What is a Professional Limited Liability Company?
ATTORNEYS IN DALLAS
A professional limited liability company (or PLLC) is a limited liability company formed for the sole purpose of providing a professional service to the public.
What is a Professional Limited Liability Company?
A professional limited liability company (PLLC), is a type of business entity that is formed by licensed individuals or business partners who provide professional services. Although similar to an LLC, a PLLC can only be established by a limited number of licensed professionals who offer specific professional services. Under Texas law, PLLC ownership and management must adhere to specific regulations and requirements. This type of company is an excellent choice for licensed professionals who are prohibited from forming an LLC under Texas law.
Examples of professionals eligible to establish a PLLC in Texas include attorneys, accountants, architects, physicians, other medical specialists, mental health professionals, dentists, and veterinarians. Under the regulations, only members who are licensed to provide the professional services offered by the PLLC can own and manage it. For instance, a receptionist working at a doctor's office would not be able to become a member of the PLLC as they are not professionally licensed by the state of Texas to practice medicine.
How to Form a Professional Limited Liability Company
Compliance with all relevant regulations and requirements is essential when establishing a new business entity. To form a professional LLC or PLLC in Texas, there are three fundamental criteria that you and your business partners must satisfy:
-Ensure that every member of your PLLC who is a professional holds a valid and suitable state license for their profession.
-Obtain explicit authorization from the relevant Texas state licensing board as required by your profession.
-File the PLLC's certification of formation with the Texas Secretary of State (SOS) and pay any associated fees.
In addition, it is advisable to create an operating agreement for the PLLC, which outlines the internal procedures of the company. If the PLLC has multiple members, the operating agreement should specify the responsibilities of each member and manager within the PLLC. The operating agreement should include details on the PLLC's purpose, member capital contributions, profit/loss distribution, meeting and voting procedures, and whether members or managers will oversee the PLLC's management. To ensure the success of your company, it is also recommended that you take proactive steps beyond these requirements.
Federal & State Taxation of PLLC
Importantly, a PLLC is subject to a state franchise tax. In addition to contacting your CPA, you can contact the Texas Comptroller of Public Accounts, Tax Assistance Section, Austin, Texas, 78774-0100, (512) 463-4600 or (800) 252-1381 for franchise tax information. our PLLC will also need a federal tax id, more commonly known as a federal employer identification number. For federal income tax filing requirements, tax publications, and forms call (800) 829-3676 or visit the Internal Revenue Service web site at www.irs.gov.
Dallas PLLC Attorneys
As a licensed professional, it is important to take appropriate measures to protect your rights, interests, and career when establishing a new company. The attorneys at Wilson Whitaker Rynell can help you implement the right business structure that will allow your professional practice to thrive.
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