Professional Corporation or PLLC

California does not permit certain professions in forming a limited liability company or a traditional corporation. Therefore, instead they must form a professional corporation.

Professions that need to be professional corporations include many who must have a state license, such as dentists, certified public accountants, doctors, veterinarians, lawyers, optometrists, marriage and family therapists, psychiatrists, and psychologists.

What is a Professional Corporation or Professional LLC?

Professional corporations and professional limited liability companies (PLLC) are corporations and limited liability companies organized for the purpose of providing professional services. Usually, professions where the state requires a license to provide services require the formation of a professional corporations or PLLC.

What Is Different About Professional Corporations?

Professional corporations have more restrictions than traditional corporations. They are also subject to specific rules in the California Business and Professions Code. For example, only licensed persons can be shareholders of a professional corporation. In addition, professional corporations are subject to the regulations of the applicable governmental agency overseeing the profession.

Why Form A PLLC?

Most professional corporations do not provide liability protection for malpractice. Although,  you could have limited liability protection for claims not based on malpractice, such as a slip and fall accidents. In addition, by forming a professional corporation you may be able to deduct payments for benefit plans, such as disability or health plans or group term insurance.