As a licensed professional in Florida, you can structure your business as a Florida professional limited liability company (PLLC). This will give you protection from several important types of liability. It also may provide certain tax advantages compared to other ways of structuring your business.
What is a Florida PLLC?
A Florida PLLC is a limited liability company (LLC) formed specifically by people who will provide Florida licensed professional services. LLCs in general are businesses registered with the state that consists of one or more people—called LLC members—who own the business. Like other LLCs, PLLCs protect their individual members from people with claims for many (but not all) types of financial debts or personal injuries.
What is Professional Service?
Under Florida’s PLLC law, professional service is any type of personal service to the public which requires the provider to obtain a license or other legal authorization before providing the service. As specific examples, the law lists services provided by:
- certified public accountants
- public accountants
- chiropractic physicians
- osteopathic physicians
- physicians and surgeons
- doctors of medicine
- doctors of dentistry
- podiatric physicians
- attorneys at law, and
- life insurance agents.
Anyone who is licensed to practice one of these professions in Florida can form a Florida PLLC. In addition, Florida’s PLLC law states that the categories of professional services are not limited to those on the foregoing list. If you’re unsure whether members of your licensed or authorized profession are allowed to form a PLLC in Florida, check with a local business attorney.
How Do I Form a Florida PLLC?
To form your Florida PLLC you’ll need to:
- have the state license for each professional who will be a member of the company
- check with the relevant state licensing board for your profession to see if its approval is required (and, if so, obtain the necessary documentation showing that approval), and
- file articles of organization with the Division of Corporations (which is a part of the Florida Department of State (DOS)) including a statement of specific purpose (for example practice of law, accounting services, etc.).
You can file the articles online or download blank articles of organization form (Form CR2E047) by going to the Division of Corporations website (known as Sunbiz). The downloadable form, which includes a form cover letter and a form to designate your LLC’s registered agent, is designed for use with all LLCs, not just PLLCs. The current filing fee is $125.
The name of a Florida PLLC must contain the words “professional limited liability company,” the abbreviation “P.L.L.C.” or the designation “PLLC.” Other naming restrictions also apply. For additional important information on LLC names, check the Business Name, Location & Licenses section of the ThelawQ.com website.
Service and Membership Restrictions
A Florida PLLC can only engage in the business of providing the professional services for which it was organized. (However, apart from providing those professional services, a PLLC can invest its funds, for example in real estate or stocks.) All members of a Florida PLLC must be licensed to provide the specific professional services offered by the PLLC. Florida PLLCs and/or their members are subject to the regulation of the relevant state professional licensing authorities.
You should make sure you have an operating agreement for your PLLC. Unlike professional licenses, articles of organization, naming restrictions, and service and membership restrictions, this is not a state requirement. However, it is important to have an operating agreement so that other members of the PLLC (if any), as well as outside companies and businesses (for example banks), know what the internal rules are for the company. Depending on your own level of knowledge and expertise, you should consider having a lawyer assist you in preparing this document.
A PLLC Will Not Protect You From All Liability
Forming your professional service business as a PLLC will protect you personally from:
- creditors seeking to collect unpaid debts owed solely by the PLLC
- liability for the malpractice of other PLLC members, and
- people who are personally injured in connection with your PLLC because of things having nothing to do with your own professional malpractice or torts (for example, if someone slips and falls in your PLLC’s offices).
Regarding protection from liability for the malpractice of fellow PLLC members, be aware that, for some professions in some states, PLLC members are required to have a minimum amount of malpractice insurance before they are eligible for such protection. Therefore, it’s always a good idea to double-check your state’s PLLC laws, as well as your state’s rules for your particular profession, regarding minimum insurance requirements.
Meanwhile, you are personally responsible if:
- you personally guarantee repayment of a business loan
- you engage in professional malpractice (such as completely botching a patient’s treatment or egregiously mishandling a client’s case), or
- you intentionally or negligently commit a tort (such as assaulting someone).
Because you are not protected from your own malpractice, you should make sure you have professional liability insurance—and, if applicable, that your coverage meets any minimum insurance requirements.
A PLLC is Different From a Professional Corporation
A PLLC is not the same thing as a professional corporation (PC). A PLLC is a newer type of business entity than a PC. Here are some of the key differences:
- a PLLC, like other LLCs, is comprised of members, but a PC, like other corporations, is comprised of shareholders
- following from the previous point, PLLC ownership consists of so-called membership interests in the business, but PC ownership is based on shares of stock; and
- a PLLC, like other LLCs, is a so-called pass-through tax entity, meaning that in most states (including Florida) only the individual members have income tax obligations, while a PC, like other corporations, usually has its own income tax obligations.
The tax differences between PLLCs and PCs can become complicated. For example, a PC can elect a special tax status (S corporation status) that effectively makes it a pass-through tax entity like a PLLC. And, meanwhile, PCs that don’t elect special status may be subject to double taxation—in other words, both the PC itself and its shareholders may have to pay taxes on business income.
Florida allows professionals to form both PLLCs and PCs, and both PLLCs and PCs provide liability protection for, respectively, their members or shareholders. Because the protection is essentially the same for both PLLCs and PCs, but PLLCs are simpler to create and operate, many professionals prefer the PLLC structure.
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