An LLC taxed as a C-corporation means members become shareholders and don’t pay tax on their profits. The better news is that PC owners can elect to be taxed as an S-corporation by filing https://personal-accounting.org/what-does-pc-stand-for-after-a-business-name/ Form 2553 with the IRS. Some states require PCs to file annual reports and pay applicable state fees. Failure to do so can result in shareholders’ suspension from providing services.

Malpractice protection is often why professionals file as a PC to avoid financial liability for the wrongdoings of others in the practice. Neither protects you against personal liability for your own malpractice, negligence, or personal wrongdoing. Should you choose to incorporate your sole proprietorship as an LLC in the future, you can do so under the IRS “check-the-box » regulations without incurring federal tax consequences. PCs have made it possible for businesses to centralize data management, eliminating the need for hard copy files. This has greatly improved organizational productivity and simultaneously increased data accessibility, enabling quicker decision-making processes.

B. Disadvantages of Using PCs in Business

A single-member LLC is a disregarded entity to the IRS and taxed as a sole proprietorship. A multi-member LLC is taxed as a partnership but can also elect to be taxed as a C-corporation or S-corporation. If the profits are distributed to owners, then they will also pay income taxes. LLCs and PCs have similarities in how they are formed, but professional corporations require additional steps.

  • When choosing between an LLC and a PC, check the state statutes to make sure the legal entity can operate in your state.
  • The shift began in the 1990s when businesses started to deploy enterprise-wide networks, which enabled the sharing of files and resources.
  • One advantage of an LLC is that each owner—also called a member—has limited liability, which means they are not personally liable for the financial obligations of the LLC.
  • There are similarities between a PC vs. LLC when it comes to personal liability.

The benefit of registration – a formal acknowledgement of the entity – is that the LLP takes on a form of limited liability similar to that of a corporation. Typically, that means that partners aren’t liable for the bad behavior of the other partners though the level of liability can vary from state to state. There is generally unlimited personal liability for contractual obligations of the partnership such as promissory notes and mortgages (again, this varies by state). PCs and PLLCs offer many of the same advantages as regular corporations and LLCs. Click on the FAQ tab on this page or the article noted below to learn more about the taxation of PC corporations and professional limited liability companies. LLC is a cost-effective option for sole business owners to gain personal liability protection and then attract extra business members should they need to.

What Does PC Mean After a Business Name?

With the introduction of the PC, businesses could process data faster and more efficiently than ever before, revolutionizing the way they operated. As technology continues to dominate the business landscape, the need for a deep understanding of PCs and their applications in business operations has become vital to the success of modern organizations. When you see the initials “PC” in a lawyer’s name, it indicates that they have chosen to practice law as part of a Professional Corporation. This designation signifies that the lawyer has taken steps to operate their legal practice within the framework of a corporate entity. While Professional corporations and Personal computers are the most common interpretations, PC can also represent other terms in various business contexts. It can refer to Purchase Card, a card issued to employees to make authorized purchases on the company’s behalf.

What is better LLC or PC?

An LLC can also opt to be taxed as a S corporation (more on that in a bit). Generally, PCs must be incorporated by a licensed professional in the field in which the PC provides services. A professionally incorporated law firm must be formed by a licensed attorney.

LLC & PC Definition

A professional corporation isn’t allowed to branch out beyond the services for which it was specifically incorporated with the state. Typically, those not licensed in the profession may not be shareholders in a PC. This rule not only applies employees but also to potential investors and family members. Like other corporations, professional corporations must be registered with the state in which they are formed.

PCs aren’t as popular as they once were, in part because of tax law changes and in part because LLCs or PLLCs provide the same limited liability protection as a PC does and are easier to run. Another option available to professionals is a partnership, which is common in many other types of businesses as well. In a partnership, all partners are liable for the actions of the other partners. This is why professionals often find a professional corporation more advantageous since they are held liable only for their own actions.

Specific requirements of corporations vary significantly from state to state. PC stands for “Professional Corporation.” It is a special type of business entity that is typically used by professionals such as lawyers, doctors, and accountants to structure their practices. A professional corporation is formed under state laws and provides certain benefits and limitations that are specific to professional service providers. The Limited Liability Company (« LLC ») is probably the most popular form of business entity today. It’s a hybrid entity that offers the liability protection of a corporation with the option to be taxed as a partnership or a corporation.

That means that personal assets – like your house – can be treated, for liability purposes, as business assets. A professional corporation or PC is governed by the laws of the state where it’s formed. Shareholders of a PC have personal liability protection against both corporate debts and negligent acts of other professionals. In some states, it isn’t uncommon to see the name of a law firm or attorney’s office with the letters « PC » after it.

A professionally incorporated accounting firm must be formed by a licensed accountant. Each state has individual licensing requirements for regulated professions. PCs that operate across state lines must comply which each state’s requirements. Because licensed professionals must adhere to a strict code of professional ethics, professional corporations cannot shield these workers from those ethical requirements.

Call your state licensing board to determine if a PC or PLLC should be used prior to forming your business. With a sale or change in ownership, the business continues to operate without disruption. Filing fees vary by state law, and additional documents or fees may be required. Both PC and LLC organizers must file the necessary paperwork with the secretary of state to form a new entity. Another difference between a PC and LLC is in how the entities are taxed. LLCs can have an unlimited number of members, and filing requirements vary by state.