Once created, only professionals can own shares of the corporation. The corporation can only provide one form of service, i.e., a professional corporation of lawyers who are also accountants can provide legal services but not accounting services. There are many other aspects of professional corporations that should be addressed before you venture into this form of entity. Your attorney or accountant can advise you as to whether the professional corporation is right for your situation. In general, corporations are separate taxable entities that are subject to federal and state taxation.
Corporate income is taxed at the corporate level.
When that income is passed on to the shareholders as a distribution or dividend, it is taxed again on the shareholder's individual tax return. Double taxation may be partially or completely avoided in a small business by paying a salary to the employee shareholder. However, the tax laws governing this area are complex and should be discussed with your accountant or your attorney. Also, be aware of the tax consequences upon dissolution of a corporation. With all forms of business entity except a C corporation, dissolution and distribution of the business's assets to the owners is, at worst, a single taxable event.