What are the disadvantages of a Professional Corporation or PLLC?
The primary disadvantage to a corporation is the potential for “double taxation”. This occurs when the ‘Earnings and Profits’ of a corporation are distributed to shareholders as ‘Dividends’. These ‘Earnings and Profits’ were taxed first as ‘Income’ earned by the corporation, and again taxed as ‘Income’ to the shareholder when received as ‘Dividends’. The potential for “double taxation” can be minimized, however, since the corporation is permitted to deduct a very broad range of business expenses.
