New York State PLLC: Everything You Need To Know
A New York state PLLC is a special type of LLC and an LLC is a business entity that gives some benefits common to partnerships and corporations.3 min read
2. Tax Purposes
4. Biennial Statements
Updated July 28, 2020:
A New York state PLLC is a special type of LLC. An LLC is a type of business entity that provides individuals with some of the benefits common to partnerships and corporations. All businesses can be formed as LLCs, no matter their size.
Forming a PLLC
The choice of business structure is usually governed by the scale of business, types of products/services offered, and the state's rules and regulations regarding the formation of companies.
The aim of setting up a business as an LLC is to take advantage of its partnership pass-through taxation and corporate limited liability protection.
The limited liability protection afforded to LLCs protects the personal assets of business owners or members from the adverse consequences of actions undertaken by the company. It also limits the owners' liability for most lawsuits and business debts.
The partnership pass-through taxation afforded to LLCs frees the company from the burden of taxation. Instead, its members are responsible for all taxes arising from the profits and losses of the company. As such, LLC members are protected from the double taxation that happens with corporations.
A PLLC has the same benefits as an LLC. The major difference between a PLLC and an LLC is that the former can only be formed by professionals that are recognized and licensed by the state. Such professionals include:
- Medical practitioners.
The article of organization for a PLLC is similar to that of an LLC, but its filing requires additional steps.
Only licensed professionals are allowed to sign the PLLC's filing documents. The certified copy of the professional license or a license number must be included in the filing documents.
Furthermore, the filing documents must be submitted to the state's licensing board for approval before filing with the Secretary of State. Due to the additional approval required by the licensing board, the process for forming a PLLC is longer than that for standard LLCs.
The IRS doesn't recognize the PLLC as a separate entity for tax purposes. Multi-member LLCs (MMLLC) must file as a C corporation, S corporation, or partnership. Single-member LLCs (SMLLC), on the other hand, may file as corporations or sole proprietorships.
To classify your LLC, you must also file Form 8832 Entity Classification Election. If you don't fill out this form, you will be classified automatically — possibly into the wrong category. For instance, if your business has two or more members and is supposed to be taxed as a corporation, it could be automatically classified as a partnership by the IRS if you don't fill out Form 8832.
SMLLCs are automatically classified as disregarded entities, entities with sole proprietorship status that are regarded as distinct from the owner.
Although the members of PLLCs and LLCs aren't usually liable for their employees' actions, they become liable for actions undertaken under their direct supervision. PLLCs and LLCs don't usually provide liability protection from malpractice lawsuits.
Businesses that offer certified or licensed professional services in states like California are not allowed to form PLLCs. However, they can form a professional corporation (PC). Some states, like California, don't allow LLCs to offer licensed or certified professional services.
According to Section 301(e) of the New York LLC laws, PLLCs must file biennial statements with the Department of State. The statement should set forth the address where the Secretary of State can mail copies of legal processes that it accepts on the PLLCs behalf. Forms for biennial statements are provided by the New York Department of State.
An LLC's filing period is the calendar month in which its article of the organization was filed. The Department of State automatically mails biennial statements to the address it has on record to be processed one month prior to the due date.
Any PLLC that wishes to file biennial statements but hasn't received the proper forms can request one from the Department of State. PLLCs that fail to file their biennial statements on time will be designated in the records of the Department as past due.
This will be reflected in all status letters or certificates that are obtained from the Department of State. Consequently, the PLLC may be unable to complete certain business transactions.
If you need help with a New York state PLLC, you can post your legal need on the UpCounsel marketplace. UpCounsel accepts only the top 5 percent of lawyers on its site. Lawyers on UpCounsel come from schools such as Yale Law and Harvard Law and usually have 14 years of legal experience, including work with or behalf of companies like Google, Menlo Ventures, and Airbnb.