What Does PC Mean After a Business Name?

The all-cap letters "PC" can stand for many things in our lives. The personal computer became known as a PC shortly after its debut. More recently, being PC has meant being politically correct, or saying what is customarily accepted as the "right" thing to say to avoid offending anyone regardless of what you might want to say. However, when you see the letters "PC" with lawyers' names, other professionals' names or after a company's name, the "PC" meaning is clear: professional corporation.

TL;DR (Too Long; Didn't Read)

"PC" after a company's name stands for "professional corporation," a type of corporation used by professionals such as lawyers, accountants and doctors because of the limited liability and tax advantages it provides.

Understanding "PC" After a Name

A professional corporation, abbreviated as "PC" after a company’s name, is a type of corporation often seen in professions where highly educated people provide services to those who need their expertise, such as accountants, lawyers, doctors, architects, consultants and other professionals. They are often entrepreneurs who have joined in business with others in the same specialty.

Many people see "PC" after a group of lawyers’ names, and therefore they assume a PC company is a legal term or is related to lawyers. It is a legal term in the sense that a professional corporation is a legal entity that provides professionals with certain tax and legal advantages. However, professional corporations are not only for lawyers; PCs benefit many types of professionals by giving them legal protections and tax advantages.

Assessing the Pros and Cons of a PC

Designed specifically to give some protection from liability to professionals such as doctors, lawyers, architects and others, "PC" does not excuse all liability — it still holds professionals accountable for their own actions.

For example, a doctor who prescribes the wrong medication for a patient’s condition may be held liable if that mistake makes the patient ill, a lawyer who gives inaccurate advice to a client is responsible for what occurs as a result of that advice and an architect might be held liable for the design of a building that collapses because it wasn't structurally sound. However, PC protects professionals from being held liable for their partners’ actions — so, if another professional in the group commits these or other errors, he can be held liable for his actions, but his colleagues in the business cannot.

PCs are taxed in a way that comes with both advantages and disadvantages. For example, PC employees have higher contribution limits on retirement plans. PCs can provide health and life insurance benefits tax free and can receive deductions for additional benefits like disability insurance. On the other hand, PCs are taxed at a flat rate that makes it disadvantageous to hold funds in the corporation, where they will be taxed at a higher rate.

Comparing Other Types of Companies

Another option available to professionals is a partnership, which is common in many other types of businesses as well. In a partnership, all partners are liable for the actions of the other partners. This is why professionals often find a professional corporation more advantageous since they are held liable only for their own actions.

A limited liability company is like a partnership but with more limited liability. One advantage to professionals is that LLC members (as the LLC participants are called) can consist of different types of entities, such as individuals and corporations. So, a doctor in a solo practice and a PC of doctors could join an LLC that has other doctor members as well. A disadvantage, however, is that members of an LLC are generally required to carry a high level of malpractice insurance.

Business owners are wise to consider several types of legal entities before deciding to register as a PC or any type of corporation. In addition to federal rules, look into your state’s rules for each type as well because many states have different requirements for them.