Can a PA be a corporation? Explained

What kind of corporate entity to create is one of the first choices you’ll need to make when beginning a firm. A PA (Professional Association) and a corporation are two well-liked possibilities. There are several significant variations between the two, even though they both provide liability protection for the owners.

In response to the first query, a PA cannot be a corporation. A PA is a particular kind of corporate entity created for experts like doctors, lawyers, and accountants. It is set up as a professional corporation and needs a state license. A PA’s main function is to keep its owners’ professional responsibility to a minimum while still enabling them to do business.

The ownership of a corporation, on the other hand, is held by its shareholders. As a separate legal entity from its owners, the corporation is able to engage into contracts, bring legal actions and be sued, as well as hold assets in its own name. One of the key advantages of forming a corporation is that the stockholders are not individually accountable for the firm’s debts.

An association is what kind of corporate entity, then? An association is a specific kind of nonprofit group that was established to further a particular cause or offer a service to a particular demographic. It is not a standard company entity, and neither does it have owners or shareholders. An association’s members have the right to vote, and it is instead controlled by a board of trustees.

Is a PA a C Corp or a S Corp, one might inquire? A PA may be a C or S corporation. The owners of the company decide whether to choose S Corp status, and the IRS must approve this choice. Due to the fact that S Corps are not C Corps, the company is able to avoid double taxes.

Is an LLC or S Corp better, which is another relevant query? The answer to this query is based on the particular requirements and objectives of the company. S Corps give higher tax advantages, however LLCs offer more management and tax flexibility. In the end, it’s crucial to seek advice from a skilled accountant or attorney to decide which course of action is best for your company.

Finally, there are a few tasks you must complete if you want to create a S Corp in Pennsylvania. Articles of incorporation must first be submitted to the Pennsylvania Department of State. To chose S Corp status, you must also submit Form 2553 and get an Employer Identification Number (EIN) from the IRS. In addition, depending on the type of your firm, you might need to acquire several licenses and permits.

Conclusion: Despite the fact that a PA cannot be a corporation, it is nevertheless an important tool for professionals who want to shield their personal assets from responsibility while conducting business. It’s crucial to comprehend the advantages and restrictions of each option before deciding whether to set up a PA, corporation, LLC, or association.