Professional Corporations or PCs (also called Professional Service Corporations) were created to allow certain kinds of professionals (e.g., doctors, lawyers, accountants, engineers, and so forth) to do business as a professional corporation.
In contrast to ordinary corporations, all shareholders in a professional corporation typically must be members of the profession that the corporation is involved in. While there is some limitation on liability surrounding the actions of each partner, the professionals in the firm may not be relieved of liability for their own professional negligence or malpractice. This is the main reason professionals form this type of corporation. They can enjoy sharing management responsibilities and profits without exposing themselves to malpractice actions against the other owners. Depending on state law, limited liability partnerships (LLP) may offer the same benefit and may even be more desirable.
If you are interested in setting up a professional corporation, be sure you understand the requirements in your state. Some states require that each owner hold the same type of business license and will verify this before allowing the corporation to be formed. You may have to carry a certain designation in the company name, such as "PC" for professional corporation. You will also need to draft corporate by-laws. These are the rules of how your business will run and be governed. You will need to designate officers and their responsibilities, assign decision-making procedures and any terms regarding management and finances; think of them as a contract between partners. The final step is to register your corporation in your state. It varies, but in most cases you will pay a filing fee and submit a registration form. If you feel you need help, your local small business association or a corporate attorney can offer assistance. Some states also have guides posted on their websites to help explain the process.