PLLC
What Does PLLC Mean?
A Professional Limited Liability Company, or PPLC, is a structure that provides personal asset protection for owners of medical and legal practices and other licensed professional businesses.
PLLCs must follow the same laws as other LLCs. However, the state licensing board for the PLLC’s profession must verify the PLLC owner’s professional license and approve the PLLC’s articles of organization.
Here are the states that do permit licensed professionals to use the structure:
- Arkansas
- Arizona
- Colorado
- District of Columbia
- Florida
- Idaho
- Iowa
- Kentucky
- Maine
- Massachusetts
- Michigan
- Minnesota
- Mississippi
- Montana
- Nevada
- New Hampshire
- New York
- North Carolina
- North Dakota
- Oklahoma
- Pennsylvania
- South Dakota
- Tennessee
- Texas
- Utah
- Vermont
- Virginia
- Washington
- West Virginia
What Are the Differences Between PLLC vs. LLC?
Like the benefits of a Limited Liability Company (LLC) or a single-member LLC, a PLLC offers a business some management flexibility, taxation advantages, and limited personal liability.
However, a difference between the two structures is that PLLCs have restrictions on membership and a limitation on the liability of the members.
Anyone can be a member or owner of the business under an LLC. State laws typically specify that only fully licensed professionals can be members of a PLLC or that only a set number of members must be licensed professionals within the structure.
Although a PLLC cannot be used to protect its members from malpractice claims, the malpractice of one PLLC member does create liability for the other members. PLLC members should carry professional liability insurance (malpractice insurance) to cover malpractice claims.
How to Form a PLLC
State rules can vary, but here are the basic steps to take to establish a PLLC.
Select a name for the PLLC
Most states require the PLLC to have a different name from other businesses in your state. The PLLC name must also end with the words “Professional Limited Liability Company” or the acronym “PLLC.” Check with your Secretary of State’s office for more state-specific name requirements.
Designate an agent for the PLLC
You must designate a registered agent or statutory agent who will accept official notices and documents for your business.
Obtain licenses
Each owner of the PLLC must be fully licensed to practice the profession that the PLLC business offers. Your city or county may also require you to get other business or zoning licenses before the PLLC can operate.
File articles of organization
You may be able to file these documents online with the Secretary of State’s office. Then, the state licensing board for your profession will review the articles. After its approval, you will be notified and receive a copy of the filed articles of organization.
Create an LLC operating agreement
Some states, such as California and New York, require both LLCs and PLLCs to create an LLC operating agreement. An operating agreement is a good idea, even if it is not required. This document can work as a business plan summarizing the PLLC’s daily operations and each owner’s contributions and share of the profits.
Pay PLLC taxes and file annual reports
Like a regular LLC, a PLLC is known as a pass-through entity for federal and state taxes. Each owner must pay personal federal and state income taxes on their share of the business profits.
However, the PLLC itself does not pay a federal income tax. A PLLC can request to be taxed as a corporation and, therefore, pay a corporate tax on profits.
State laws can vary on annual franchise tax, gross receipts tax based on the company’s revenue, payroll tax obligations for PLLCs with employees, and required yearly report information.
Follow other state and federal regulations
Your state may have additional requirements for PLLCs. For example, you may need to have workers’ compensation insurance for employees and withhold taxes from their wages. Establishing a separate business bank and credit card accounts for the PLLC is wise.
Helpful Resources:
NC Social Work Certification and Licensure Board - PLLC/PC FAQ’s
IDFPR - Professional Limited Liability Company
What Does PLLC Mean?
A Professional Limited Liability Company, or PPLC, is a structure that provides personal asset protection for owners of medical and legal practices and other licensed professional businesses.
PLLCs must follow the same laws as other LLCs. However, the state licensing board for the PLLC’s profession must verify the PLLC owner’s professional license and approve the PLLC’s articles of organization.
Here are the states that do permit licensed professionals to use the structure:
- Arkansas
- Arizona
- Colorado
- District of Columbia
- Florida
- Idaho
- Iowa
- Kentucky
- Maine
- Massachusetts
- Michigan
- Minnesota
- Mississippi
- Montana
- Nevada
- New Hampshire
- New York
- North Carolina
- North Dakota
- Oklahoma
- Pennsylvania
- South Dakota
- Tennessee
- Texas
- Utah
- Vermont
- Virginia
- Washington
- West Virginia
What Are the Differences Between PLLC vs. LLC?
Like the benefits of a Limited Liability Company (LLC) or a single-member LLC, a PLLC offers a business some management flexibility, taxation advantages, and limited personal liability.
However, a difference between the two structures is that PLLCs have restrictions on membership and a limitation on the liability of the members.
Anyone can be a member or owner of the business under an LLC. State laws typically specify that only fully licensed professionals can be members of a PLLC or that only a set number of members must be licensed professionals within the structure.
Although a PLLC cannot be used to protect its members from malpractice claims, the malpractice of one PLLC member does create liability for the other members. PLLC members should carry professional liability insurance (malpractice insurance) to cover malpractice claims.
How to Form a PLLC
State rules can vary, but here are the basic steps to take to establish a PLLC.
Select a name for the PLLC
Most states require the PLLC to have a different name from other businesses in your state. The PLLC name must also end with the words “Professional Limited Liability Company” or the acronym “PLLC.” Check with your Secretary of State’s office for more state-specific name requirements.
Designate an agent for the PLLC
You must designate a registered agent or statutory agent who will accept official notices and documents for your business.
Obtain licenses
Each owner of the PLLC must be fully licensed to practice the profession that the PLLC business offers. Your city or county may also require you to get other business or zoning licenses before the PLLC can operate.
File articles of organization
You may be able to file these documents online with the Secretary of State’s office. Then, the state licensing board for your profession will review the articles. After its approval, you will be notified and receive a copy of the filed articles of organization.
Create an LLC operating agreement
Some states, such as California and New York, require both LLCs and PLLCs to create an LLC operating agreement. An operating agreement is a good idea, even if it is not required. This document can work as a business plan summarizing the PLLC’s daily operations and each owner’s contributions and share of the profits.
Pay PLLC taxes and file annual reports
Like a regular LLC, a PLLC is known as a pass-through entity for federal and state taxes. Each owner must pay personal federal and state income taxes on their share of the business profits.
However, the PLLC itself does not pay a federal income tax. A PLLC can request to be taxed as a corporation and, therefore, pay a corporate tax on profits.
State laws can vary on annual franchise tax, gross receipts tax based on the company’s revenue, payroll tax obligations for PLLCs with employees, and required yearly report information.
Follow other state and federal regulations
Your state may have additional requirements for PLLCs. For example, you may need to have workers’ compensation insurance for employees and withhold taxes from their wages. Establishing a separate business bank and credit card accounts for the PLLC is wise.
Helpful Resources:
NC Social Work Certification and Licensure Board - PLLC/PC FAQ’s
IDFPR - Professional Limited Liability Company