What Is a Professional Limited Liability Company?

By Cindy DeRuyter, J.D.

What Is a Professional Limited Liability Company?

By Cindy DeRuyter, J.D.

If you want to establish a limited liability company (LLC) for your business and your business involves a professional service, you may be required to instead establish a professional limited liability company (PLLC) with your state.

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What Types of Services Are Considered Professional Services?

Generally speaking, people engaged in certain fields, including attorneys, accountants, doctors, engineers, architects, realtors, veterinarians, and chiropractors, are required to maintain state licenses in order to provide their services.

The specific services deemed “professional" for purposes of determining whether a business must register as a PLLC will vary from state to state and may include some or all of the professional services identified above, as well as other services not listed here.

When someone in a state-licensed field decides to open a new business and wants to use an LLC structure, they need to determine whether their state allows them to establish a traditional LLC or whether they need to register a PLLC. State secretaries of state offices and professional licensing bodies can be good starting points in understanding what's required to open an LLC.

Understanding the Limitation of Liability of LLCs and PLLCs

One of the main reasons new business owners often choose the LLC structure is that, when formed and managed correctly, LLCs can provide some protection for the business owners' personal assets. Essentially, if an LLC is sued, the individual LLC members' real estate and other assets are not vulnerable in the lawsuit. There are exceptions if the lawsuit involves allegations of fraud or misrepresentation.

Another exception relates to claims that the licensed professional committed malpractice. Because professionals in state-licensed fields can be subject to professional liability or malpractice claims, most states do not allow LLCs or PLLCs to shield the members from these types of claims.

That means that, even if a group of doctors establishes a PLLC in their state, the PLLC's liability protection will likely not shield a doctor's personal assets if he is sued for malpractice. The PLLC structure could, however, protect the other doctors in the practice from being responsible for that doctor's liability.

What Is Required to Establish a PLLC?

As with establishing any LLC, professionals establishing a PLLC must draft articles of organization that meet their state's requirements. These generally include the name of the new business, identifying a registered agent, providing a registered address, identifying the organizer or organizers, and paying applicable registration and filing fees.

As is the case with LLCs in many states, PLLCs may be required to include the letters “PLLC" or some approved variation of them in the business' name.

In addition, some states require that the applicable state licensing board(s) review and approve the articles of organization before the PLLC's registration becomes effective.

This portion of the site is for informational purposes only. The content is not legal advice. The statements and opinions are the expression of author, not LegalZoom, and have not been evaluated by LegalZoom for accuracy, completeness, or changes in the law.