If you’re a doctor, lawyer, accountant, or other licensed professional planning to practice in Florida, understanding professional corporations is essential. Florida law requires certain licensed professionals to use specialized business structures, and the professional corporation (PC) offers unique benefits tailored to regulated professions.
This comprehensive guide explains everything you need to know about professional corporations in Florida, from formation requirements to ongoing compliance obligations.
What Is a Professional Corporation?
A professional corporation (PC) is a specialized corporate structure designed exclusively for licensed professionals who provide professional services. Unlike general business corporations that can engage in any lawful activity, professional corporations exist solely to offer services that require a professional license.
Professional corporations provide the liability protection and organizational structure of traditional corporations while ensuring that professional services remain under the control of licensed practitioners. This structure recognizes that certain professions carry special responsibilities to the public and require oversight by professional licensing boards.
Key Characteristics
Limited Liability Protection: Shareholders in a professional corporation enjoy protection from business debts and most liabilities, similar to regular corporations. However, professionals remain personally liable for their own malpractice or professional negligence.
Licensed Ownership: Only individuals licensed in the same profession can own shares in a professional corporation. A medical professional corporation, for example, can only be owned by licensed physicians.
Professional Regulation: Professional corporations remain subject to the licensing requirements, ethical rules, and disciplinary authority of their respective professional boards.
Corporate Tax Treatment: Professional corporations can elect S-Corporation status for federal tax purposes, offering potential tax advantages while maintaining professional structure requirements.
Who Must Form a Professional Corporation in Florida
Florida law governs which professions must use professional corporations through Chapter 621 of the Florida Statutes, the Florida Professional Service Corporation Act.
Mandatory Professional Corporation Status
Licensed professionals in the following fields must practice through a professional corporation or professional limited liability company if they choose to incorporate:
Medical Professions:
- Physicians and surgeons
- Osteopathic physicians
- Chiropractors
- Podiatrists
- Dentists
- Optometrists
Mental Health Professions:
- Psychiatrists
- Psychologists
- Clinical social workers
- Marriage and family therapists
- Mental health counselors
Allied Health Professions:
- Veterinarians
- Physical therapists
- Occupational therapists
- Respiratory therapists
- Speech-language pathologists
Legal and Accounting:
- Attorneys
- Certified Public Accountants (CPAs)
- Public accountants
Design and Engineering:
- Architects
- Professional engineers
- Landscape architects
- Interior designers
Other Licensed Professions:
- Surveyors and mappers
- Community association managers
- Real estate appraisers (in some circumstances)
Verification with Licensing Boards
Because professional licensing requirements can change, always verify with your specific Florida licensing board whether you must practice through a professional corporation. Some professions allow alternative structures like professional limited liability companies (PLLCs), while others mandate corporate structure.
Florida Statutes Governing Professional Corporations
Professional corporations in Florida operate under two key statutory frameworks:
Chapter 621: Professional Service Corporation Act
Chapter 621 of the Florida Statutes establishes the rules specific to professional corporations. This chapter addresses:
- Which professions must use professional corporation structures
- Ownership and shareholder restrictions
- Naming requirements and designators
- Professional liability rules
- Licensing requirements for shareholders and employees
Key provisions include the requirement that all shareholders, directors, and officers actively engaged in professional service be licensed in the same profession, and that the corporation can only provide services in that licensed profession.
Chapter 607: Florida Business Corporation Act
Professional corporations must also comply with Chapter 607, the Florida Business Corporation Act, which governs general corporate requirements including:
- Articles of incorporation filing procedures
- Corporate bylaws and governance
- Shareholder meetings and voting
- Director duties and responsibilities
- Annual report requirements
- Dissolution procedures
The professional corporation statutes in Chapter 621 supplement and modify the general corporate rules in Chapter 607 to address the unique needs of licensed professions.
Formation Requirements and Process
Forming a professional corporation in Florida requires several specific steps beyond standard corporation formation.
