Professional Corporation Definition and Legal Meaning
On this page, you'll find the legal definition and meaning of Professional Corporation, written in plain English, along with examples of how it is used.
What is Professional Corporation?
nAn organisation that is formed by a group of professionals practicing with proper licences like lawyers,medical practitioners,architects,certified public acoouants etc.Most states have certain federal rules that such corporations can operate with a director who should also be a professional.But the organisation is not legally responsible for any kind of damages caused due to negligence by a particular member.
History and Meaning of Professional Corporation
A professional corporation or PC is a legal classification for companies that provide professional services such as those offered by doctors, engineers, accountants, and lawyers. The professionals who are a part of a PC share ownership in the company, which is operated as a corporation. The PC structure provides personal asset protection to its members as they are not personally liable for the corporation's debts or malpractice suits against another member. PCs have been in operation for almost a century, with the first PC statute approved in New York in 1930.
Examples of Professional Corporation
A group of lawyers can form a professional corporation that would provide them with liability protection.
A team of medical professionals can create a PC to offer their services and share the financial profits.
Accountants can form a PC to limit personal liabilities associated with malpractice suits arising from the delivery of their professional services.
Legal Terms Similar to Professional Corporation
Limited Liability Company (LLC)- The structure of an LLC provides personal asset protection to its members, similar to that of a professional corporation.
Registered Limited Liability Partnership (RLLP) - A partnership between professionals that provides personal protection to its members from crimes or malpractice suits committed by another member.
Professional association (PA) – A non-profit entity formed by professionals who seek to provide a common set of professional services while enjoying personal protection from potential suits relating to malpractice.