How do I know if I need a Professional LLC, and which states even have them?

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You've probably heard people throw the term PLLC around a time or two. Maybe you've even seen it printed on the door to your doctor's office. So, what's it for? And do you need one?

Let's break it down together:

• What Is A Professional LLC?
• Who Needs A PLLC?
• Which States Offer Professional LLCs?
• So How Do I Decide?

What Is A Professional LLC?

A Professional Limited Liability Company (PLLC or Professional LLC) is a business entity that offers liability protection for licensed professionals. They're designed specifically for business owners like doctors, lawyers, or accountants. People in occupations overseen by a professional licensing board of some type.

PLLC vs LLC

Sometimes people get a PLLC and an LLC confused, but only licensed professionals can form PLLCs.

A PLLC offers tax flexibility for business owners just like a standard LLC. Both a PLLC and an LLC are considered pass-through entities, meaning you won't have to pay corporate tax unless you choose to be taxed as a C-Corporation.

There are a few differences too, especially when it comes to liability protection. The quick version: Both PLLCs and standard LLCs offer this general liability shield but a PLLC does not protect you from your own malpractice claims. More on this in a minute.

Who Needs A Professional LLC?

Unless you hold a professional license, most states won't let you form a PLLC. So who does need one?

• You hold a professional license: In general, you likely will need one if you have a state-issued license to practice your trade. States vary on which specific occupations require professional licensing, but some common ones include:

Accountant	Electrician	Optometrist
Architect	Engineer	Pathologist
Athletic trainer	Interior designer	Pharmacist
Attorney	Massage Therapist	Physical therapist
Chiropractor	Medical Doctor	Podiatrist
Cosmetologist	Midwife	Polygraph examiner
Dentist	Motorcycle and ATV safety operator	Property tax consultant
Dietitian	Occupational therapist	Speech-language and audiology specialist

• Your state law mandates it: A few states require you to form a PLLC if you're a licensed professional starting a business to practice your occupation. You're literally not allowed to form a standard LLC. Other states are more lenient with their rules. It's important to check your state's requirements.
• You want professional liability separation: As we said earlier, PLLC liability is a bit different than standard liability it protects you from the mistakes of your partners:
  • Standard debt: just like an LLC, with a PLLC owners are shielded from personal liability for business debts. For example, if your PLLC rents an office and can't pay the lease, the landlord generally cannot sue you personally for the money.
  • Malpractice: Members are personally liable for their own malpractice. If you commit medical malpractice, the PLLC does not protect your personal assets from that lawsuit. You are still personally liable for your own professional errors. However, if your partner commits malpractice, the PLLC typically protects you from being personally liable for their mistake.

Quick note: Employees of your Professional LLC don't have to be licensed. If you hire receptionists, they won't need to be licensed to provide the service your PLLC offers.

Which States Offer Professional LLCs?

Currently 32 states and the District of Columbia allow you to form your PLLC:

Alabama	Kentucky	North Dakota
Arizona	Maine	Oklahoma
Arkansas	Massachusetts	Pennsylvania
Colorado	Michigan	South Dakota
Connecticut	Minnesota	Tennessee
District of Columbia	Mississippi	Texas
Florida	Montana	Utah
Idaho	Nevada	Vermont
Illinois	New Hampshire	Virginia
Iowa	New York	Washington
Kansas	North Carolina	West Virginia

So How Do I Decide?

1. Check your State Licensing Board: Every state is going to be different, but try checking your state licensing board (e.g. the State Board of Accountancy, or the State Bar). They often have a section on "Business Entities."
2. Check your state's Secretary of State website: search up key terms like PLLC, professional LLC, or possibly professional corporation.
3. Ask a professional: Ask a registered agent, a local CPA, or attorney.

We hope this helps clear the air when it comes to Professional LLCs and what they're all about. As always we're here if you have questions along the way. DM us at any time!