Which statement describes a Professional Corporation?

Which statement describes a Professional Corporation?

• A. It cannot practice professional services across state lines
• B. For professionals such as architects, lawyers, doctors, accountants, and interior designers. Liability for malpractice is limited to the person responsible for the act.
• C. It provides unlimited liability for malpractice
• D. It is a form of sole proprietorship

Answer: (B)

A Professional Corporation is a corporate form used by licensed professionals to practice under a formal company structure. It provides liability protection for the professional practice, separating most business debts from personal assets, while malpractice liability typically stays with the individual who performed the act rather than distributing across the whole firm. This fits professionals such as architects, lawyers, doctors, accountants, and interior designers who operate under a licensed practice. It is not a sole proprietorship, and it does not inherently imply unlimited liability; improper or negligent acts by a specific professional can lead to personal accountability for that act, even within the corporate structure. It also does not automatically restrict cross-state practice; licensing rules govern where a professional can practice, not the basic corporate form itself.

A Professional Corporation is a corporate form used by licensed professionals to practice under a formal company structure. It provides liability protection for the professional practice, separating most business debts from personal assets, while malpractice liability typically stays with the individual who performed the act rather than distributing across the whole firm. This fits professionals such as architects, lawyers, doctors, accountants, and interior designers who operate under a licensed practice. It is not a sole proprietorship, and it does not inherently imply unlimited liability; improper or negligent acts by a specific professional can lead to personal accountability for that act, even within the corporate structure. It also does not automatically restrict cross-state practice; licensing rules govern where a professional can practice, not the basic corporate form itself.