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Written by : Megan Sheffer
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so you're thinking of starting a business among the first choices you'll need to make is how you plan to organize your business no matter what kind of field you plan to enter creating some kind of business formal entity is likely a good idea so which one do you choose one of the most popular choices in recent years has been a limited liability company or an llc can your business form as an llc or is a pllc right for you let's find out so what's an llc llc's or limited liability companies have only been around for about 40 years but they provide a lot of advantages and have become extremely popular for people starting businesses as it says in the name llcs provide the people who start them with limited liability that means that in the event something were to go wrong and the company were sued your liability can be limited to the amount that you invested and that personal assets you may have like your home or your car are protected you've got to follow some basic rules for that to stay true like not mixing your own money with the companies but it's really valuable limited liability has proved so beneficial to businesses that it's a big reason why corporations came into existence but corporations can have a downside for federal income tax purposes money they make can be taxed twice once when the corporation earns it and again when it's distributed as salaries or dividends traditionally entities like partnerships enjoy pass through taxation meaning the money that they made was only taxed once but partnerships don't have limited liability llcs were created to combine the best of both worlds pass-through taxation and limited liability those two benefits have made them extremely popular so if llcs are so great what's a pllc as you can guess from the name pllcs are related to llc's but they're a little bit different the p stands for professional and refers to businesses that must obtain some kind of license from the state in which they operate as llcs began becoming more popular a lot of states decided that they didn't want every kind of business to be able to use the form the concern was that it wasn't always fair to limit the liability of businesses whose licenses implied some kind of seal of approval from the state so states created another entity called the pllc which is like the llc but with slightly different limits on liability here is an example you may have heard the term malpractice before probably in the context of medicine say a group of doctors forms a pllc and one of the doctors makes an error during surgery and the patient sues both the doctor and the pllc in many states that doctor could be personally liable but the other doctors would not be here is a common question that people are faced with my business requires being licensed by the state can i form a pllc often the answer is yes but not always unfortunately some states don't recognize the pllc and people in professions have to consider different options like a professional corporation or a limited liability partnership the requirements differ from state to state and in some places like california whether your business is eligible for some kind of limited liability entity can be a complicated case specific question that may require consulting an attorney e-forms can help you get started and can help you find out if your state is one of those places so are there any differences between setting up an llc in a pllc there's a lot of overlap between the two and for both although you don't have to file it anywhere you should create an operating agreement there are however two key differences about pllcs one you must show that you have a valid license from the state board that oversees your type of business as well as let the state board know that you're starting a business the second is about dissolution or ending the pllc a lot of professional licenses have renewal requirements which if not met can mean a suspension of the license in some states having your license suspended can mean the end of your pllc so it is important to keep on top of this where he forms the biggest online database of legal documents we'll show you how to draw up an operating agreement for free at the link below with no membership or credit card requirement click the link and get started on yours today
Thanks for your comment Paul Witherspoon, have a nice day.
- Megan Sheffer, Staff Member
what is a pllc pllc stands for professional limited liability company but first i'm not your attorney i'm not your cpa i'm just providing easily accessible information you can get anywhere on the internet through the google machine i'm just trying to curate it all here into one place for all entrepreneurs just like you so let's get into it um a pllc is required by states for very specific job types um so for lack of kind of better icons that i've got here clipart um you know hal is a plumber um and uh let's call this guy jeeves i guess jeeves um let's say jeeves is an architect in some states jeeves here is considered a professional because you have to get a a certificate or some sort of like a license in order to become an architect so in some states and again this is going to be different in every state so whichever state that you're forming your llc in if you don't know which state you're forming it in we have a video for that we also have a playlist that goes over a bunch of different uh stuff that talks about this kind of small business 101 from soup to nuts all this great information packed in a night look nice little bow um so let's say jesus is an architect and um maybe in uh wyoming he doesn't need to be considered a pllc but in new york maybe he does so he just needs to check with his usually if you've been working in a state you went to school in a state schooling for whatever you're doing they're probably going to let you know that you need to be one or the other i have seen instances where an architect didn't know and they filed an llc through us and then came back and said hey i needed a pllc why didn't you tell me and frankly we don't you know there's so many different permeations of everything it's it's impossible for us to know we kind of expect the customer uh to to tell us what they need um so most of the time a plc is going to be for things like an attorney or a accountant or an architect or a healthcare professional a nurse maybe um different states uh are a little less uh uh strict states like new york uh are very strict uh i i know that to provide like some kind of nail salon services uh in the state of new york you have to go to the health review board we've actually done that with a customer before where we had to get approval from the health board of new york state to get them a pllc so uh that's all it stands for is a professional limited liability company do your research on this one you're gonna need to kind of just type in you know what your job title is you know are you a plumber are you a carpenter um are you an attorney what not but generally i would say don't hold me to this but i would generally say that attorneys cpas healthcare professionals and architects probably and engineers are the ones that need to check for this type of stuff and do this research and see do they need to be an llc or a pllc but again uh figure out whether you want to be an llc or corporation then figure out what state you're going to file in then figure out do you need a pllc or a professional corporation or just a limited liability company or a corporation and that's everything you need to know about what a pllc is without doing your own research this is just kind of the uh the surface level information here just to kind of get you going uh but if you got information uh good information out of this video please like and subscribe we've got a lot more videos coming if you have a question about uh you know wanted to do a deeper dive or you have another question ask in the comments but also if you're forming an llc or a corporation or you've got a friends or family members that are doing that send them over to betterlegal.com and we will help them and get them the most complete and affordable package that contains everything you need to be able to walk into a bank and open a business checking account and i will see you on the next video
Thanks liphuzuZ your participation is very much appreciated
- Megan Sheffer
About the author
I've studied outdoor education at Eastern Kentucky University in Richmond and I am an expert in reading education. I usually feel listless. My previous job was government budget analyst I held this position for 4 years, I love talking about whittling and orienteering. Huge fan of Mike Pence I practice balance beam and collect comic books.
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