What is a PLLC?
A professional limited liability company (PLLC) is an LLC that is formed to carry out a service or function that requires a license from a public licensing authority. To know if you are required to file as a PLLC, you can use this convenient list of professions in New York licensed by the State Education Department. For other states, check with your licensing authority. In most ways, a PLLC is a regular LLC, but has additional formation, ownership, management and reporting requirements that vary from state to state.
Who can form a PLLC?
Only a licensed professional can open or manage a PLLC. Putting it another way, if your State requires you to have a license in order to practice your profession, you need form a Professional LLC. In general, the LLC can only be operated to provide professional services (there are exception, notably including New York), so if you are providing medical services and selling medical supplies, outside of New York you need to form a separate, non-professional LLC or corporation.
Why would you want a PLLC?
If your professional practice needs to form a company for limiting business liability, retirement planning or other reasons, then a PLLC is an attractive vehicle. PLLCs do not provide protection from any liabilities coming from malpractice (and hence, malpractice insurance is definitely required) but does offer limited liability for normal business risks, assuming the usual corporate formalities are followed.
What alternatives are there to a PLLC?
For licensed professionals, the main alternative corporate entity is the professional corporation (PC), or a Limited Liability Partnership (PLLC). A professional corporation is a business corporation for performing professional services, and generally has the same types of extra formalities as a PLLC. A PLLC is simpler to form than a PC, but provides less liability protection.
What is needed to set up a PLLC
Depending on the state, a PLLC will have to prove that the Members, and Managers, if any, are duly licensed to practice the profession. In some states, prior permission must be obtained from a licensing body prior to incorporation. The PLLC will also have to have an appropriate name (usually including the professional to be practiced) and a corporate indicator, such as LLC or PLLC.
What is the procedure to set up a PLLC?
The procedure to set up a new PLLC is the same as setting up an LLC, plus extra steps that vary a lot from one state to another. In every state, a corporate name availability search and preparation and filing of the articles of organization is required. Some states (like New Jersey) require only that the licensed professional\’s name, address and license number be listed on the certificate in order for the PLLC to be filed, while a heavily-bureaucratic state like New York requires the certificate of incorporation to be prepared first then submitted to the State Education Department for license verification (with the payment of a fee, of course), followed by a filing at the Secretary of State, then obtaining a certified copy of the articles of formation and filing that with the Education Dept. After incorporation, the PLLC should prepare an appropriate operating agreement, obtain a federal Employer Identification Number (EIN, or federal tax number), open a bank account and begin conducting business.
In New York, you can set up a PLLC by using our convenient NY PLLC Order Form.
How much does it cost to set up a PLLC?
The costs vary widely by state, and whether additional steps need to be taken to obtain consent to file the PLLC. Contact us to provide you with a quote for your profession and state.