If you own a professional services organization, you may have heard that you should structure your company as a PLLC. You are probably also wondering what a PLLC is and whether you should be one.
What’s the Difference Between a PLLC and an LLC in Virginia?
The Virginia Professional Limited Liability Act (PLLC Act) governs the formation of a Professional Limited Liability Company (PLLC) in Virginia. A PLLC is a business entity formed by members of a licensed profession to provide licensed professional services. For example, dentists, architects, and CPAs, and clinical nurse specialists may form a Virginia PLLC. Generally, all members of a PLLC must be licensed and the PLLC must provide only one kind of professional service; but there are exceptions to these rules. State licensing boards may require prior approval to form as a PLLC and some may even require formation as a PLLC rather than LLC. (Like the Virginia State Bar) The articles of incorporation for a PLLC must state the type of services the PLLC will provide. A PLLC may only provide the services for which it was organized. There are naming requirements for a PLLC set forth in the VPLLC Act.
A Limited Liability Company (LLC) is a general business entity made up of one or more individuals who own the LLC. These individuals are not necessarily, but may be, licensed professionals providing licensed services. An LLC may engage in a wide variety of services that may or may not include professional services.
Both structures offer similar liability protections for business debts and are taxed in the same manner.
Does formation as a PLLC eliminate liability?
No. Generally, both PLLCs and LLCs have similar liability benefits; they protect individual members from claims for personal injury unrelated to the services provided and certain financial debts of the company, and acts of malpractice committed by other PLLC members. This is different from a Partnership which imposes liability on all the partners.
A member of a PLLC is NOT protected for individual professional malpractice, intentional torts, gross negligence, malfeasance, or personally guaranteed business loans. Because they are individually liable for their own malpractice, Individual members of a PLLC should have individual professional liability insurance.
What professional services may form as a PLLC?
A wide variety of professional service providers may form as a PLLC under the Virginia Professional Limited Liability Company Act including:
- Physical therapists and therapist assistants
- Practitioners of the “Healing Arts” (those individuals who deal “with the prevention, diagnosis, treatment and cure or alleviation of human physical or mental ailments, conditions, diseases, pain or infirmities”) including all physicians and medical professionals who are otherwise not specifically mentioned under the Act
- Nurse Practitioners
- Practitioners of Behavioral Science (i.e. Psychologists, Social workers, Counselors, etc.)
- Professional Engineers
- Land Surveyors
- Landscape Architects
- Certified Interior Designers
- Public Accountants and Certified Public Accountants
- Insurance Consultants
- Audiologists and Speech Pathologists
Which one should I select?
Before forming as a PLLC you should review the Virginia Professional Limited Liability Company Act and check with the applicable licensing board for specific provisions related to your profession.
Not sure what to do for your business? We can walk you through the process of selecting the right entity formation for your business. Click here to get started.
This article is for informational purposes only and does not constitute legal advice nor does it create an attorney-client relationship. Always consult appropriate legal counsel for specific questions related to your business. Some states may consider this attorney advertising.