includes a section for all shareholders to sign and indicate their consent. However, your professional corporation doesn’t become an S corporation automatically upon submitting this form.

What is the difference between AS Corp and AC Corp?

The C corporation is the standard (or default) corporation under IRS rules. The S corporation is a corporation that has elected a special tax status with the IRS and therefore has some tax advantages. Both business structures get their names from the parts of the Internal Revenue Code that they are taxed under.

Can law firms be S corporations?

Around this time, many small businesses — including law firms — are contemplating starting a separate entity in the new year. The most popular entity for a solo law practice and a few small firms is the S-corporation. They are relatively easy to start up, and there is no double taxation, unlike C-corporations.

What is the difference between corporation and professional corporation?

A professional corporation is one that only performs services in one, single profession. It is a specific type of corporation for professionals like doctors, lawyers, accountants, etc. The professional is able to form a corporation, but the professional remains liable for his or her own actions.

Who are the members of a professional corporation?

Professional corporations (PCs), or professional service corporations, are a unique corporate structure which is comprised of a specific group of professionals. An S corporation or a C corporation may be formed by certain professionals including physicians, attorneys, engineers, or accountants.

Can a professional corporation have an s status?

Professional Corporation. If you’re a doctor, lawyer, accountant or provide another type of expert services, you can establish a professional corporation, which means the Internal Revenue Service allows you to treat yourself as an employee of a company that performs services for the business.

What’s the difference between Personal Services Corporation and professional corporation?

A personal services corporation is a taxing entity set up under the regulations of the IRS. But there is much more to the differences between these two types of businesses. What Is a Professional Corporation? A professional corporation (PC) is a corporation of professionals, organized (incorporated) under the laws of a specific state.

Can a professional corporation be a limited liability company?

However, a professional corporation may be able to opt for S corp status. Most states allow professionals to opt for an S corporation, professional corporation (PC), or limited liability company (LLC). The best choice for your entity depends on the individual circumstances of your business.