Step 1: Verify Licensing Eligibility
Confirm that all proposed shareholders hold active, unrestricted licenses in the relevant profession from the appropriate Florida licensing board. Professional corporations cannot be formed if the organizers lack proper licensure.
Step 2: Choose a Corporate Name
Your professional corporation name must comply with special naming requirements under Chapter 621:
Required Designators: The name must include one of these designators indicating professional corporation status:
- “Professional Association” or “P.A.”
- “Professional Corporation” or “P.C.”
Most Florida professional corporations use “P.A.” as this has been the traditional designator in Florida since before the Professional Service Corporation Act was enacted.
Professional Indication: While not legally required, many firms include words indicating their profession (Medical Associates, Legal Group, Accounting Services) to clearly communicate their field of practice.
Name Availability: Search the Florida Division of Corporations Sunbiz database to ensure your desired name is distinguishable from existing corporations.
Licensing Board Approval: Some professions require you to obtain approval of your proposed corporate name from your licensing board before filing with the state. Check with your specific board for this requirement.
Step 3: Obtain Pre-Filing Approvals
Certain licensing boards require you to obtain formal approval or certification before forming your professional corporation:
Medical Professionals: Physicians must register with the Florida Board of Medicine. The corporation cannot practice medicine until registered with the board.
Attorneys: Law firms organized as professional corporations must comply with Rules Regulating The Florida Bar, including restrictions on firm names and non-lawyer ownership.
CPAs: Accounting firms must register with the Florida Board of Accountancy and comply with specific ownership and organizational requirements.
Contact your licensing board to determine if pre-filing approval or registration is required.
Step 4: Appoint a Registered Agent
Every professional corporation needs a Florida registered agent with a physical street address in Florida (not a P.O. box) to receive legal documents and official correspondence.
Your registered agent can be:
- An individual Florida resident
- A business entity authorized to serve as a registered agent
- A commercial registered agent service
- One of the licensed shareholders
Step 5: Draft and File Articles of Incorporation
Prepare your Articles of Incorporation for Professional Service Corporation, which must include:
Standard Provisions:
- Corporate name with appropriate designator (P.A. or P.C.)
- Principal place of business address
- Registered agent name and Florida street address
- Number of shares authorized
- Incorporator information
Professional Corporation-Specific Provisions:
- Statement that the corporation is organized under Chapter 621, Florida Statutes
- Statement of the specific professional service(s) the corporation will provide
- Confirmation that all shareholders, directors, and officers providing professional services are licensed in the stated profession
Filing: Submit your Articles to the Florida Division of Corporations through the Sunbiz website. The filing fee is $35 online or $70 by mail.
Step 6: Create Professional Corporation Bylaws
Draft bylaws tailored to professional corporation requirements, addressing:
- Qualifications for shareholders (must be licensed professionals)
- Restrictions on stock transfer (shares can only be sold to licensed professionals)
- Professional responsibility and ethical compliance
- Director and officer qualifications
- Meeting procedures
- Provisions for shareholder death, retirement, or license suspension
Step 7: Obtain Federal EIN
Apply for an Employer Identification Number through the IRS website. This free process typically completes immediately online and is required for tax filings and business banking.
Step 8: Complete Board Registration
Register your professional corporation with your applicable licensing board. Requirements vary by profession:
- Medical practices register with the Board of Medicine or Osteopathic Medicine
- Law firms file notices with The Florida Bar
- CPA firms register with the Board of Accountancy
- Engineering firms register with the Board of Professional Engineers
Failure to complete required board registration can result in disciplinary action and may prohibit you from legally practicing.
Step 9: Hold Organizational Meeting
Conduct your initial board of directors meeting to:
- Adopt bylaws
- Elect corporate officers
- Authorize stock issuance
- Adopt banking resolutions
- Address other organizational matters
Document this meeting in formal corporate minutes retained in your corporate records.
Step 10: Issue Stock Certificates
Issue stock certificates to initial shareholders according to your ownership agreement. Certificates should note the transfer restrictions applicable to professional corporation shares.
