PLLC Vs. LLC: Operating A Company As Professionals (2026)

What an LLC Is

What is an LLC? A limited liability company (LLC) is a business structure that protects owners, called LLC members, from company liabilities. It exists as a legal entity separate from its owners.

What a PLLC Is

A PLLC is a type of LLC. In most states, only a licensed professional can form a PLLC. These states often block licensed professionals from forming a standard LLC. Thus, a PLLC is the only LLC type available for these occupations.

For example, in Texas, certain professionals, such as attorneys, real estate inspectors and polygraph examiners, can only form professional corporations or PLLCs.

Ownership and Licensing Rules

PLLCs may be managed by their members or a manager. The manager does not need to be an LLC manager. In most states, including Texas, all owners and managers must be licensed professionals.

Formation and State Recognition

Professionals can form a PLLC by filing articles of organization, also called certificates of formation, with the state.

What are articles of organization? They typically list the company name, address, profession, and resident agent.

However, requirements vary by state. In New York, for instance, the articles also require a list of original owners.

Liability Protection Compared

LLCs provide fairly strong limits on member liability. The general rule is that the LLC’s assets are exposed to company liabilities and debts, but members’ personal assets are protected. Thus, LLC members’ homes and cars will usually not be exposed if the LLC is sued.

PLLCs provide similar limits on member liability for company liabilities. However, the rule changes for professional negligence claims. Specifically, a PLLC member’s personal assets are exposed to professional negligence claims based on that member’s acts.

They may also be exposed to malpractice claims asserting that the member supervised the negligent member. However, they are protected if they were unaware of and did not participate in their co-owner’s negligent act.

How Each Is Taxed

Both PLLCs and LLCs may elect corporate or pass-through taxation. Corporate taxation taxes the entity on its net profits. The LLC members must also pay income taxes on salaries or owner draws they receive from the company.

Pass-through taxation means that the entity does not pay taxes. Instead, the PLLC members pay income taxes on their share of the company’s net profits.

Which One Fits Your Business?

In many states, the decision between an LLC and PLLC is made for you. If you fall within a defined list of professions, you cannot form an LLC. For these professions, the choice is between a PLLC, professional corporation (PC) or professional association. If you do not practice these professions, you might not be allowed to form a PLLC.