Professional LLC

What is a PLLC?

A Professional Limited Liability Company (PLLC) is a business entity that offers limited liability protection for licensed professionals.

A few states (such as Connecticut and Illinois) don’t allow licensed professionals to own a standard LLC. So, if you want to form an LLC that offers professional services, you may have to start a PLLC. Other states, such as Delaware and Oregon, don’t recognize PLLCs. Instead, Delaware licensed professionals can form Registered Limited Liability Partnerships (RLLPs) or Professional Corporations (PCs). In Oregon, licensed professionals are allowed to form traditional LLCs and corporations.

Typically, each owner (aka member) of a PLLC must be licensed under the same profession—meaning your business probably can’t be owned by an engineer and two podiatrists. In addition, most PLLCs can’t offer multiple services. However, there are a few exceptions. For example, chiropractors in Kansas and Texas can also provide pharmacy services.

PLLC vs LLC

The primary difference between a PLLC and an LLC is that only licensed professionals can form PLLCs. Also, LLCs are recognized business entities in every state—whereas PLLCs are not.

Both types of LLCs are considered tax-through entities, meaning you likely won’t have to pay a corporate tax—unless you choose to be taxed as a C-Corporation. Instead, annual profits go to the owners, who report their shares on personal income taxes. However, when it comes to liability protection, there are a few differences.

Unfortunately, a PLLC may not always protect your personal assets. For example, if you are sued for professional misconduct, your assets could be at risk. In addition, some states (such as Florida) could hold you personally liable if someone under your direct supervision is accused of wrongdoing. However, the PLLC will protect your assets if another member faces legal action.

Which states recognize Professional LLCs?

The following US jurisdictions (32 states and the District of Columbia) allow you to form PLLCs:

PLLCs aren’t the only option for businesses offering state-licensed professional services. Depending on your state, you may also be able to form a professional corporation (PC) or even a traditional LLC or corporation if permitted. For example, most licensed professionals can create a PLLC, PC, or traditional LLC in Washington state.

On the other hand, some states may limit your options based on your profession. For example, in Colorado, dentists must form a PLLC or a professional corporation. However, attorneys can form a PLLC, professional corporation, or standard LLC.

Who can form a Professional LLC?

Each state will vary, but generally speaking, a licensed professional will include one or more of the following:

How to form a PLLC

Before you file business formation documents, you’ll need to obtain an occupational license from your state’s regulatory board.

Occupational licensing

Suppose you’re a speech pathologist in West Virginia. In that case, you’d need to get approval from the West Virginia Speech-Language Pathology and Audiology Licensing Board before filing your Articles of Organization with the Secretary of State. You’ll also need to attach a copy of your occupational license along with your business formation papers.

The process and cost of obtaining an occupational license will vary between states. You may have to pay registration fees as well as take state-specific exams.

Filing Articles of Organization

To form a PLLC, you’ll need to file Articles of Organization (or your state’s equivalent) with the state’s business filing office, typically the Secretary of State. Required information will vary among states, but most will (at minimum) require the following:

1. Name of your PLLC. Most states (with the exceptions of Florida and South Dakota) require the name of your business to contain “Professional Limited Liability Company,” or the abbreviation “PLLC.” Plus, your PLLC’s name must be unique and distinct from current registered businesses.
2. Registered agent information. Your registered agent is the person or business entity that accepts legal documents on behalf of your PLLC. This could be you, someone within the business, or a third party such as a registered agent company. Most states will require your registered agent to have a physical address within the state.
3. Type(s) of professional service your PLLC will render. You’ll need to indicate what kind of service your PLLC will provide.
4. Member/manager information. Members are owners of a PLLC. Members can choose to run the business themselves or hire managers to handle the business’s day-to-day operations. If you decide to hire managers, they must be licensed to perform the service your business offers.
5. Signature and printed name of the organizer. Sign and print the name of the person filing your documents. Typically, this person isn’t required to be otherwise associated with your PLLC. However, some states, such as Nevada and New Hampshire, will require the signature of at least one member or manager.

Filing fees can range from $50 (Arkansas) to $500 (Massachusetts). However, most states charge between $100 and $180.

Once the state has approved your formation papers, you might need to submit your business information to your state’s professional regulatory department. For example, in Illinois, businesses offering state-licensed professional services must file their approved articles OR a written statement that includes the name of your business, primary address, and your registered agent’s information to the Illinois Department of Financial and Professional Regulation.