Florida LLC vs Florida Professional Association

Florida LLC vs Florida Professional Association

The purpose of forming a company is for liability protection, tax benefits and enhanced prestige. For a professional, there is the added complexity of having professional entities to choose from, in addition to the traditional Corporations, LLCs and Partnerships which are available to all.

If you provide professional services, then you should consider a professional corporation or professional association (PA). These two terms are used interchangeably, and are not the same as a professional limited liability company (PLLC). A professional association is Corporation formed with the single purpose of providing a specific professional service. These professional services are commonly medicine, law, accounting, etc.

The distinguishing aspect of a professional company is the owners, either members of shareholders, are licensed in the profession their business practices, i.e. owners may only be lawyers, doctors, accountants, etc. Unlike a traditional LLC or Corporation a business purpose must be stated in the Articles, and the company's activities may not deviate.

Forming an LLC or Corporation in this manner is preferable to operating as a sole-proprietorship or partnership. There are additional liability protections and more tax flexibility. Historically, professional organizations were designed to provide tax benefits without limiting liability to the owners. Over time, additional protections for professionals have been established, and professionals may now operate via an LLC or Corporation. These updates have made the differences between professional LLCs and regular LLCs less pronounced, with the same being true for professional corporations and traditional corporations.

Regardless of the entity chosen you will not be protected if you engage in fraud or malpractice, though you will be if one of the other partners does.

Single Purpose for Professional Association

A requirement for professional associations in the state of Florida is that your PA is formed with the single purpose of providing a specific professional service. Any shareholder of the association must be properly licensed to provide the services offered by the business. There are a number of different services that qualify as a professional service, such as an insurance agent, dentist, attorney, CPA, veterinarian and more.

While all shareholders need to be licensed to provide the association’s given professional service, they are not required to perform those services on behalf of the business. Other employees of the business can provide the services so long as they are also appropriately licensed in the field. Additionally, the professional association can employ non-licensed individuals to perform services apart from the specified professional service.

Florida Professional Association Name Requirements

When choosing a name for your professional association, keep in mind that it must contain a signifier such as “professional association”, “PA”, or “chartered”. Your name cannot use any other misleading signifiers, such as “incorporated”, “inc.”, or “company”. However, if your business has registered with the state of Florida under a fictitious name (a name different than the registered corporate name) then you have the option of omitting the signifier from your name. There are additional exemptions for fictitious names that extend to attorneys and other licensed professionals by the Department of Health and the Department of Business and Professional Regulation. If you require additional information on this, consult the Florida Division of Corporation’s website.

Filing Articles of Incorporation in Florida

In order to form your professional association or professional corporation, you are required to file articles of incorporation. These articles will be filed with the Florida Division of Corporations and can be completed online or by mail. Your articles of incorporation will include the following information:

  • Name of your professional association.
  • Stated single purpose of your professional association.
  • Address for your principal place of business (and a mailing address if this is different).
  • Name and address of your registered agent.
  • Name and address of your incorporator.
  • Optional effective date (if one is not specified, it will be the date your articles are filed).

Additional Considerations for Your Professional Association

Be sure to check for any additional permit or license requirements unique to your location. The Florida Small Business Development Center will have information on any of their requirements for your county or city. Other state agencies that you might check with are the Florida Department of Business and Professional Regulation and the Florida Department of Agriculture. Both departments have their own licensing requirements that may pertain to your business.

Additionally, you will want to be certain that your business complies with any tax or regulatory requirements that apply to professional associations in the state of Florida. A good place to check for this information is on the Florida Department of Revenue's website. Also, if you require any information on obtaining an employer identification number (EIN), income tax requirements, or tax forms, consult the IRS website.