I’ve Seen the Initials “S.C.” in the Name of Some Businesses. What Does S.C. Mean?

You’ve seen the initials “S.C.” in the name of some businesses.  What does that mean?

 

The quick answer is:  “S.C.” is an abbreviation for “Service Corporation.” As with other, “regular” corporations, the S.C. is a creature of state law.  In Wisconsin, Service Corp.s’ are addressed in Subchapter XIX of Chapter 180 of the Wisconsin business corporation law.

The S.C. is sometimes used when a group of commonly licensed professionals (e.g. lawyers, accountants, doctors and other health care professionals, etc.) partner together to form a common business concern. 

In general, corporations are legal “entities” that are owned by shareholders.  Those shareholders are generally shielded from personal liability for the debts, obligations and liabilities of the corporation.  However, in many jurisdictions (including Wisconsin) certain professions had been restricted from rendering services under the general corporate entity structure, and thus couldn’t shield themselves from personal liability (e.g. a person’s personal bank and investment accounts, house, car, etc. were at risk).  For example, in some jurisdictions medical services could not be rendered by a corporation.

 In order to address this problem, Wisconsin lawmakers (and lawmakers in most other states) developed and adopted the Service Corporation. The Service Corporation enables medical professionals (and other professionals) to organize a business venture, but also reap the advantages of the (limited) personal liability protection and other benefits of the corporate structure. 

The main difference between a Service Corporation and a general, non-S.C. corporation is that an S.C. shareholder may still have personal liability for the S.C.’s omissions, negligence, wrongful acts, misconduct and/or malpractice of any person who is under his or her actual supervision and control in the specific activity in which the omissions, negligence, wrongful acts, misconduct and/or malpractice occurred. 

For example, if 1 attorney shareholder of an S.C. owned by 100 attorney shareholders commits an act of legal malpractice (without the involvement of any of the other 99 attorney shareholders), the other 99 shareholders may escape personal liability resulting from that 1 shareholder’s malpractice (the corporation itself is still liable—it’s the personal liability of the other 99 shareholders that is the issue).  However, the 1 shareholder who committed that act of malpractice may have personal liability resulting from his or her actions.

Mayer Galligan Law, LLC, we strive to be Southeastern Wisconsin’s best business law and business and estate planning lawyers.

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