A professional limited liability company, otherwise known as a PLLC, is a form of LLC specific to a licensed profession, such as doctors, lawyers, accountants, and more. Some states don’t allow for licensed professionals to own LLCs, so professionals interested in the benefits of an LLC, must opt for a PLLC instead. Florida is one such state that allows professionals to form PLLCs. Similar to an LLC, PLLCs offer member protection against certain forms of debt collection and personal injury claims. However, there are a few important liability distinctions between the two that we will cover here.
Florida Professional Services
To begin, it is useful to understand how Florida defines professional services. The regulations governing Florida PLLCs consider a professional service to be any type of service performed for the public that requires a license or legal authorization to perform. Some common services that fall into this category are:
- Insurance Agents
In Florida, if you are licensed to practice a profession like one of these, then you are allowed to form a PLLC. This list is not a comprehensive one. If you would like to know if your profession is authorized to form a Florida PLLC, consult with an attorney.
How to Form a Florida PLLC
There are a few requirements that you must meet to successfully form a PLLC in Florida. To begin, the state licensing board of your given profession must approve your articles of organization. There may be additional requirements depending on your profession. This is an extra step for PLLCs that LLCs do not require. Once you are approved by the licensing board, you must then file articles of organization with the Florida Division of Corporations. Your application should include a statement of purpose specific to your profession and a $125 filing fee.
Naming Your PLLC
Choose a name for your PLLC that is not currently in use by any other Florida company. Additionally, your name should include a PLLC designation, such as “PLLC”, “P.L.L.C.”, or “Professional Limited Liability Company.”
Restrictions on Your PLLC
Your PLLC can only perform business practices in the professional service for which it has been formed. Florida PLLC members must be licensed in the professional service provided by the PLLC. Additionally, the members are subject to any regulations set by their professional service licensing authority.
Operating Agreement for Your PLLC
While not a requirement by the state of Florida, your PLLC should draft and agree upon an operating agreement. An operating agreement will help set the internal guidelines and practices of your PLLC. It is smart practice to seek the assistance of an expert attorney when drafting your agreement to ensure all of your bases are covered.
Liability and Your Florida PLLC
One of the main benefits of forming a PLLC is the separation it offers between the members and the entity. The PLLC structure offers several personal liability protections, such as:
- Protection from creditors seeking debts owed by the PLLC.
- Protection from malpractice involving other members of the PLLC.
- Protection from malpractice suits and other torts connected with the PLLC.
However, your PLLC will not protect you against all liability. Here are some examples in which you may be held personally responsible:
- You have personally guaranteed a business loan.
- You have engaged in a form of professional malpractice.
- You have behaved negligently or intentionally committed a tort.
In general, the PLLC structure protects you against the actions of your employee. However, it is important to be aware that if you are acting in a supervisory role, it is possible that you may be found liable for employee actions under your supervision. Additionally, the PLLC structure does not protect from any malpractice you may commit on your own, so it is important to have malpractice insurance. Also, be certain that this insurance meets all minimum coverage requirements.
Difference Between a PLLC and a Professional Corporation
For starters, PLLCs tend to be easier to set up and more cost-friendly to maintain in comparison to professional corporations. PLLCs are comprised of members and determine ownership through member interest in the business. Professional corporations are comprised of shareholders and determine ownership through shares of stock. Similar to LLCs, PLLCs enjoy pass-through taxation. Taxes for corporations can be more complicated. If the corporation elects to use a special status (S-corp), then the corporation can also enjoy pass-through taxation. Without this special status (C-corp), the corporation is subject to double taxation.