PLLC

What is a professional limited liability company (PLLC)?

If you work in a professional field, you may have heard of a professional limited liability company (PLLC) as an option for starting your own firm or practice—but what is a PLLC, exactly?

This type of business entity requires members to have professional licenses. Because of this, a designation of PLLC can lend a sense of credibility to the organization.

This type of entity is recognized in many—but not all—states. The types of businesses that are allowed to form a PLLC range from state to state, but generally the include: 

• Doctors and other medical professionals
• Architects
• Attorneys
• Psychologists and psychiatrists
• Accountants
• Real estate agents or brokers

The defining features of a PPLC are: 

• Limited ownership. All PLLC owners (called members) must be certified, registered, or licensed professionals to practice or offer services in their field.
• Personal liability protection. PLLC members enjoy limited personal liability from business debts or lawsuits and from other members’ malpractice or negligence. However, if someone brings a malpractice claim against a member, that member may be held personally liable.

In states that don’t allow PLLCs, individuals may be able to choose from comparable options, like a professional corporation, general partnership, or limited liability partnership.

FAQs 

What is the difference between a PLLC and an LLC?

A key difference between a PLLC and an LLC is that a PLLC is formed for licensed professionals who perform legal or medical services, accounting services, and more. Members of LLCs can be corporations, other LLCs, or individuals in any profession, while members of a PLLC must be individuals with the proper license or certification to provide professional services in their field.

Does a PLLC need an EIN?

Although an EIN is not required, a PLLC must get one if it has or plans or hiring employees, elects to be taxed as a corporation, or wants to open a business bank account. LegalZoom can help you obtain an EIN for your business.

Does a PLLC protect against malpractice?

A PLLC only protects members from other members’ malpractice. It does not protect a member’s personal assets in malpractice claims brought against them by a client or patient. This is why professional liability insurance or malpractice insurance can help to safeguard professionals’ personal assets. 

Can I switch my LLC to PLLC?

You may be able to switch your LLC to a PLLC if your state recognizes the PLLC (professional limited liability company) business structure and if you have the proper professional license, registration, or certification required by your occupation’s state licensing board. Contact your state’s business services department to see if you have the option to form a PLLC.