Liability Protection and Limitations
Professional corporations offer important but limited liability protection that differs from general business corporations.
Corporate Liability Shield
Professional corporations provide liability protection for:
Business Debts: Shareholders are not personally liable for the corporation’s debts, contracts, leases, or other business obligations. Creditors can pursue corporate assets but generally cannot reach shareholders’ personal assets.
Other Shareholders’ Malpractice: A shareholder is not personally liable for malpractice or professional negligence committed by other shareholders or employees of the corporation.
General Business Torts: Shareholders enjoy protection from general business liabilities not related to professional services.
Personal Professional Liability
The professional corporation structure does NOT protect professionals from liability for their own professional conduct:
Personal Malpractice: Each professional remains personally liable for their own malpractice, professional negligence, and errors in judgment. The corporate form provides no shield for your own professional mistakes.
Supervisory Liability: Professionals may be held liable for malpractice committed by those they supervise if proper oversight was lacking.
Ethical Violations: Licensing boards can discipline individual professionals for ethical violations regardless of corporate structure.
Direct Participation: Professionals who directly participate in wrongful conduct remain personally liable for their actions.
This limitation on liability protection is fundamental to professional corporations. The law ensures that licensed professionals cannot hide behind corporate structure to escape accountability for professional negligence or misconduct.
Professional Liability Insurance
Because of these liability limitations, professional liability insurance (malpractice insurance) remains essential for professionals practicing through professional corporations. The corporate structure supplements but does not replace the need for adequate insurance coverage.
Many licensing boards require minimum professional liability insurance coverage as a condition of practicing through a professional corporation.
Shareholder Restrictions
Professional corporations operate under strict ownership restrictions designed to keep professional services under the control of licensed practitioners.
Licensed Professional Requirement
Primary Rule: All shareholders who provide professional services must be licensed in the specific profession the corporation practices.
A medical professional corporation can only be owned by licensed physicians. A law firm organized as a professional corporation can only be owned by attorneys licensed to practice law in Florida.
Restrictions on Non-Professional Ownership
General Prohibition: Non-licensed individuals cannot own shares in a professional corporation, even if they don’t practice the profession.
Limited Exceptions: Some professions allow limited non-professional ownership for specific purposes:
- Law firms may employ non-lawyer administrators but cannot give them ownership
- Medical practices may have business managers but they cannot hold equity
- CPA firms have specific rules allowing some non-CPA ownership under certain circumstances
Always verify restrictions with your licensing board, as rules vary by profession.
Transfer Restrictions
Professional corporation bylaws typically include mandatory buyback provisions requiring:
Death or Retirement: The corporation or remaining shareholders must purchase shares when a shareholder dies or retires.
License Suspension or Revocation: Shares must be transferred if a shareholder loses their professional license.
Voluntary Transfer: Shareholders can only sell shares to other licensed professionals in the same field, subject to approval.
Right of First Refusal: Existing shareholders or the corporation itself typically hold rights to purchase shares before they can be sold to outside licensed professionals.
These restrictions ensure professional corporations remain under the ownership and control of qualified, licensed practitioners.
Regulatory Compliance Requirements
Professional corporations face ongoing compliance obligations to both corporate regulators and professional licensing boards.
State Corporate Compliance
Annual Report: File an annual report with the Florida Division of Corporations each year between January 1 and May 1. The filing fee is $150. Failure to file results in administrative dissolution.
Registered Agent: Maintain a registered agent with a current Florida street address. Update the registered agent information within 30 days of any change.
Address Updates: Notify the Division of Corporations of any changes to your principal office address.
Corporate Records: Maintain proper corporate records including minutes of meetings, shareholder lists, financial records, and stock transfer ledgers.
Professional Licensing Compliance
Individual Licenses: All shareholder-practitioners must maintain active, unrestricted professional licenses. A shareholder who loses their license must divest their shares.
