What is the difference between a PS (professional service corporation), a PC (a professional corporation), and a corporation? How do you know whether to form a PLLC (professional limited liability company), as opposed to just a regular LLC (limited liability company)?
A PS and a PC are the same type of professional corporation. A professional corporation is an entity through which licensed professionals provide professional services. While anyone can incorporate and form a regular corporation, in general, only shareholders who are licensed to provide professional services are permitted to form a professional corporation. RCW 18.100.060. This dichotomy holds true for a PLLC vs. a LLC, with the PLLC being a professional entity whose members are required to be licensed professionals. RCW 25.15.046.
Moreover, with few exceptions, professional service providers are not permitted to form a regular corporation to provide those professional services. Columbia Physical Therapy, Inc., PS v. Benton Franklin Orthopedic Assocs., PLLC, 168 Wn.2d 421, 228 P.3d 1260 (2010). Thus, the only available form of business entity through which a professional service provider is authorized to provide professional services is a professional corporation.
The difference between a professional entity and a regular entity is not just in the name. Because a professional relationship exists between a professional and his or her patient or client, the Professional Corporation Act, which governs Washington professional corporations and PLLCs, requires a professional entity to follow certain corporate governance practices to protect and maintain such relationship.
The Professional Corporation Act defines the term “professional service” as “any type of personal service to the public which requires as a condition precedent to the rendering of such service the obtaining of a license or other legal authorization and which prior to the passage of this chapter and by reason of law could not be performed by a corporation, including, but not by way of limitation, certified public accountants, chiropractors, dentists, osteopaths, physicians, podiatric physicians and surgeons, chiropodists, architects, veterinarians and attorneys-at-law.” RCW 18.100.030. Note that the examples are illustrative and not an exhaustive list. Therefore, all licensed professionals need to be aware of the difference between a professional entity and a regular entity and seek legal advice to determine whether they should form a professional corporation.
This post is for informational purposes and does not contain or convey legal advice. The information herein should not be used or relied upon in regard to any particular facts or circumstances without first consulting with an attorney.