PLLC

A Professional Limited Liability Company (PLLC) is a limited liability company explicitly designed for licensed professionals. While an LLC can be used by almost any type of business, a PLLC is reserved for those who hold professional licenses, such as doctors, lawyers, accountants, and architects. A PLLC allows these professionals to enjoy the liability protections of an LLC while complying with regulations that require them to practice within a specific legal framework. Essentially, a PLLC blends the flexibility of an LLC with the stringent requirements needed for professional practices.

• Professions Required to Use PLLCs: Doctors, lawyers, accountants, architects, and similar licensed professionals typically have to choose a PLLC as their business structure to limit their personal liability while practicing and comply with local laws.
• State Regulations: Not all U.S. states offer PLLCs. Check state-specific regulations as they can vary. Some states may have specific requirements or restrictions on forming and operating PLLCs.
• Liability Protection: Like a standard Limited Liability Company (LLC), a PLLC provides personal liability protection for its owners. This means the personal assets of the owners are generally protected from business debts and claims, although professional malpractice may still expose the individual to personal liability.
• Regulatory Compliance: PLLCs must adhere to stricter regulations than typical LLCs. This includes compliance with professional licensing requirements and possibly additional oversight by state regulatory boards, ensuring the PLLC meets professional standards.

Which Professions Use PLLC?

Different states have varying requirements, but PLLCs are generally mandated for professions requiring state licensing. These include:

• Doctors and Medical Practitioners: To ensure compliance with medical regulations and offer liability protection.
• Lawyers and Legal Professionals: To meet legal practice requirements while providing limited liability.
• Accountants and CPAs: To comply with financial regulations and ensure client trust.
• Architects and Engineers: To adhere to industry-specific guidelines and offer liability protection.
• Dentists and Veterinarians: To maintain professional standards and safeguard personal assets.

These professionals must use a PLLC to practice legally and benefit from limited liability protection, shielding their personal assets from business liabilities.

How to Check if Your Business Needs a PLLC Instead of LLC?

Determining whether you need a PLLC instead of an LLC involves a few steps:

1. Research State Requirements: Check the state's Secretary of State website or regulatory bodies for guidelines on selecting between a Limited Liability Company (LLC) versus a Professional Limited Liability Company (PLLC). Each state has different regulations that must be followed.
2. Consult Professional Associations: Look for resources and guidelines from your industry's governing body or professional association. They often have detailed information and can offer advice based on the latest standards.
3. Seek Legal Advice: Consult a business attorney in the state who specializes in professional practices. They can better assist business owners with the maze of legal obligations and benefits of forming an LLC versus a PLLC or similar business structure.

State Examples

• Massachusetts and California are two examples of states that do not permit PLLCs. In Massachusetts, some professions can opt to form LLCs where PLLCs are not permitted. In California, professionals would generally opt for some form of partnership since neither LLC nor PLLC are permitted in various cases.
• New York and Texas are two examples of states that permit PLLCs. Both states permit and may require some professions to form PLLCs instead of regular LLCs.

How to Get a PLLC?

Forming a PLLC involves several steps similar to creating a LLC. However, the requirements might vary more from state to state:

1. Choose a Business Name: Ensure the name complies with state regulations. Typically, the name must include "PLLC" or "Professional Limited Liability Company."
2. File Articles of Organization: Submit the necessary paperwork to your state's Secretary of State. Include details about your business structure and professional licenses.
3. Obtain Licenses and Permits: Ensure all owners have the required professional licenses. Obtain any additional permits specific to your profession.
4. Create an Operating Agreement: Draft a document outlining the management structure and operating procedures. This is particularly crucial for multi-member PLLCs.
5. Be Prepared for Taxes: Apply for an EIN from the IRS. Register and file for the appropriate federal, state, and local taxes.

Given the more niche nature of PLLCs, business owners should show more care to ensure the setup complies with all state and local laws.

Recommended Services

Most of the top providers for traditional LLC formations, with the exception of LegalZoom, do not offer services for PLLC formations. However, there are other providers who specialize in this area.

• LegalZoom
• CorpNet.com
• MyCorporation.com

How is a PLLC Different from an LLC?

Most individuals and businesses can form LLCs in any US state.

PLLCs are restricted to professionals in certain professions and will vary based on specific state regulations. The states determine which professions require a PLLC or similar business structure. Typically, there may be more licensing requirements and rules for designated professions. However, PLLCs are not available in all states. In some cases, PLLCs may be required where they are available.

PLLCs are selected as the preferred business structure under particular conditions. LLCs are far more straightforward and with broader applications.

What are some alternatives to PLLC?

In cases where professions are required to form PLLCs, the alternatives available will vary by state. In some states, business owners can choose to form a professional corporation (PC) instead of a PLLC. Refer to each state for its specific regulations and consult a professional lawyer in the appropriate region.