PLLC vs LLC

PLLC vs LLC: professional LLCs for licensed practitioners vs regular LLCs, who can form each.

Understanding PLLC vs LLC helps licensed professionals choose the right structure. A PLLC, or professional limited liability company, is a type of LLC for licensed practitioners such as doctors, lawyers, and accountants. A regular LLC is open to most businesses. The main difference is who can form each and the rules that apply. Because the requirements vary by state, check your state's rules.

PLLC vs LLC: What Is a PLLC?

A PLLC is a professional limited liability company. It is designed for businesses that provide licensed professional services, such as medical, legal, or accounting services. Only licensed professionals can form or own a PLLC in most states. The structure provides liability protection while meeting the state's professional licensing requirements. For more, see our professional LLC guide.

PLLC vs LLC: What Is a Regular LLC?

A regular LLC is a general business entity open to most types of businesses. It provides limited liability and flexible tax treatment. A regular LLC can be formed by individuals or companies for a wide range of activities. If your business does not require a professional license, a regular LLC is usually the simpler choice. For more on forming one, see our LLC formation guide.

Who Can Form Each

The key difference is who can form each. A PLLC is limited to licensed professionals in fields like medicine, law, and accounting. A regular LLC is open to most other businesses. If you are a licensed professional, your state may require you to use a PLLC rather than a regular LLC. Check your state's rules and your licensing board's requirements.

Liability Protection

Both a PLLC and an LLC provide limited liability. However, a PLLC does not protect you from your own professional malpractice. You remain personally liable for your own errors, though the structure can protect you from the malpractice of other members. Professional liability insurance is important for PLLC owners. For more on coverage, see our business insurance guide.

Tax Treatment

A PLLC and a regular LLC are taxed similarly. Both can choose how they are taxed, such as a sole proprietorship, partnership, or corporation. A single-member PLLC is typically taxed as a sole proprietorship, while a multi-member PLLC issues K-1 forms. The tax treatment is generally the same as a regular LLC.

Which Should You Choose?

Choose a PLLC if you are a licensed professional and your state requires it. Choose a regular LLC if your business does not involve licensed professional services. Consider the state requirements, your licensing board, and your liability needs. For more on the ongoing obligations, review our annual report guide.

Talk to your licensing board before you decide. Some boards have specific rules about the entity you must use, and they may require certain language in the name. A quick call can save you from forming the wrong structure and having to redo the paperwork.

Once you choose, keep your licenses current and your filings on time so your structure continues to protect you.

Your licensing board and a local attorney can confirm the rules for your profession before you file.

Many states require licensed professionals to carry malpractice insurance, and some make it part of the PLLC application. The routine filings, annual reports, and registered agent requirements are the same as for a regular LLC. If your state does not require a PLLC, you can often use a standard LLC, but check with your licensing board first. Keep your professional license current and tell your insurer about the business structure you choose. For the insurance side, see our business insurance guide, and for the annual requirements, review the annual report guide.

Frequently Asked Questions

What is the difference between a PLLC and an LLC?

A PLLC is for licensed professionals like doctors and lawyers, while a regular LLC is open to most other businesses. A PLLC, or professional limited liability company, is designed for businesses that provide licensed professional services, such as medical, legal, or accounting services. Only licensed professionals can form or own a PLLC in most states, and the structure is meant to work alongside the state's professional licensing rules. A regular LLC can be formed by individuals or companies for a wide range of activities that do not require a professional license. Both provide limited liability, but a PLLC does not protect you from your own professional malpractice. If your business requires a professional license, your state may require you to use a PLLC rather than a regular LLC.

Can anyone form a PLLC?

No. A PLLC is limited to licensed professionals in fields like medicine, law, and accounting. In most states, only individuals who hold the required professional license can form or own a PLLC, and all members typically need to be licensed in the same profession. Some states also require the PLLC to carry professional liability insurance or meet other requirements set by the licensing board. If you are not a licensed professional, you generally cannot form a PLLC, and a regular LLC would be the appropriate structure. The rules vary by state and by profession, so check both your state's LLC statute and your licensing board's requirements. If you are licensed and want the liability protection of an LLC, a PLLC is likely the right choice.

Does a PLLC protect me from malpractice?

No. You remain personally liable for your own professional malpractice, though it can protect you from other members' errors. This is the key limitation of a PLLC: the structure shields you from many business liabilities, but it does not shield you from claims arising from your own professional mistakes. If a client sues you for malpractice, your personal assets can still be at risk, which is why professional liability insurance is essential. The PLLC can, however, protect you from liability for the malpractice of other members, as long as you were not personally involved. This is one of the main reasons licensed professionals form a PLLC instead of practicing alone. Check your state's rules and your insurance requirements to understand exactly what is covered.

Are PLLCs and LLCs taxed the same?

Generally yes. Both can choose their tax treatment, such as sole proprietorship, partnership, or corporation. A single-member PLLC is typically taxed as a sole proprietorship, while a multi-member PLLC is taxed as a partnership, just like a regular LLC. Both can also elect to be taxed as a corporation if that makes sense for the business. The main differences between a PLLC and an LLC are about who can form them and the professional rules that apply, not about federal taxes. That said, your state may treat professional entities differently for state tax or licensing purposes, so it is worth checking. A CPA can help you choose the tax treatment that fits your situation. In most cases, the tax picture is very similar.