Professional Services Corporations (PSC)

Question 1

Professional Services Corporation (PSC) - General /name

Answer 1

• For professional services
• Usually required with state professional ethical standards in regard of trade name (use of PS, PC, professional service, professional cort, LLC, LLP, PLLC, PLLP)

Question 2

PSC - Requirements (2)

Answer 2

1) Only for licensed professionals (legally qualified in at least 1 state)
2) Have corporate provision (in articles or by-laws) to buy out in case of disqualification

Question 3

PSC - “Idle funds” rule

Answer 3

• Exception to gral rule of prohibtion of activties that are not professional services or ancillary related services
• Can be invested in anything not necessarily related with the required professional purpose of PSC
• i.e. real estate, mortgages, stocks, bonds, insuarences, other passive investments

Question 4

PSC effect of death of partner

Answer 4

Corp/shareholder required to purchase share at fair value

Question 5

PSC - Shareholder liability rules

Answer 5

“Personal Liability Shield”

• No personal liability for malpractice of other professionals, ONLY for own N and of those under supervision
• No liability of personal shareholder for entities bankruptcy