We shall offer some answers to those questions in this article. Large verdicts and large settlements involving major accounting firms have indeed become commonplace, and the availability and affordability of insurance coverage has accordingly been severely impacted. A member may practice public accounting only in the form of a proprietorship, a partnership or a professional corporation whose characteristics conform to Resolutions of Council. The Resolutions of Council regarding professional corporations provide, in part, that all shareholders of a professional corporation must be engaged in the practice of public accounting, must own their shares in their own right, and must be the beneficial owners of those shares. Organizing as a PC may be an effective way for many firms to limit the personal malpractice liability of their members.
Professional corporations are creatures of state statutory law.
As with a commercial corporation, ownership of a PC is divided among its shareholders, not among partners. PCs are similar to commercial corporations in other respects. Both are legal entities separate and apart from their shareholders. As such, the PC, like a commercial corporation, is liable to the full extent of its assets for all debts of the corporation or claims against the corporation. On the other hand, shareholders of the PC, like shareholders of a commercial corporation, are not personally liable for the general debts and obligations of the corporation.