Corporate Registration: Maintain active registration with your professional licensing board. Many boards require annual renewal of corporate registration.
Professional Liability Insurance: Carry required minimum professional liability insurance coverage as mandated by your licensing board.
Continuing Education: Ensure all licensed professionals complete required continuing education to maintain their licenses.
Ethical Standards: Comply with professional ethical rules and standards established by your licensing board.
Employment and Tax Compliance
Payroll Taxes: Withhold and remit federal and state employment taxes for all employees, including shareholder-employees.
Workers’ Compensation: Carry required workers’ compensation insurance unless you qualify for an exemption.
Annual Tax Filings: File federal corporate tax returns (Form 1120 or 1120-S if electing S-Corp status) and any required Florida corporate tax returns.
Professional Corporation vs. PLLC
Florida professionals can choose between forming a professional corporation (PC) or a professional limited liability company (PLLC). Understanding the differences helps you select the optimal structure.
Structural Differences
Management Structure: Professional corporations have traditional corporate governance with shareholders, directors, and officers. PLLCs offer flexible management—they can be member-managed or manager-managed.
Formality Requirements: Professional corporations require regular shareholder meetings, director meetings, and formal corporate minutes. PLLCs have fewer formality requirements and more flexible operating procedures.
Ownership Documentation: Professional corporations issue stock certificates to shareholders. PLLCs document ownership through operating agreements and membership interests.
Taxation Similarities
Both structures offer identical federal tax treatment options:
Pass-Through Taxation: Both can elect pass-through taxation where income flows to owners’ personal returns without entity-level tax.
S-Corporation Election: Both can file IRS Form 2553 to be taxed as S-Corporations, potentially reducing self-employment taxes.
Default Treatment: Professional corporations default to C-Corp taxation unless they elect S-Corp status. PLLCs default to pass-through taxation unless they elect corporate taxation.
Liability Protection Comparison
Similar Protection: Both provide the same level of liability protection for business debts and other shareholders’ malpractice.
Same Limitation: Neither structure protects professionals from personal liability for their own professional negligence or malpractice.
Equal Requirements: Both require professional liability insurance regardless of structure.
Choosing Between PC and PLLC
Choose a Professional Corporation if:
- Your licensing board requires corporate structure
- You prefer traditional corporate governance
- You plan to have multiple shareholder classes
- You want a structure familiar to investors and banks
Choose a PLLC if:
- Your licensing board allows PLLC structure
- You want operational flexibility and fewer formalities
- You prefer member-managed business operations
- You’re a solo practitioner or small partnership
Many Florida professionals now choose PLLCs for their flexibility and simplified administration. However, some professions (particularly law firms) have traditionally used professional corporations, and this remains common practice.
Consult with an attorney familiar with your profession’s licensing requirements before selecting your structure.
Tax Treatment Options
Professional corporations have the same federal tax treatment options as general business corporations.
C-Corporation Tax Treatment (Default)
Professional corporations are taxed as C-Corporations by default:
Corporate Tax: The corporation pays federal income tax at 21% on net profits and Florida corporate income tax at 5.5%.
Double Taxation: Shareholders pay tax again on dividends or distributions received from the corporation.
Accumulated Earnings: The corporation can retain earnings for business purposes without distributing them to shareholders, deferring personal taxation.
Fringe Benefits: C-Corporations can deduct 100% of health insurance and certain other fringe benefits provided to shareholder-employees.
S-Corporation Election
Most professional corporations elect S-Corporation status for tax advantages:
Pass-Through Taxation: The corporation doesn’t pay federal income tax. Income, deductions, and credits pass through to shareholders’ personal tax returns.
Self-Employment Tax Savings: Shareholder-employees pay themselves reasonable salaries subject to payroll taxes, then take remaining profits as distributions not subject to self-employment tax.
Florida Advantage: Because Florida has no personal income tax, shareholders avoid state income tax on their pass-through income.
Election Timing: File Form 2553 with the IRS within 2 months and 15 days of forming your corporation, or by March 15 for the current tax year.
