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A professional limited liability company is a limited liability company created for providing professional service. Most states need to have licensed professional to acquire a PLLC. California and some other states do not allow licensed professionals to practice under an LLC. The PLLC requirement is not uniform throughout the US and it varies from state to state. Liability of a PLLC does not cover malpractice claims. What are the tax ramifications for a PLLC vs. LLC?
Case details: I wish to start an LLC as a side business in NH. I am a veterinarian and I want this business partly for veterinary work related issues and partly for other reasons. Would it be better if I create a PLLC and run everything through it or create a regular LLC and run everything through it? Alternatively, would it be better to create both of them?
According to NH law a company has to register as a Professional Limited Liability Company if professional services are required. The taxes are the same for the two companies. Both types of companies operate in the same way and the paperwork is the same. In case of PLLC only qualified and licensed provider of professional services can be members. No such licenses are mandatory for the LLC. Both of them have to file tax return but no taxes have to be paid since both are flow-through entities. Each member has to file a K-1 form listing the profits and losses which is subsequently added to their personal income taxes. I am an esthetician living in the state of Arizona. I wish to form an LLC and open a part time skin care business. Is an LLC ok or do I need to form a PLLC since estheticians are licensed people?
According to the law of Arizona, PLLC is allowed but you can practice under an LLC as long as there are no restrictions imposed by a licensing agency. At present there doesn’t seem to be any such restrictions preventing you from using that except for a license for a salon or a school. However, you may not have an unlicensed partner or member practicing under your LLC license unless you get a Salon license. Basically, you can work with an LLC license if you are the only member of it. Working as a single member LLC means that liability for mistakes or omissions would lie with you since it is considered a disregarded entity. Should I set up a PLLC or LLP? Should I file in DC or VA? While I live in VA, I wish to open my own law practice (perhaps with a partner) in DC. According to my knowledge PLLC offers more protection. Is it true? Is there any advantage to filing in DC vs. VA?
Doctors, lawyers, accountants are professional trades and are required to file for a PLLC or a professional corporation rather than a regular license. You should open your incorporation where you wish to work, not in the state that you live in. As for corporate registrations, DC and VA are practically the same apart from the exception that DC has a greater corporate tax of 4%. You have to register your business in the state where you operate. You will have to register for a foreign business entity if you are a VA PLLC but wish to operate in DC. The rule will be the same if you were in DC and want to operate in VA. If you wish to know more about PLLC you may ask a business lawyer for more information.
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