New York PLLC: Everything You Need to Know
Understanding the laws governing a New York PLLC is important if you are forming a professional business in New York. 5 min read
2. New York PLLCs
3. PLLC Requirements: Do You Need a PLLC in New York?
4. How to Form a PLLC in New York (step by step)
Updated May 5, 2022:
Understanding the laws governing a New York PLLC is important if you are forming a professional business in New York. A PLLC, or professional limited liability company, is a special kind of limited liability company designed with the needs of various professional occupations in mind. When you are looking to set up a practice in a profession in New York, you should carefully consider whether creating your own PLLC is a good idea for you.
PLLCs vs LLCs in New York
A regular limited liability company is a way for a business to gain advantages in liability situations without going to the complication and expense of forming a corporation. An LLC allows the income of its members to “pass through,” counting as personal income from self-employment on their yearly state income taxes, much as a sole proprietorship would. But the LLC also counts as a legal person for liability purposes, and legal actions taken against the company must only take into account the assets of that company.
LLC status is granted state by state, and thus has no effect on federal tax liability; as far as the IRS is concerned, the company will be another kind of company, depending on how it is filed. Some LLCs will elect to file as sole proprietorships or partnerships, while others might want to be taxed as one of the types of corporation.
PLLCs are geared for groupings of people in professions like medicine, architecture, or law. The main difference between an LLC and a PLLC is how the company handles malpractice claims. A PLLC holds each member separately responsible for their own malpractice claims. While a member will not be held liable for the malpractice of another member, they are personally liable for their own malpractice, and their personal assets are on the table in any settlements or penalties involved. Though this seems intimidating, it is generally better than a generic partnership, which might hold all members liable for the deeds of one.
Note that supervisors in a PLLC might be liable for the malpractice of those under their direct supervision.
New York PLLCs
The first thing to note about New York PLLCs is that they are not called PLLCs. Instead, they are called professional service limited liability companies, or PSLLCs. The difference here is mostly cosmetic, though; whatever the state refers to the company type as, the effects are similar enough to the PLLCs of other states to make the comparison accurate. Other factors involved with the New York PSLLC include:
- In New York, people in licensed professions of certain sorts outlined under the Education Law cannot practice together with non-licensed people, making the regular LLC not an acceptable way to organize the company.
- Those filing the PLLC must be licensed to practice the occupation in question, and the company must be managed by those with the proper licensing as well. This licensing will be checked by the state board.
- A New York PSLLC needs to have a certificate of incorporation prepared and submitted for verification at the State Education Department and the Secretary of State, as well as possess articles of formation. There are also fees to pay.
- The company will need a name that meets the naming requirements, including a form of the abbreviation for the company status at the end of the name.
- The PSLLC can form leases and contracts as long as those things are involved in the practice of the company's business.
- A PSLLC cannot engage in business activities beyond the scope of the specific remit of its profession.
- You will need an operating agreement for your PSLLC, and you are required to publish the articles of the company in two newspapers in the area it is based in for six consecutive weeks.
If a business owner does not want to file their professional company in New York as a PSLLC, they will need to instead file as a Professional Corporation (or PC), Design Professional Corporation (or DPC), or a Limited Liability Partnership (or LLP). Each of these types of organizations have their own requirements and advantages, and you'll probably want to at least find out about what those requirements and advantages are before you make your choice.
PLLC Requirements: Do You Need a PLLC in New York?
Under New York law, professional services get defined as personal services that can be lawfully issued by a member of a certain profession. Other laws provide additional requirements regarding professional services. Such itemized lists include:
New York law does not provide itemized lists, but it comes with various provisions that indicate the following professions:
- Practicing medicine or dentistry
- Veterinary services
- Social work
If you do not know whether your profession would fall under a professional category, check with a local attorney to get more information. The following professions are directly regulated under Title VIII:
How to Form a PLLC in New York (step by step)
- To form a PLLC in New York, you need a state license for whichever profession you’re entering. You must also submit an articles of organization to the Division of Corporations at the Department of State in New York. You must then submit a certificate copy of the same papers to the relevant licensing agency within 30 days of submitting the articles of organization.
- In addition, you must publish a copy of your articles of organization for six consecutive weeks in two newspapers in the county in which the PLLC was created. You must do this within 120 days of submitting your articles or organization to the DOC. Check with an attorney if you are not sure where you should publish the announcement of your PLLC.
- You must pay a filing fee of $200 to register the PLLC. The procedure is the same of creating an LLC, plus additional steps that vary on the state. In each state, however, the corporate name search and articles of organization is necessary. In certain states, such as New Jersey, you would need only the licensed professional’s name, license number, and address on the certificate for the PLLC to be created.
- In other states such as New York, the certificate of incorporation must be submitted to the Education Department to verify the license, submit to the secretary of state, and followed by getting a certified of the articles of organization and getting it to the Education Dept.
- After the incorporation process, you should do the following:
- Draft an operating agreement
- Get an employer identification number (EIN)
- Open a business bank account
- When it comes to the naming process, ensure that the name is memorable and different from names already registered in the state database. In addition, the name must come with certain designators, such as “PLLC” or “LLC.”
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