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Pending legislative action may soon give you a choice of how you structure your practice: the professional corporation, the limited liability company or the limited liability partnership. But when the choices become available, will you know which form to choose? The following information can help you make the right choice.
The professional corporation
PCs are widely used in California. and throughout the country. For many years, they have provided tax benefits and ease of transferability. However, the applicability of the highest federal tax rate on any income left in the PC, coupled with the double tax on liquidation, may force California practitioners to seek something better. In addition, variations in licensing requirements and state corporation laws make the PC problematic for entities doing business in multiple states.
The limited liability company
In late 1994, California enacted SB 469 (Beverly-Killea) and joined 46 other states that now authorize the …