LLC Vs. PC Solo Practice

By Cindy Hill

Limited liability companies and professional corporations are two forms of business structure available in most states to individuals starting a solo practice in professions such as law or medicine. Differences in how LLCs and PCs are taxed and the different liability protections they provide mean that either an LLC or a PC may be more advantageous to a particular individual depending on her business goals and needs.


Limited liability companies are authorized in most states for almost all kinds of businesses, and most states allow a sole practitioner to form an LLC. If your state does not permit single-owner LLCs or if the filing costs for an LLC in your state are high, you may be able to form an LLC in a different state. Professional corporations are limited only to certain licensed professionals defined by state statute. These typically include attorneys and doctors, and may also include architects, accountants or engineers. If you are not a qualifying licensed professional under your state's business formation laws, a PC is not a business form available to you.


A PC is a corporation and gets taxed as a corporation. For a sole practitioner, this means that his income gets taxed first at the corporate level of his PC, and then as personal income for whatever money the PC pays to him in salary. The corporation may deduct corporate expenses such as life and health insurance, payroll taxes, disability insurance and other payroll expenses for salary paid to the owner, staff and employees. Owners of an LLC can select whether they want to be taxed as a corporation, partnership or sole proprietorship. For a sole practitioner, the option to be taxed as a sole proprietor means that all the income passes through the LLC and is taxed to to the owner once as ordinary self-employment income.

Ready to start your LLC? Start an LLC Online Now


Both a PC and an LLC can help protect the owners against some forms of liability. Neither business form will protect a licensed professional such as a lawyer or doctor from liability for individual malpractice. A professional corporation has the advantage of protecting any one professional in the corporation from the malpractice liability of the other owners. For a sole practitioner, however, this advantage is of no avail unless the owner intends to add other professional members to the business in the future. Both a PC and LLC can purchase and hold liability insurance for its owners, and both forms help insulate the owners' personal assets against collection by creditors of the business. In some states, however, sole proprietor LLC owners do not have any creditor protection.


An LLC is a very flexible business form that can be used for a variety of purposes including real estate holding. LLCs can become partners with other businesses to allow for a wide variety of project management configurations, although some professionals may be restricted by their state professional conduct rules from entering into certain types of businesses with non-professionals. PCs are usually more strictly limited by state statute, and may not be able to join with other non-professional businesses to form other ventures.

Ready to start your LLC? Start an LLC Online Now
Can Accountants Form an LLC?


Related articles

Can an LLC Be a Member of Another LLC?

In most states, LLC members can be individuals -- either residents, out-of-state residents or out-of-country foreigners -- corporations, other LLCs, trusts and pensions plans. So, unlike an S corporation, which imposes limitations on the type of owners, an LLC can have virtually any type of members.

A Professional Corporation vs. an LLC

Starting a new business is a big undertaking that requires making many decisions. Once you have developed a vision for the business, you must decide how to structure it. Each state has laws that govern the basic structure and specific rules for each type of business entity permitted in that state. Two examples of common business forms in all states are professional corporations and limited liability companies. PCs and LLCs are popular choices for small businesses. You must determine which business form will best suit your company's needs.

What's an LLC?

An LLC, or limited liability company, is a flexible form of business entity that provides its owners with the safeguard of limited liability. An LLC can have any number of owners, known as members, so the entity is suitable for both sole proprietors and larger businesses. Although each state has its own laws for LLCs that are registered within its jurisdiction, the general rules regarding formation, limited liability, taxation and operation of the LLC are broadly similar.

LLCs, Corporations, Patents, Attorney Help

Related articles


While the sole proprietorship remains a popular business form for many entrepreneurs, professionals such as doctors, ...

What Makes an LLC Different Than a PLLC?

When forming a new business, particularly if professional in nature, you should understand the difference between ...


A PA, or professional association, is a business entity that is limited to specific professions. In contrast, an LLC, ...

Pros & Cons of LLP Vs. Partnership

Limited liability partnerships, or LLPs, and partnerships, which are sometimes referred to as "general partnerships," ...

Browse by category
Ready to Begin? GET STARTED