With few exceptions, this is the only form of doing business in California for professionals other than lawyers and accountants which limits the professional's liability for the acts of others. (Lawyers and accountants may elect to do business as a limited liability partnership.) Generally, only one profession may be practiced by a professional corporation. A "profession" includes those for which a license, certification, or registration is required under the Business and Professions Code or the Chiropractic Act.

How Formed? The articles of incorporation must contain a statement that the corporation is a professional corporation within the meaning of the Moscone-Knox Professional Corporation Act. Regulatory requirements differ for each profession; a "certificate of registration" with the licencing agency is required, and each agency has its own separate requirements for issuance of this certificate (often requiring insurance or undertakings for errors and omissions). Generally, only "licensed persons" may be shareholders, and the regulatory agency may restrict the class of persons who may be directors and officers of the professional corporation to "licensed persons."

Taxation: May be a "C" corporation or an "S" corporation, and will be taxed accordingly. If a "C" corporation and it provides services in the fields of health, law, engineering, architecture, accounting, actuarial science, performing arts, or consulting, it will also be a personal service corporation. Originally professional corporations were formed for the owner-employees to take advantage of the many tax perquisites available only to "C" corporations, especially qualified pension and profit sharing plans. These advantages have dwindled over the years as other forms of doing business have gotten parity. Health insurance and medical reimbursement plans are two of the remaining benefits for traditional "C" professional corporations that remain unavailable to owner-employees of "S" professional corporations.