Final answer:
A PT Corporation is designed for licensed professionals and must adhere to corporate formalities, include 'Professional Corporation' in its name, and manage specific tax considerations. Regulations vary by state, but generally offer liability protection, require professional ownership, and sometimes dictate professionalism in management.
Step-by-step explanation:
The regulations of a Professional Corporation, often abbreviated as PT Corporation, vary depending on state laws, but generally, they are a type of corporation designed for licensed professionals such as lawyers, doctors, architects, and accountants. Ownership of a PT Corporation is typically limited to individuals who are licensed in the profession that the corporation practices. Additionally, some states require that a certain percentage of directors or officers also be licensed professionals in that field.
Professional Corporations must adhere to specific corporate formalities, such as holding annual meetings, maintaining accurate records, filing articles of incorporation, and abiding by operating agreements or bylaws. Another notable regulation is that these entities must include 'Professional Corporation' or abbreviations such as 'P.C.' or 'PC' in their name. It is essential for a PT Corporation to manage tax considerations carefully, as they can be subject to different taxation rules compared to other types of corporations, including the possibility of being taxed as an S corporation.
One key advantage of forming a PT Corporation is the personal liability protection it offers to its owners for certain types of claims. Although individual professionals remain personally liable for their own malpractice claims, non-professional liabilities may be shielded.