A Professional Limited Liability Company (PLLC), also known as a Professional LLC, is a specific type of limited liability company that is designed for professionals in certain fields. The PLLC structure provides the benefits of limited liability protection while allowing professionals to operate as a partnership or a sole proprietorship.
Formation and Requirements
Forming a Professional LLC involves several steps and requirements:
- Choose a business name that complies with state rules and includes an appropriate professional identifier.
- File Articles of Organization with the state that outline the details of the PLLC, such as its name, address, professional services, and member information.
- Obtain any necessary professional licenses or certifications.
- Appoint a registered agent who will receive legal documents on behalf of the PLLC.
Eligible Professions
While the specific eligible professions may vary by state, common professions that can form a Professional LLC include:
- Doctors and physicians
- Lawyers and attorneys
- Accountants and auditors
- Architects and engineers
- Dentists and dental hygienists
Limited Liability Protection
One of the key benefits of a Professional LLC is the limited liability protection it offers to its members. This means that the personal assets of the professionals are generally protected from the debts and liabilities of the PLLC. However, it’s important to note that members are still personally responsible for their own professional malpractice.
Tax Considerations
A Professional LLC can choose how it wants to be taxed:
- Pass-through taxation: The PLLC’s income passes through to the members, who report it on their personal tax returns.
- C-Corporation taxation: The PLLC is treated as a separate entity for tax purposes and files its own corporate tax return.
Management and Ownership
A Professional LLC can be managed and owned in different ways:
- Member-managed: All members actively participate in the management of the PLLC.
- Manager-managed: The PLLC appoints one or more managers who are responsible for the day-to-day operations, while the members have a more passive role.
In conclusion, a Professional LLC is a specialized legal structure for professionals to operate their businesses while enjoying limited liability protection. By adhering to specific formation requirements and meeting the eligibility criteria, professionals from various fields can take advantage of the benefits offered by a Professional LLC.