LLC and PLLC are two business structures that can be used when building your business. While anyone can open an LLC, a PLLC may require a professional license of some sort. In some states, having a license to perform your chosen profession may prevent you from legally opening an LLC. Instead, a PLLC must be opened. While many of the overall benefits are the same. There are significant differences that you must be aware of to protect yourself and your business.
What Is PLLC?
A Professional Limited Liability Company works in much the same ways as an LLC. The primary difference has to do with the word professional. In most states, a professional that must be licensed to practice or perform the duties of their profession. A PLLC still protects the owner from personal liability and financial loss. The primary difference is that as a professional, they must maintain their license to practice and make sure it is in good standing at all times. Physicians, attorneys, nurses, and accountants are examples of who will be required to open a PLLC.
What Is LLC?
A Limited Liability Corporation is designed to protect a business owner from any type of financial loss or liability that is incurred by their business. An LLC means that only the business can bear the brunt of a lawsuit if one is ever filed. The business owner’s personal assets will be protected and cannot be touched through any kind of legal action that has to do with the business. An LLC does not require any type of professional licensing in order to open the business.
Differences Between LLC vs PLLC
The primary difference between a PLLC and an LLC is that a professional license is required by the state in order to open a PLLC. While not every state requires a professional license, those that do, also require that you maintain your license. This means that it cannot be suspended or lapsed for any reason. If you open an LLC in one state, it may not be recognized by another state if that state requires a professional license.
Advantages of PLLC vs LLC
If you are a professional, creating a PLLC in place does offer added protection against legal action. Keeping your professional license in good standing is essential if you want to operate your business legally. Without it, your business could face major penalties and eventually be forced to close. For a professional, having a PLLC ensures that any personal assets they own are secured and protected from any type of legal action associated with the business. Opening a business can be confusing when it comes to having the right structure. If you want to learn more about the differences between an LLC vs PLLC, talk to an accountant or financial institution. Having the right information will ensure that you make the right choice when you choose the structure of your business. If yu are a professional, choosing a PLLC may be one of the best decisions you will ever make.