Professional entities

Licensed professionals organise through entity forms designed for them, with restrictions that do not apply to ordinary businesses.

Ownership restrictions. Statutes commonly require that owners be licensed in the profession, and some permit limited ownership by licensees of related professions. Transfers to unlicensed persons, including on death, are restricted and require a redemption mechanism.

Liability. The entity protects owners from the entity’s ordinary business obligations, but a professional remains personally liable for their own malpractice and, in many states, for that of those they supervise.

Corporate practice doctrines in some professions prohibit ownership or control of the practice by non-professionals, which shapes management services arrangements and is enforced with increasing attention.

Fee splitting restrictions limit sharing professional fees with non-professionals, affecting management fees, referral arrangements and compensation structures.

Insurance. Professional liability coverage requirements, sometimes mandated by statute as a condition of the limited liability form.

Name restrictions, licensure of the entity itself in some professions, and registration with the licensing board.

Succession. Buy-sell provisions triggered by loss of licence, death and disability, funded and with a mechanism for transferring client relationships in accordance with professional obligations.