Meaning of PLLC: Everything You Need to Know
Understanding the meaning of PLLC can be important when you're trying to decide on the specific structure you would like to adopt when you're forming a new business. 3 min read
Understanding the meaning of PLLC can be important when you're trying to decide on the specific structure you would like to adopt when you're forming a new business. The PLLC business structure is a specific type of LLC or Limited Liability Company. PLLC stands for Professional Limited Liability Company. In some states, certain professionals are prohibited from forming a general LLC. In these cases, forming a PLLC may be a viable alternative.
PLLC members are required to be licensed in certain types of professions. Those professionals include:
A PLLC may be formed in certain states that have laws in place to regulate this specialized type of LLC business structure. Each state's laws will outline which professions are able to form an LLC. These laws may also place restrictions that require members of the PLLC to be licensed in the company's specific vocation. In California, individuals providing a professional service are not allowed to form an LLC of any kind and must consider adopting alternative structures to conduct business in the state.
There are certain requirements that must be met in order to form a Professional Limited Liability Company. For example, your Articles of Organization must be approved by the local state licensing board. Specific licensing requirements will vary depending on your specific state and profession. Obtaining approval from the state licensing board is an additional step in the formation process for an LLC. This means that it can sometimes take longer to establish a PLLC than it does to form a general LLC.
Once you have gained approval from your local state licensing board you'll need to file your company's Articles of Organization, along with any additional paperwork required by your state, at your local Secretary of State. There is only one main difference between the formation process of a PLLC and that of a general LLC.
When forming a PLLC, your incorporation-llc-template">Articles of Organization need to include a signature belonging to a person who is licensed to carry out your company's specified professional task in the state you intend to do business in. This person, most likely you, will be identified as the company's organizer. This is similar to the incorporation requirements of a professional corporation structure. If necessary, be sure to also include the person's professional license number.
In some states, the Secretary of State may also want to see a certified copy of the professional individual's relevant license. This requirement is only in place for the company's organizer. If the company includes more than one member, the others are not required to provide proof of their professional licenses, even if they are the same type of professional as the organizer.
In many states, it is only possible to establish a PLLC if you possess a required professional license. In some cases, it is only necessary for at least half of the company's members to be professionals in a field that relates to the PLLC's primary functions. In other cases, it may be possible for the heir of a member to continue ownership of the company in the event of the original member's death. In most cases it is possible for a person who was previously licensed in a related field and has since retired, to act as a member of the PLLC.
In some states, the organizer of the PLLC is required to be a licensed professional. This person must sign any relevant documents that pertain to the formation of the company. This means that you cannot employ the services of a private organization to form the company for you.
This restriction may also affect your ability to transfer ownership of the company to another person, although some states do allow for an unlicensed person to act as a member of the company for up to two years after a transfer takes place. After that period expires, however, the member who has accepted the transfer of ownership may be required to obtain proper licensing to maintain their claim to ownership.
The most common occurrence of this type of transfer is in the event of the original member's death. This two-year grace period provides the individual's heir with enough time to obtain proper licensing, sell, or transfer their ownership while they administer the original member's estate.
If you need help with the meaning of PLLC, you can post your legal need on UpCounsel's marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.