A corporation becomes an S corporation by filing an S corporation election with the IRS. The election is made on IRS Form 2553, Election by a Small Business Corporation. It must be signed by all the shareholders and timely filed.

What is a professional S Corp?

If you have a professional corporation, you may qualify for pass-through taxation by electing to be treated as an S corporation by the IRS. In many states, licensed professionals are not permitted to operate as regular corporations. However, a professional corporation is an alternative that provides limited liability.

What type of liability does an S corporation have?

limited liability protection
The owners of an S corporation have limited liability protection. This means that the individual owners are not personally liable for most business debts.

Can a professional corporation be formed in California?

California professional corporations can be formed only to provide PROFESSIONAL services within a single profession, according to the Moscone-Knox Professional Corporation Act. A professional service is defined as any service that requires a license issued by a California state regulatory licensing board, state court, or a similar agency.

What are the benefits of forming a professional corporation?

There are many benefits to forming professional corporations, such as having the opportunity to qualify for special tax treatments, apply for liability protections, and many more. Most importantly, forming a professional corporation is a requirement for professional services.

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.

Who are the professionals that can form a C corporation?

An S corporation or a C corporation may be formed by certain professionals including physicians, attorneys, engineers, or accountants. There are certain legal requirements and restrictions that apply only to these types of business entities.