Understanding PLLC and LLC

September 20, 2019
Understanding PLLC and LLC
LLC agreement

It’s easy to form a PLLC and an LLC after understanding the requirements and restrictions. If a company is doing a business that needs a license, then your state will require a professional limited liability company (PLLC), else the organization might opt for a limited liability company (LLC).


Let’s break down their details one at a time.


Limited Liability Company


An LLC is a legal business structure that aids businesspersons with particular benefits. The state is responsible for their approval. Most companies have the structure of an LLC, but some states forbid certain licensed professionals from forming it.


There is no limitation for LLC membership. One or more individuals can form it.


Even though the owners provide the company with funds and resources, they’re not liable for the company. Each member is liable for the amount they placed into the organization.


Professional Limited Liability Company


This type of LLC is licensed for individual professionals such as lawyers, doctors, accountants, real estate agents, and architects.


Doctors and lawyers are usually found on the list of states that aren’t allowed to create standard LLCs. You should, therefore, examine your state to know whether they allow professionals to create Standard LLCs.


Many states require that all PLLC members be licensed professionals, whereas other states only allow half of the members to be licensed. Examine your states keenly to know all the policies applied.


If a PLLC defaults on a bank loan, then one member will be personally liable. Even though the PPLC protects the supervisor from other members, he is liable for their actions.




The IRS doesn’t recognize LLCs or PLLCs. Therefore, a company has to decide whether to be taxed as an S-Corp, a partnership, or as an individual. There is an IRS form that every owner has to fill out. If one fails to provide this form, then the category of the company might be mistaken. This can lead to contrary conclusions for tax liability.


Bottom Line


The creation of an LLC and PLLC is easy when you understand all the requirements and restrictions. Always check the conditions that your state offers. If a company is doing a business that needs a license, then your state will require PLLC; otherwise, the organization might opt for an LLC.


If you need more information about the formation of an LLC or a PLLC, please contact us. We are here to serve you.