A Professional Limited Liability Company, often abbreviated as PLLC or P.L.L.C., is a limited liability company formed by licensed professionals for the purpose of providing professional services. PLLCs are commonly used by professionals such as attorneys, accountants, physicians, dentists, architects, engineers, and other individuals whose services require a professional license.
A PLLC is generally structured and operated similarly to a standard limited liability company. However, because it is formed to provide licensed professional services, it is subject to additional rules that do not apply to ordinary LLCs. These rules may involve ownership restrictions, management requirements, professional licensing requirements, naming rules, and approval or registration with the applicable licensing authority.
One important distinction is liability. A PLLC generally provides limited liability protection for ordinary business debts and obligations of the entity. However, a PLLC generally does not protect a licensed professional from personal liability for their own malpractice, negligence, or professional misconduct when providing professional services. In many states, a PLLC may help protect one licensed professional from personal liability for the malpractice or negligence of another licensed professional within the company, although the specific scope of protection varies by state and profession.
Most states that authorize PLLCs require the company name to identify the entity as a professional limited liability company by using a professional entity designator such as “PLLC,” “P.L.L.C.,” “Professional LLC,” or “Professional Limited Liability Company.” The permitted designators vary by state. Some states may not allow a professional entity to use the standard “LLC” designator alone, while others may have different naming requirements.
Depending on the state and profession, the members and managers of a PLLC may need to be licensed in the same profession or otherwise authorized to provide the professional services offered by the company. Some states require prior approval, consent, or certification from the applicable licensing board before the PLLC may be filed with the state filing office. For example, New York recognizes professional service limited liability companies and identifies certain professional services, including attorneys, physicians, and professions regulated under Title Eight of the Education Law. New York also has specific filing procedures for PLLCs through the Department of State and, for many professions, the Office of the Professions.
For federal tax purposes, a PLLC is generally treated under the same tax classification rules as other LLCs. Depending on the number of members and any tax elections made, a PLLC may be treated as a disregarded entity, partnership, C corporation, or S corporation for federal tax purposes. The legal structure of the PLLC should therefore be considered separately from its tax classification. The IRS provides that an LLC may be classified for federal tax purposes in different ways depending on elections and ownership structure.
PLLC requirements may depend on several factors, including:
- The state of formation;
- The profession being practiced;
- The licensing status of the members and managers;
- The proposed company name;
- Whether prior licensing-board approval or consent is required;
- Whether the entity must register separately with a professional licensing authority;
- The desired federal tax classification; and
- Ongoing licensing, registration, and compliance obligations.
Because PLLC laws and licensing-board requirements vary significantly by jurisdiction and profession, licensed professionals should confirm the applicable requirements before forming a PLLC or conducting business in another state.
