How are professional corporations (PCs) and professional limited liability companies (PLLCs) taxed?
A. Generally, the taxation of PCs and PLLCs is the same as standard corporations and limited liability companies (LLCs). PCs are taxed like C corporations (unless they make the S corporation election). However, some PCs do not have the advantage of graduated corporate federal income tax rates. Those PCs that are “qualified personal service corporations” may be eligible to pay a flat federal income tax rate of 35 percent. “Qualified personal service corporations” typically provide services in the fields of health, law, engineering, architecture, accounting, actuarial science, or consulting. You should seek the advice of an attorney or accountant regarding whether your company meets this classification in your state of formation. PCs are allowed to file for S corporation status, which allows for the entity to have pass-through tax treatment. With pass-through taxation, the income to the entity is not taxed at the entity level; however, the entity does complete a tax return. The income or
