What’s the Difference Between an LLC and a PLLC?
Many of us have heard of the term LLC, or limited liability company. What you may not be as familiar with is the term PLLC, which is very similar to LLC, but stands for professional limited liability company. Both terms are a type of business formation, but the difference is the restrictions and requirements that are required to form a PLLC making it a professional service rather than just a “company.”
Defining a PLLC
To form as a PLLC, Florida Statutes define the terms of “professional service” as any of the services provided to the public that require the person providing the service to have legal authorization or a license to render said services. Examples of professional services include, but are not limited to, the following:
- Certified Public Accountants
- Insurance Agents
How a PLLC is Formed
To begin the process of forming a PLLC in Florida, you must first obtain the required state license for each of the professionals that will be a member of your PLLC. Once this is done, you will need to file organization articles for your business with the Florida Division of Corporations. You will be required to include a statement for the specific purpose of your business such as veterinary services, accounting services, etc.
Just like businesses formed with an LLC, those formed with PLLC must use this designation after the name of the business. This may be done in several forms including P.L.L.C. or PLLC. Each business is limited to one professional service only.
PLLC Liability Protection
While a PLLC will offer some liability protection, it will not protect members or managers from all forms of liability. Some protections that a PLLC may offer include:
- Creditors attempting to collect business debts that are owed only by the PLLC.
- Liability for malpractice of one of the PLLC members.
- People that are injured in connection with the PLLC when there is not a connection with your own professional tort or malpractice.
One member of the PLLC may, however, be held personally liable in certain situations, such as the following:
- Personal guarantees to a bank regarding the repayment of a business loan.
- Accusations of egregious mishandling or malpractice.
- Intentional or negligent commission of a tort.
Such agreements are not required by the state of Florida, but it is still a good idea to have an operating agreement in place for your PLLC. Unfortunately, member disputes are not uncommon, even in limited liability companies. Having an operating agreement will help define the rules for operating the business and will ensure that all members are aware of these rules.
Contact an Experienced Business Planning Attorney Today
Tampa business transactions attorney David Toback has years of experience helping business get off to a good start, including forming and operating LLC and PLLC companies. If you have questions about which type of business formation is best for you or would like help forming your business to ensure it gets a solid start, contact us today to schedule a consultation.