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Professional Limited Liability Company

A professional limited liability company is a limited liability company designed with the purpose of providing a professional service. While most states require licensed professionals to acquire a PLLC, California and a few other states don't allow licensed professionals to practice under an LLC. PLLC requirements vary from state to state and the liability of a PLLC doesn't cover malpractice claims. Below are a few questions regarding PLLC's that have been answered by Experts.

Are there tax ramifications for a PLLC vs. LLC?

Case details: I am trying to start an LLC for a side business in NH. I am a veterinarian, and for part of what I want this business for, it will be veterinary work related. For other parts of it, it will not. Should I create a PLLC and run everything through it, or create a regular LLC and run everything through it, or would it be just better to create an LLC and a PLLC?

New Hampshire law requires that a company must register as a Professional Limited Liability Company if there is to be professional services provided. The taxes are no different for the two companies. Both PLLC and LLC's operate in the same manner and use the same paperwork. With a PLLC, only people who are qualified and licensed to provide the professional services can be members, where as no licenses are required for an LLC. PLLC's and LLC's both file a tax return but pay no taxes because they are both flow through entities. Each member files a K-1 form listing all profits and losses which is them added onto their personal income taxes.

I am an esthetician in the state of Arizona. I want to form a company (an LLC) and open a part-time skin care business. Can I form an LLC or does it need to be a PLLC since estheticians are licensed individuals?

Arizona law allows PLLC's but you can practice under an LLC as long as there are no restrictions placed by a licensing agency. There doesn't seem to be any restrictions found that would keep you from using an LLC except for a license for a Salon or a school. However, it may not be possible for you to have an un-licensed partner or member practicing under your LLC license unless you were to obtain a Salon license.

Basically, if you are the only member of your LLC, you can work under the LLC license. Working as a single member LLC would mean that you will be liable for mistakes or omissions made by you because an LLC is considered a disregarded entity.

Should I set up a PLLC or LLP? And should I file in DC or VA? I live in VA but plan to open my own law practice (perhaps with a partner) in DC. From what I've briefly read, it appears PLLCs offer a little better protection, is that right? Is there any advantage to filing in DC vs. VA?

Doctors, lawyers, accountants etc. are professional trades and require the professional to file for a PLLC or a professional corporation instead of a regular license. You will have to open your incorporation in the area that you plan to work, not in the state that you live in. As far as corporate registrations are concerned, DC and VA are practically the same with the exception of a 4% greater corporate tax in DC. You will have to register your business in the state of operation. You would have to register for a foreign business entity if you are a VA PLLC but plan to operate in DC. The same rule would apply if you were in DC and wanted to operate in VA.

For tax purposes, my accountant recommends I form a PLLC in WA rather than continue as a sole proprietor. Assuming I do so, what are the advantages and disadvantages of having both a Legal Name (like XXXX, PLLC) and a DBA (like "First name Last name, Ph.D.")?

Your accountant gave you the correct information. To protect your personal assets from any liabilities from the business, you would want keep your business within a limited liability entity. As far as how to name the business, you would use the one that you prefer; there is no rule as to how you name the business. You will have to file for a DBA to show that you are a limited liability entity if you choose not to use the PLLC in the name that you will be using. A DBA isn't required if you have the PLLC in the company title and you will have to have the PLLC in the title when you register with the state.

To learn more about PLLC's, you should consult with an Expert who is familiar with Business law.
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