| When starting a business, one of the first questions | | | | not provide protection from malpractice claims, but will |
| you will face is what business entity should you use. | | | | for all other claims. Confused yet? Let's look at an |
| While everyone is at least passingly familiar with the | | | | example. |
| corporation, "S" corporation and LLC, there are other | | | | I am an attorney. I want to do partner up with another |
| entities for more specific situations. The professional | | | | attorney. Together, we are interested in adding a third |
| corporation is one. Let's take a look. | | | | person who is a court reporter to our firm. We would |
| As the name suggests, the professional corporation is | | | | form a professional corporation. The two attorneys |
| a particular form of the corporation. As the name | | | | would be the shareholders. The court reporter could |
| further suggests, it is designed to be used by | | | | not join as a shareholder, but we could create financial |
| professional businesses. What are professional | | | | incentives to keep them on board. If get sued because |
| businesses? Well, it depends on the state you are in. | | | | I commit malpractice in a case, I will personally be liable. |
| Most states have a section of code known by the | | | | If the business gets sued in a dispute with our landlord, |
| name Business & Professions Code or something | | | | neither attorney will be personally responsible. |
| similar. In that code, there is a section of law that | | | | The professional corporation is a state creation. Not all |
| details which businesses must use professional | | | | states have them. Some replace them with |
| corporations. That's right. The use is mandatory if you | | | | professional limited liability companies or some other |
| are going to incorporation. | | | | form of business. If you are a professional looking to |
| What is the professional corporation? It is run like a | | | | form a business entity, make sure you contact a |
| basic corporation, but it has certain restrictions. | | | | business attorney in your area to find out your options |
| Generally, the shareholders must be licensed | | | | and requirements. |
| professionals in the niche in question. Also, the entity will | | | | |