Our firm’s business law team assists in forming and running professional limited liability companies (PLLCs) in the Everett and Snohomish County region. A PLLC is the business entity type most commonly selected by traditional professionals, such as doctors, dentists, lawyers, and accountants. The law prohibits traditional professionals from practicing their occupations within standard limited liability companies (LLCs); their LLCs must be designated as PLLCs instead. Similarly, no one may own a membership share of a PLLC unless he or she is licensed in that business’s professional occupation, with a few limited exceptions.
We at Genesis Law Firm understand the nuances of PLLCs as well as other aspects of professional’s businesses, including malpractice defense. Our attorneys typically earned more prestigious academic credentials than our local competitors, and our hourly rates are usually less as well. Reach us toll free at 866-631-0028 or by email at email@example.com.
Frequently Asked Questions:
Are there differences between LLCs and PLLCs other than what you’ve explained above? Yes. For example, a PLLC’s liability shield provides less protection for claims up to $1,000,000. We can advise you of these differences so you can make educated decisions, such as a decision whether to carry additional insurance to cover this $1,000,000 gap.
You say the liability shield provides less protection for claims up to $1,000,000. Does that mean the PLLC provides no protection up to $1,000,000 in liability? No, the PLLC’s liability shield does provide some protection, just not as much. A PLLC’s liability shield is just as strong as an LLC’s for contract disputes, but not tort claims such as malpractice.
You say there are exceptions to the rule prohibiting non-professionals from owning shares of a PLLC. Can you give me a common example? Sure. A common example occurs when a PLLC owner passes away, and his or her spouse receives the membership share. For a limited time, the non-professional spouse may own a share of the business, at least in a sense. He or she receives the deceased spouse’s associated economic interest in the PLLC but not the ability to run the business.
I’m a retired professional, and my former firm just received notice of a malpractice suit. Am I potentially liable despite my retirement? Possibly, yes. You can be held liable for wrongful acts that were committed before you sold or gave back your interest in the business, but not ones committed afterward. Of note, you might be the beneficiary of a malpractice insurance “tail” that would cover all or some of your liability after retirement, even if you no longer maintain malpractice insurance. You should contact your former firm’s malpractice insurance company to learn more.
Why is a PLLC better than a professional limited liability partnership (PLLP)? Neither entity structure is necessarily better than the other, but most professions prefer PLLCs. The primary advantage of a PLLP is that the owners are technically “partners”, and the term “making partner” has a nice ring to it. The advantage of a PLLC is its more robust liability shield.