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Dimitry K., Esq.
Dimitry K., Esq., Attorney
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We are psychologits pratcicing as sole practitioners in california

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We are psychologits pratcicing as sole practitioners in california and we want to form a legal partnership. What legal entity makes the most sense for us?
You have 3 options, and all of them probably will be good ideas.

1. You can set up an LLP (a Limited Liability Partnership ). You set up the LLP if you are trying to set up a professional company. Benefits include a separate legal identity from the owners, typically not much paperwork to fill out, limited liability of partners against the actions of other partners, flexible tax structures, and there is only single taxation as there are no dividends to pay out.

2. S-Corp (Small Corporation). S corporations are corporations that elect to pass corporate income, losses, deductions and credit through to their shareholders for federal tax purposes. Shareholders of S corporations report the flow-through of income and losses on their personal tax returns and are assessed tax at their individual income tax rates. This allows S corporations to avoid double taxation on the corporate income. S corporations are responsible for tax on certain built-in gains and passive income.

3. P.C. Professional corporations (PCs) and professional limited liability companies (PLLCs) are corporations and limited liability companies organized for the purpose of providing professional services. Additionally, a PC or PLLC must typically be organized to solely provide the services of the licensed practitioners.


I suggest you review your options with a CPA, as either of those options can be useful for you and your business.




Dimitry Alexander Kaplun, Esq.

Customer: replied 8 years ago.
We've been told that LLC and LLP do not apply to proefessionals providing services, that the only entity that applies is an PC for those operating with a license (doctors, psychologists, etc.) Is this your understanding as well? The LLP fits us the best, XXXXX XXXXX don't know if that is possible for psychologists in California.
You were told correctly. An LLC/LLP is not a professional organization. However you can still create an LLP as your entity, but provide services through it. It is possible, but a P.C. is more prevalent as an entity.


Dimitry Alexander Kaplun, Esq.
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