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LLC vs PLLC: What’s the Difference Between These 2 Business Structures?

When researching some of the different business structures, you may encounter limited liability companies (LLCs) and professional limited liability companies (PLLCs). In addition to S-corps and C-corps, they are the two of the most common business structures used in the United States. LLCs and PLLCs aren’t the same, however. They are two unique business structures with their own purpose and benefits.

LLC vs PLLC: What’s the Difference Between These 2 Business Structures?

What Is an LLC?

An LLC is a business structure that provides personal protection of the owner’s assets. You aren’t required to use a specific business structure when operating a business. You can operate a business under your own name — or a Doing Business As (DBA) name — as a sole proprietorship.

Sole proprietorships, though, leave your personal assets susceptible to forfeiture. If your business incurs debts that you are unable to repay, lenders may seek to collect your personal assets. LLCs protect personal assets. If you use an LLC, your personal assets will be separated from your business’s assets.

What Is a PLLC?

A PLLC is a specific type of LLC that’s designed for certain professions recognized at a state level. It offers many of the same benefits as an LLC. PLLCs are simple and easy to set up. More importantly, they protect the owner’s personal assets from business-related debt.

In the United States, certain professions are allowed to form a PLLC. Different states recognize different professions for PLLCs. Generally speaking, states recognize licensed professions for PLLCs. If you own a business that requires a license, you may be able to form a PLLC, assuming it’s a recognized profession in your state.

While different states recognize different professions for PLLCs, some of the most common PLLC professions include the following:

  • Accountants
  • Medical doctors
  • Chiropractic doctors
  • Lawyers
  • Physical therapists
  • Optometrists
  • Veterinarians

Choosing Between an LLC and PLLC

You might be wondering whether to use an LLC or a PLLC for your business. Both types of business structures offer personal asset protection. When using either an LLC or a PLLC, your personal assets will be safe from business-related liabilities.

LLCs and PLLCs are both easy to set up as well. You can form either of them yourself, or you can hire a professional accountant to do it on your behalf.

Keep in mind that while most states allow licensed professions to form a PLLC, others require them to form a PLLC. You’ll need to check your state’s business guidelines to determine if a PLLC is optional or required. Of course, there are other business structures from which you can choose, such as S-corps and C-corps, so make sure to explore all options before making a final choice.

This article was brought to you by Intrepid Private Capital Group – A Global Financial Services Company. For more information on startup and business funding, or to complete a funding application, please visit our website.

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Intrepid Private Capital Group • April 8, 2021

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