PLLC vs. LLC: What's the Difference?
A PLLC is a specialized LLC for licensed professionals — doctors, lawyers, accountants, and others. Learn how a PLLC differs from a standard LLC, who can form one, and which structure fits your business.
Bizee Editorial Staff
Editorial Team
Introduction
A PLLC — Professional Limited Liability Company — is a specialized version of an LLC built for licensed professionals like doctors, lawyers, and accountants. Both structures offer liability protection and pass-through taxation, but a PLLC restricts membership to licensed professionals and doesn't shield members from their own malpractice claims.
What is an LLC?
A Limited Liability Company (LLC) is a business entity that separates your personal assets from your business debts. If the business gets sued or can't pay its bills, your personal finances are generally protected. The IRS doesn't tax an LLC as its own entity — instead, profits and losses pass through to the members' personal tax returns.
An LLC has no federal restrictions on who can be a member. Individuals, other businesses, and investors can all hold membership interests. There's no licensing requirement, no professional credential check, and no limit on the number of members.
What is a PLLC?
A Professional Limited Liability Company (PLLC) is a type of LLC available only to licensed professionals. It works the same way as a standard LLC in most respects — same pass-through taxation, same basic structure — but state law restricts membership to people who hold an active professional license in the field the business practices.
The professions that qualify vary by state, but common examples include doctors, dentists, lawyers, CPAs, architects, engineers, pharmacists, psychologists, chiropractors, social workers, veterinarians, and real estate agents. If your state requires a license to offer your services, there's a good chance it also requires — or at least permits — a PLLC instead of a standard LLC.
Not every state allows PLLC formation. If your state doesn't offer the PLLC structure, a licensed professional may need to form a Professional Corporation (PC) or a Professional Limited Liability Partnership (PLLP) instead. Check with your Secretary of State to confirm what's available in your state.
Key differences between a PLLC and an LLC
The core differences come down to 3 things: who can be a member, how liability works for professional mistakes, and which states allow the structure. Everything else — taxation, management, operating agreements — works the same way.
Membership restrictions
A standard LLC can have any member — an individual, a corporation, another LLC, or a foreign investor. A PLLC restricts membership to licensed professionals in the specific field the business practices. In most states, every member of a PLLC must hold an active license. If a member's license lapses or is revoked, that can trigger dissolution rules depending on the state.
Malpractice and personal liability
Both structures protect members from the business's general debts and liabilities. But a PLLC doesn't protect a member from their own professional malpractice. If a doctor in a PLLC makes a negligent treatment decision, that doctor is personally on the hook — the PLLC structure doesn't change that.
Where a PLLC does help is cross-member liability. If one member of a multi-member PLLC commits malpractice, the other members aren't personally liable for that mistake. In a standard LLC, members also aren't liable for each other's negligence — but the PLLC makes this protection explicit in a professional context.
State availability
Every state allows LLC formation. PLLCs are only available in states that have passed specific legislation authorizing them. The list of eligible professions also varies — a profession that qualifies for PLLC status in one state may not qualify in another. Some states impose additional dissolution rules when a licensed member leaves or loses their license.
How formation works for each entity
Both LLCs and PLLCs are formed by filing Articles of Organization with the Secretary of State in the state where you're organizing the business. The basic filing requirements — business name, registered agent, management structure — are the same for both. The PLLC adds one layer: proof of professional licensure.
Some states require a PLLC to file a separate certification or affidavit with the relevant licensing board during formation — not just with the Secretary of State. Filing fees for LLCs and PLLCs are often similar, though PLLCs can sometimes incur additional licensing-related fees depending on the state. The IRS treats both structures the same way for federal tax purposes: neither is recognized as a separate tax entity, so both default to pass-through taxation.
One thing that catches people off guard: if you're a licensed professional forming a PLLC with partners, every member typically needs to hold the same type of license. Bringing in a non-licensed investor as a member usually isn't allowed under PLLC rules — that's a meaningful constraint if you're planning to raise outside capital.
FAQ
A PLLC — Professional Limited Liability Company — is a type of LLC available only to licensed professionals. It offers the same pass-through taxation and liability protection as a standard LLC, but restricts membership to people who hold an active professional license in the field the business practices. Common examples include doctors, lawyers, CPAs, and architects.
PLLC stands for Professional Limited Liability Company. The "professional" designation signals that the entity is organized specifically for licensed professionals — and that state law governs who can be a member and how liability works for professional services rendered through the business.
The main differences are membership eligibility and malpractice liability. A standard LLC can have any member — individuals, investors, other businesses. A PLLC restricts membership to licensed professionals in the field the business practices. Plus, a PLLC doesn't protect members from their own professional malpractice, even though it does protect them from each other's mistakes.
It depends on your profession and your state. If your state requires licensed professionals in your field to use a PLLC — rather than a standard LLC — you don't have a choice. If your state permits either structure, a PLLC may still be the better fit if all your partners are licensed in the same profession. A legal professional can help you figure out what your state requires for your specific field.
The IRS doesn't recognize PLLCs or LLCs as separate tax entities, so both default to pass-through taxation. A single-member PLLC is taxed like a sole proprietorship. A multi-member PLLC is taxed like a partnership. Either structure can elect S Corporation tax treatment by filing Form 2553 with the IRS, which can reduce self-employment taxes for profitable businesses. Talk to a tax professional to figure out which election makes sense for your situation.
Yes. A PLLC can elect S Corporation tax treatment by filing Form 2553 with the IRS, the same way a standard LLC can. The S Corp election doesn't change the legal structure — the business is still a PLLC under state law. It only changes how the IRS taxes the income. This election is worth exploring if the business is profitable enough that the self-employment tax savings outweigh the added payroll complexity.
It depends on how your PLLC is taxed. If it's taxed as a sole proprietorship or partnership, you take owner's draws — you move money from the business account to your personal account. If your PLLC has elected S Corporation status, you need to pay yourself a reasonable salary as a W-2 employee first, then take additional distributions on top of that. A tax professional can help you figure out the right approach for your situation.
Not every state permits PLLC formation, and the list of eligible professions varies by state. States that generally allow PLLCs include Arizona, Arkansas, Colorado, Florida, Idaho, Iowa, Kentucky, Maine, Massachusetts, Michigan, Minnesota, Mississippi, Montana, Nevada, New Hampshire, New York, North Carolina, North Dakota, Oklahoma, Pennsylvania, South Dakota, Tennessee, Texas, Utah, Vermont, Virginia, Washington, West Virginia, and the District of Columbia. Check with your Secretary of State to confirm availability and eligible professions in your state.
The owners of a PLLC are called members, the same as in a standard LLC. A single-owner PLLC has one member. A PLLC with multiple owners is a multi-member PLLC. Members can also hold professional titles relevant to their license — a PLLC owned by a physician might list the owner as "Member" and "Managing Member" in the operating agreement, alongside their professional credentials.
