Legal Definitions - Professional corporation

A Professional Corporation (often abbreviated as PC) or Professional Service Corporation (PSC) is a specific type of business entity created under state law. It allows individuals in certain licensed professions to form a corporation to provide their professional services. Unlike a standard corporation where shareholders might be fully shielded from the company's liabilities, a Professional Corporation is designed to balance the benefits of corporate structure (like administrative ease or tax advantages) with the unique ethical and liability responsibilities inherent in professional practice.

A key feature of a Professional Corporation is its liability structure: while an individual professional within the PC remains personally responsible for their own professional negligence or malpractice, they are generally protected from the personal liability arising from the negligence or malpractice of other professionals within the same corporation. This means a doctor in a PC is accountable for their own errors but typically not for a partner's errors. Professional Corporations are often identified by "PC" or "P.C." appended to their business name.

• Example 1: Medical Clinic
  

  Dr. Anya Sharma, Dr. Ben Carter, and Dr. Clara Diaz, all licensed physicians, decide to open a joint medical practice specializing in family medicine. Instead of forming a partnership, they choose to establish "Harmony Health Clinic, P.C."

  How this illustrates the term: By forming a Professional Corporation, they can operate as a unified business entity, sharing administrative costs and resources. If Dr. Sharma makes a medical error, she is personally liable for her actions. However, Dr. Carter and Dr. Diaz's personal assets would generally be protected from liability stemming solely from Dr. Sharma's malpractice, assuming they were not involved in or aware of her specific error. This structure allows them to collaborate while limiting their exposure to each other's individual professional mistakes.

• Example 2: Veterinary Practice
  

  Dr. Emily Chen and Dr. David Lee, both licensed veterinarians, decide to merge their individual practices into a single entity called "Paws & Claws Veterinary Services, PC."

  How this illustrates the term: This Professional Corporation allows them to pool resources, hire staff, and manage their practice more efficiently as a single business. If Dr. Chen accidentally prescribes the wrong medication to a patient, she would be personally accountable for that error. However, Dr. Lee's personal finances and assets would typically be shielded from any lawsuit arising from Dr. Chen's specific mistake, illustrating the limited liability feature among the professional owners.

• Example 3: Physical Therapy Group
  

  A group of three licensed physical therapists, Sarah, Mark, and Lisa, decide to open a rehabilitation center. They incorporate their business as "Movement Matters Physical Therapy, P.C."

  How this illustrates the term: As a Professional Corporation, they can operate their clinic, employ other therapists, and manage billing under a single corporate umbrella. If Mark commits a professional error during a patient's treatment, he is personally responsible for that negligence. Sarah and Lisa, as co-owners, would not typically be held personally liable for Mark's specific malpractice, demonstrating how the PC structure protects individual professionals from the direct professional missteps of their colleagues within the same firm.