Could A PLLC Be Right For You?
Although lesser known than its better known corporate relatives, and though similar to the Limited Liability Company (LLC), the Professional Limited Liability Corporation or PLLC, can be a valuable corporate entity for your business, if you’re thinking of starting a new venture, and you fit into the description of who can form a PLLC.
What is a PLLC?
Unlike other corporate forms, not everyone can use or form a PLLC. As the “professional” in the PLLC indicates, a PLLC is generally reserved for any type of company where the members require specific licensing from the state to practice in their field.
Traditionally, people like doctors, attorneys, architects, or accountants have used PLLCs, but that’s just a partial list–PLLCs can be used by any profession that requires licensure from the state.
That means every member of the PLLC must have that licensure–a professionally licensed architect could not form a PLLC with his buddy who does electrical wiring work–the architect could only be partners or members in the PLLC with other architects or similar professionally licensed professionals.
Note that the PLLC can employ anybody it wants–only the actual owners or members must be licensed professionals with the state.
Like many other companies including LLCs, a PLLC also gives the benefit of pass through taxation, which can help with corporate taxes.
Limitations on Sale
This can be somewhat limiting–you are limited to who you can give ownership interest in the PLLC to, but you are also limited in the sale of the PLLC. Unlike a normal company, like an LLC, which can be sold to anyone who wants to buy it, a PLLC can only be sold to other professionals who would otherwise qualify to form or own a PLLC.
If you do choose to incorporate as a PLLC, the PLLC itself must appear in the name of your company. The scope of your company also is limited to the area where you are licensed in. A PLLC of accountants could only form a company that provides accountings services–the corporate function could not be something broad like “any and all business services,” the way a normal corporation can do.
One potential drawback of a PLLC is liability; because PLLC members are professionals with independent obligations to the general public when they perform their services, they can still be sued, individually, for malpractice or negligence that they may commit. They do not get the traditional corporate veil protections that people do when they form corporations.
A PLLC member cannot be liable for things that other PLLC members or owners do–but of course, if the PLLC itself is sued, as it may be when any one member does something wrong, all members’ assets put into the PLLC, could be put into jeopardy.
Call our Fort Lauderdale business law lawyers at Sweeney Law P.A. at 954-440-3993 today for help or questions about forming your company or about the benefits of each kind of business entity.