If you’ve been in the business world for some time, you’re probably familiar with the different types of entities that you can form through the Florida Division of Corporations.
Limited Liability Companies (LLC) have become popular in recent years because they allow you to protect your individual interests and can be structured to optimize tax treatment.
Certain individuals holding a professional license or other credentials through the state may be interested in a specific type of entity, the Professional Limited Liability Company (PLLC).
There are very specific rules regarding a Florida PLLC. You should trust a Florida business law attorney
What is a PLLC?
This type of business is similar to an LLC in the sense that there are members who own and run the business. However, a PLLC must be organized and operated by individuals who hold a proper Florida license in the associated profession. For instance, only the following individuals can be members of a PLLC:
- Physicians, dentists, and other medical specialties;
- Certified public accountants;
- Certain types of architects and engineers; and,
- Others designated by law.
Beyond this requirement, there are other similarities between a PLLC and LLC. All members can play a role in day-to-day operations, decision making, and other management tasks. They can also share in the profits and losses, without the constraints of forming a corporation.
“PLLCs are somewhat unique to the State of Florida. BrewerLong is a PLLC, because it best reflects that this is a company that is owned and operated by licensed attorneys.”Trevor Brewer
Are there any restrictions on “limited” liability?
The attraction of limited liability entities, including corporations, LLCs, and PLLCs, is that you can insulate your personal interests from debts and obligations of the company. Creditors cannot touch your own assets for debts owed by the PLLC and claimants cannot reach your property due to misconduct by other members. Still, “limited” doesn’t mean complete elimination of liability. You cannot protect your own assets from:
- Liabilities related to your own professional misconduct; and,
- Personal guarantees you’ve executed on behalf of the PLLC for loans or other financing.
What are some of the legal requirements for a Florida PLLC?
Beyond being a licensed professional, there are some basic compliance issues. You must file the proper paperwork to organize your company, and it needs to bear a name that includes some derivation of “PLLC” in the title. Plus:
- Your PLLC cannot be involved in any conduct other than the services that you’re professionally licensed to provide. There’s an exception for investments that are directly related to business operations.
- ALL members must hold a license in the relevant profession. Business managers, investors, “silent” members, and others cannot have an ownership interest unless they also hold the proper credentials through the State of Florida.
- Current stakeholders cannot transfer their ownership interest to any person who doesn’t have a license to practice in the professional services offered by the PLLC.
Do I need to prepare an Operating Agreement for a PLLC in Florida?
An operating agreement is essentially a blueprint for your business, defining the organizational rules, distribution of profits and losses, structure for decision making, and many other issues. You’re not required to execute an operating agreement when forming a PLLC, but there are many advantages. Generally, preparing one is a benefit because it reduces the likelihood of disputes and disruptions in company operations.
How do I deal with taxes and insurance?
For tax purposes, a PLLC is a “pass-through” company, which means that tax liability goes to the individual members instead of the entity itself. Stakeholders report income and losses on their own tax returns, much like an S-corporation. The PLLC does file an informational return with the IRS, but there’s no tax liability for the entity.
All individual members of a PLLC should carry individual professional insurance policies to cover their own losses in the event of malpractice. The company and other members aren’t liable for such misconduct, as described above. With a proper insurance policy and coverage in place, you’re protected against claims stemming from your professional services.
Discuss PLLCs with a Knowledgeable Orlando, FL Business Law Attorney
After reviewing the above, you may have additional questions about PLLCs in Florida. Our team at Brewer Long Business Law can provide the answers you seek, so please call 407.660.2964 or visit us online