What about a professional LLC?

Professional limited liability companies, or PLLC’s are corporations organized for the purpose of providing professional services.  Usually, they are professions that require state mandated licensing, such as doctors, chiropractors, lawyers, accountants, architects, and engineers.  While forming a PLLC is similar to forming other LLCs, with these professional entities, the state licensure must approve the documents.  The articles of formation must contain the signature of a licensed professional as the incorporator their license number will be necessary to file.  Consequently, the filing time for PLLCs may be longer.  Because the greatest benefits of an LLC is its tax advantages, a PLLC can opt to be taxed as a C corporation or S corporation.  However, these kind of corporations that are qualified personal service corporations  pay a flat federal income tax rate of 35 percent.  If the corporation chooses to file as an S corporation, pass-through taxation becomes an option.  This allows the income to be taxed on the individual members and not the business entity.  Despite the tax benefits a members liability does not include any malpractice suits or claims.

Unlike other limited liability corporations, this kind of corporation may hold restrictions as to who may be a shareholder.  Either employees performing said service, retired employees of the profession, or someone who inherited the stock, must own the stock of a PLLC.  However, in some states only licensed practitioners may own stock in the corporation or serve on a board of directors.  Currently, 38 states permit the formation of a Professional LLC.

Many have seen the three letters LLC and wondered what those initials were symbolic of. LLC stands for limited liability companies. They are businesses that combine features of both a corporation and a partnership. Various states refer to these types of companies as articles of organization; since the business is not incorporated. They are formed and regulated according to state laws. There are no limitations as to how many owners these companies can have.

There are benefits to be had in forming one of these type businesses as they grow popular and are increasing daily, but first it would be advantageous for an individual(s) to become familiar with the steps that are involved.

Form an LLC

Before forming a LLC, research and become familiar with what your state laws are as it concerns your situation because each state’s regulations are different. The steps include:

• Selecting a business name. The name that you choose to place on your business cannot be a name that has been filed already with the LLC office. This information can be obtained from your Secretary of State. Specific words should be excluded from the business name such as bank, insurance, corporation, or city and it should end with a LLC designator in accordance to your state guidelines.

• Filing an Article of Organization. Completion and filing of this document is required by and with the state. This article is filed to establish the organization. A filing fee starting from $100.00 and up is required, dependent on the state that you live in.

• Create a LLC Operations Agreement. This document need not be filed, but it must be available if your company becomes involved in a lawsuit or any other legal or financial matters. It also reflects the agreement that has been set forth by the members or owners of the LLC and it is a guarantee that the company is adhering to those rules. Special attention should be given to the processing, as it is the most important document in the company.

• Publication Notice – A notification of filing a LLC should be placed in your local newspaper. Not all states require this; therefore, you should check with your Secretary of State office.

• Obtaining Business License and Permits. As with opening any new business, a
business license, federal tax ID, and zoning permit, if needed, must be obtained.

• Once you have completed this step your business is official for opening.

Benefits of Forming LLC

• LLC member’s personal assets are protected. The owners also known as members are not held responsible for the debts nor the actions of the company. If a lawsuit was to be brought against the company then the owner(s) personal property would be protected because the lawsuit is against the company and not the person.

• Taxes that are due are paid at a personal level and not the business level.

• Face fewer state imposed annually requirements.

• Have the freedom to establish any organizational structure agreed upon by the company owners.

• Have few restrictions on who can be a LLC owner or how many owners a LLC may have.