Corporate attorneys at Gehres Law Group, P.C. provide assistance to business owners in determining what type of business entity makes the most sense for their situation. For many companies, the creation of a professional corporation is the right choice.
Advantages of Operating Your Business as a Professional Corporation
Operating as a professional corporation can have significant advantages compared with other business entities. Advantages of professional corporations, as summarized by Chron.com include:
- Protection from liability: Sole proprietors and partners are liable for business losses and for judgements entered against a business. Operating as a professional corporation can provide protection from liability. Business owners are not only shielded from possible losses caused by financial mismanagement or other related issues, but are also protected if co-owners engage in criminal or negligent behavior. Losses are limited to the invested funds in a business operated as a professional corporation.
- Favorable tax treatment: Professional corporations are not only eligible for general business tax deductions available to all types of professional entities, but are also eligible for some specific tax perks not available to all companies. For example, a professional corporation can write off salaries and bonuses that the corporation pays out to employees and owners. Professional corporations can also write off fringe benefits as business expenses.
- Retained earnings: Professional corporations are permitted, under the tax code, to retain some portion of company profits in order to invest in and improve their business. Money from retained earnings can be used to accomplish important goals, such as acquiring equipment or real estate or undertaking significant renovations. Many other types of business entities, including those entities operating under pass-through rules wherein profits and losses flow to owners and are reported on individual tax returns, are not set up for retained earnings like professional corporations are.
- Retirement planning: Professional corporations typically can provide retirement plans to workers that have higher contribution limits than in most unincorporated businesses. This is a major benefit that can provide help in attracting top talent.
- Professional corporations can last in perpetuity: When you operate as a sole proprietor, the business is irrevocably intertwined with you and the company may not survive your incapacity or death. Operating as a professional corporation, on the other hand, can allow the company to be passed on through a seamless business succession plan so the company can serve as your legacy and still be operational decades later even after you are gone.
These are just a few of the many advantages of operating as a professional corporation. If you have concerns about whether you should create a professional corporation or if you have any other questions related to how to structure your business, you can reach out to an experienced attorney for help.
Contact San Diego Corporate Attorneys For Help
If you are ready to get legal advice on whether the creation of a professional corporation is right for you, it is best to reach out to an attorney with experience on startup companies and business structures. A knowledgeable corporate attorney at Gehres Law Group, P.C. can provide insight into whether the creation of a professional corporation is advisable for you. Give us a call at 858-964-2314 or contact us online to talk with San Diego corporate attorneys to find out more and to get help forming a professional corporation if this is the right choice for your situation.