What is the Difference between a PLLC & LLC?

Mar 06, 2015 By Levi Hatch In Business No Comment Tags : , , ,

When you are forming a new business, there are a variety of legal entities you should consider. For small business owners, professional limited liability companies (PLLC) and limited liability companies (LLC) are two business entities that can provide numerous benefits. While these entities are similar, it is important to understand their differences. For information regarding a LLC, please read our blog titled “Understanding the Basics of Limited Liability Companies.” This blog will focus on the PLLC.

PLLC

As the name indicates, the PLLC is essentially a LLC for professionals. In other words, the members of a PLLC must be certified or granted a license by a regulatory board, agency, court or other Arizona authority as authorization to render professional services. Common examples include physicians, accountants, attorneys, and real estate agents. When you establish a PLLC, the entity can only render services in the field where its members are licensed. If a member of the PLLC attempts to render services outside the stated purpose of the PLLC, it may expose that individual to liability.

A PLLC is only permitted to hire non-licensed employees if they meet the following requirements:

  • They work under the direction or supervision of a licensed individual
  • They do not represent to the public that they are licensed to perform the professional services offered by the PLLC
  • The governing board of the PLLC allows the entity to hire non-licensed employees.

In order to have an ownership or membership interest in a PLLC, the individuals must be licensed under Arizona law to provide the professional services the PLLC was created to render. If the members are general partners, they must all be licensed by the profession to be conducted. Finally, if the members are professional corporations, they must be authorized under the law to conduct the professional services.

If you are starting a new business, let us help you comply with all the various applicable laws, regulations and rules. The attorneys at Nielsen Law Group can help with all business formation matters. You can schedule your initial consultation by calling (480) 888-7111 or submitting a web request here.