Dan was finally going to realize his dream. When he graduated with a degree in architecture over 10 years ago, he went to work for a great firm. But, deep down, he wanted more. He wanted to own and run his own agency. As he made his preparations, he had to learn the pros and cons of forming the type of business entity he wanted – a professional corporation.
Forming a Professional Corporation.
The Code of Virginia contains a really long definition of “professional business entity” and “professional limited liability company.”
Not just anyone can form a professional corporation, and the reason is in the name. Only professionals can start a business offering professional services. But conversely professionals are not limited to opening professional business entities.
A professional business entity is legally authorized by the Commonwealth or other jurisdiction to provide a professional service. Three types of professional business entity are noted in the Virginia Code:
- A professional limited liability company;
- A professional corporation; or
- A partnership registered as a limited liability partners where all partners are licensed or authorized to provide the company’s professional services.
What’s So Good About a Professional Corporation?
For some people, this type of business entity is best because:
Tax Benefits: Operating this business entity offers tax benefits to the owners. Taxes are paid by the individual members, not the company.
Limited Liability Protection: This does not protect practitioners from individual malpractice liability. It will protect against malpractice against other practitioners in the company. Also, the owners will not be held personally responsible for business obligations.
Management: Professional corporations are not required to have the same structure as a corporation.
What’s the Downside?
Fees are higher for starting a corporation as opposed to working as a sole proprietor.
Ongoing paperwork may be a pain for the corporation members.
All the owners must be the same profession. So, Anytown, PLLC, could not be owned and run by a doctor, a lawyer, and an architect.
Learn More About Starting a Business in Virginia.
There’s good and bad in every business entity type. The attorneys at Dillon Law Group, PLC, know the ins and outs of Virginia business law. Please contact us at 757-962-4796 to set up an appointment or use the Contact Form on our website, https://www.dillonlawgrp.com/. Our offices are located in Virginia Beach and Newport News.