A Professional LLC (PLLC) is a type of Limited Liability Company formed for the purpose of providing professional services.
Professional services are those where a person is licensed by the state for the service they provide.
In most states, all members of a PLLC are required to be licensed.
California: There is an exception in California, where the state doesn’t permit PLLCs. If you’re a licensed professional in California, please see: why most California professionals can’t form an LLC.
Who needs to form a PLLC?
It does vary by state, but usually the following professionals will need to form a PLLC:
- Clinical Social Workers
- Marriage and Family Therapists
- Physical Therapists
What’s the purpose of a PLLC?
The purpose for states creating PLLCs is for regulation and safety.
The states want to have more control over these professionals because the services they provide carry a higher risk to the public.
What’s the difference between a PLLC and an LLC?
Both a PLLC and an LLC offer the same liability protection to their members.
The only difference is that some states require licensed professionals to form PLLCs and they’re not allowed to form LLCs.
Also, PLLCs have stricter requirements and are governed more closely.
What’s the similarities between a PLLC and an LLC?
Both a PLLC and an LLC protect your personal assets in the event your business gets sued.
Both a PLLC and an LLC create a “wall of protection” between your business assets and your personal assets.
Your personal assets include everything that you own: your home, cars, trucks, bank accounts, investment properties, boats, jewelry, etc.
Similar to an LLC, if your PLLC gets sued, creditors can only go after the assets of your PLLC to settle those business debts and liabilities.
Having said that, if a licensed member is sued for malpractice, neither a PLLC or an LLC will offer asset protection for them personally.
PLLCs are a requirement in some states, but not all
Some states require that licensed professionals form a PLLC.
Some states allow licensed professionals to choose between PLLC and LLC.
And some states don’t even have PLLCs (California).
Ultimately, you will need to check with your local licensing board and/or to speak to an attorney in your state.
Our tip is to call the licensing board twice (to speak to different people) to make sure you receive the correct information. Not everyone that works at these places is the brightest crayon in the box.
We also recommend speaking to 2-3 attorneys to discuss whether you need to form a PLLC, an LLC, or another type of business entity. They’ll all give you 15-minutes since you’re a potential client.