S-Corp Requirements for Professional Corporations
To qualify for and maintain S-Corp status, your professional corporation must meet these requirements:
Domestic Corporation: Must be formed in the United States (Florida formation qualifies).
Eligible Shareholders: Limited to 100 shareholders, all of whom must be U.S. citizens or residents, individuals (not entities), or certain trusts or estates.
One Class of Stock: Only one class of stock permitted, though voting rights can differ.
Eligible Entity: Must be an eligible corporation (professional corporations qualify).
Most professional corporations easily meet these requirements. The single class of stock and 100-shareholder limit rarely create issues for professional practices.
Tax Planning Considerations
Reasonable Compensation: S-Corp shareholder-employees must pay themselves reasonable compensation for services rendered. The IRS scrutinizes professional service providers to ensure proper salary allocation.
Qualified Business Income Deduction: Professional service providers may have limited access to the 20% qualified business income (QBI) deduction depending on income levels.
State Tax Treatment: Florida imposes no personal income tax, making S-Corp election particularly attractive. However, professionals licensed in multiple states must consider other states’ tax treatment.
Work with a CPA experienced in professional service taxation to optimize your tax structure and ensure compliance.
Annual Report and Compliance Requirements
Professional corporations must file annual reports and maintain ongoing compliance with both the Florida Division of Corporations and their professional licensing boards.
Florida Annual Report
Filing Deadline: Between January 1 and May 1 each year.
Filing Fee: $150 for professional corporations.
Required Information:
- Current principal office address
- Current registered agent name and address
- Names and addresses of all directors and officers
- Confirmation the corporation is in good standing with its licensing board
Filing Method: File online through the Sunbiz website using your document number or corporation name.
Late Filing Consequences: If you don’t file by May 1, the Division of Corporations will send a delinquency notice. Failure to file by the third Friday in September results in administrative dissolution.
Professional Board Compliance
Annual Registration: Many professional licensing boards require annual registration or renewal of corporate registration.
License Roster Updates: Update your licensing board when shareholders, directors, or licensed employees join or leave the corporation.
Address Changes: Notify your licensing board of address changes within required timeframes.
Compliance Certifications: Some boards require periodic certifications that all shareholders and licensed practitioners maintain active licenses.
Corporate Maintenance
Annual Meetings: Hold required annual shareholder meetings and director meetings, documenting proceedings in corporate minutes.
Financial Records: Maintain proper accounting records, bank account reconciliations, and financial statements.
Stock Ledger: Keep an updated stock transfer ledger showing all share issuances, transfers, and redemptions.
Document Retention: Retain corporate records including minutes, resolutions, and financial documents for the periods required by law (generally at least seven years).
Tax Compliance
Annual Tax Returns: File federal corporate income tax returns (Form 1120 or Form 1120-S for S-Corporations) by the applicable deadline.
Estimated Tax Payments: Make quarterly estimated tax payments if required.
Payroll Tax Returns: File quarterly payroll tax returns and annual W-2s for all employees.
Information Returns: File required information returns including 1099s for contractors and other reportable payments.
Maintaining comprehensive compliance ensures your professional corporation remains in good standing with both corporate and professional regulators, protecting your right to practice and your limited liability status.
Conclusion
Professional corporations provide Florida licensed professionals with essential liability protection, professional credibility, and tax planning opportunities while maintaining compliance with professional licensing requirements.
The structure requires careful formation following both corporate law and professional regulations, ongoing compliance with annual reporting requirements, and adherence to strict ownership restrictions ensuring professional services remain under licensed control.
While professional corporations involve more formality than solo practice, they offer significant benefits for licensed professionals committed to building sustainable, compliant practices in Florida. Whether you choose a professional corporation or PLLC, proper formation and ongoing compliance protect your professional practice and your personal assets.
Consult with an attorney experienced in professional corporation formation and a CPA familiar with professional service taxation to ensure your structure meets both legal requirements and your business goals.