Taxation of a Professional Corporation
PCs are taxed at the rate of 21%, just like other businesses. But for PCs to get this tax rate, 95% of their business efforts must be in the area where they specialise. Additionally, at least 95% of the PC shares should be owned by people who work in the same field or have worked in the past. However, a medical professional company can get some exemptions as long as it meets certain conditions, which are, Tax exemption under Section 501(c)(3) of the Internal Revenue Code (IRC),
1. Medical PCs shouldn’t be connected to any parent company, because that would mean that the PC’s business operations would help the parent company.
2. It should not be for their own personal gain.
3. It is not able to pay dividends to its owners. There are, however, a lot of partners who are also the business owners and the people who provide the service.
4. PCs are not allowed to take part in any political actions or campaigns. They shouldn’t try to have any power in politics.
IRC Section 170 states that these kinds of groups can get tax assumptions. Also, PC owners have to pay their own income tax because PCs are limited liability companies.