Choosing Between PLLC or PC: Incorporation Options for Small Businesses

Chances are you’re probably familiar with entity formations like limited liability companies (LLCs) and corporations. How about professional limited liability companies and professional corporations?

What does it mean to incorporate as a PLLC or a PC? Let’s look at these legal structures and who is eligible to incorporate as one of these entities.

Understanding PLLC Formation through LLC Definition

One of the best ways to understand what a PLLC stands for in business is by learning about what it means to form an LLC. After all, a PLLC is just a regular LLC specifically for licensed professionals, which adds a few requirements to the registration process.

What’s an LLC?

An LLC is a business structure which allows the business to act as a separate legal entity. Incorporating as an LLC allows entrepreneurs to separate their personal assets, including houses and cars, from business assets with liability protection. In the event of an unforeseen circumstance which negatively effects the business, such as a lawsuit, liability protects the owner’s personal belongings from potential seizure or impact.

Outside of liability protection, an LLC is also a flexible entity. It’s easy to run and manage and has few compliance requirements.

What’s a PLLC?

A PLLC is a more specialized version of an LLC. Like an LLC, it provides professionals with liability protection to separate personal and professional assets. Professional LLCs, in states where there is PLLC legislation, may limit personal liability for claims related to the malpractice or negligence of a partner(s). This ensures one partner of the PLLC is not held fully responsible for claims as they relate to a co-partner.

However, the individual(s) incorporating as a PLLC is not an everyday entrepreneur. They must be professionals with licenses. These individuals must work in professional occupations where a license is required by the state to provide their specific services. A few examples of professionals which may form a PLLC include lawyers, doctors, dentists, architects, and engineers.

PC in Business: Understanding its Role and Significance

Incorporating as a standard corporation is typically a good fit for businesses which wish to expand to have a global presence, issue shares of stock, or take their company public with an IPO.

Like a PLLC, a professional corporation (PC) may only be formed by individuals in select professions. These may include doctors, lawyers, and architects as well as accountants, optometrists, and dentists.

The partner which incorporates as a PC receives liability protection. This provides two forms of protection. It ensures the partner’s personal assets receive protection from any malpractice or negligence of the practice’s associates. Incorporating as a PC also protects the partner. It makes sure they are not responsible for any liabilities relating to the owners.

Important Considerations Before Choosing Between PLLC or PC Formation

Now that you understand the difference between a PC and PLLC, it’s a good idea to check in with the state in which you wish to do business. When considering PLLC vs PC, knowing the specific requirements of your state is crucial. Make sure the state has authorized PLLC and PC legislation prior to filing to incorporate as the formation.

In addition, the state of incorporation may require proof of your license. You may need to show your state license in your existing professional occupation as an example of proof. Reach out to the Secretary of State in the state you wish to do business in to see if there are any additional proof examples you’ll need to provide prior to filing, too.

Still uncertain as to which entity to incorporate as? Speak with a legal professional or CPA for additional guidance and advice.

Let MyCorporation incorporate your small business today. Visit us at mycorporation.com or call us at 877-692-6772.

Deborah Sweeney

Deborah Sweeney is an advocate for protecting personal and business assets for business owners and entrepreneurs. With extensive experience in the field of corporate and intellectual property law, Deborah provides insightful commentary on the benefits of incorporation and trademark registration. Education: Deborah received her Juris Doctor and Master of Business Administration degrees from Pepperdine University, and has served as an adjunct professor at the University of West Los Angeles and San Fernando School of Law in corporate and intellectual property law. Experience: After becoming a partner at LA-based law firm, Michel & Robinson, she became an in-house attorney for MyCorporation, formerly a division in Intuit. She took the company private in 2009 and after 10 years of entrepreneurship sold the company to Deluxe Corporation. Deborah is also well-recognized for her written work online as a contributing writer with some of the top business and entrepreneurial blogging sites including Forbes, Business Insider, SCORE, and Fox Business, among others. Fun facts/Other pursuits: Originally from Southern California, Deborah enjoys spending time with her husband and two sons, Benjamin and Christopher, and practicing Pilates. Deborah believes in the importance of family and credits the entrepreneurial business model for giving her the flexibility to enjoy both a career and motherhood. Deborah, and MyCorporation, have previously been honored by the San Fernando Valley Business Journal’s List of the Valley’s Largest Women-Owned Businesses in 2012. MyCorporation received the Stevie Award for Best Women-Owned Business in 2011.