LLC vs PLLC – Which Structure Is Best For Your Business? (How These Company Structures Differ?) [Video]

LLC vs PLLC – Which Structure Is Best For Your Business? (How These Company Structures Differ?). In this comparison video I will talk about LLC vs PLLC.

So, the main difference between them is membership.
A limited liability company (LLC) is a business structure that is formed by owners who are generally referred to as members. The LLC business structure does not restrict membership, meaning that any person can be a member, including corporations, individuals, partnerships, foreigners, and other legal entities. On the other hand, a professional limited liability company (PLLC) is a type of LLC that is designed for professionals who offer services that require professional licenses issued by a state such as lawyers, doctors, and architects. The PLLC business structure restricts membership to professionals with professional licenses.
Therefore, an LLC has no membership restrictions.

Compliance requirements
The formation of an LLC requires several compliance requirements, such as business name, registered agent, tax forms, articles of organization, statement of information form, business licenses and permits, and operating agreement. On the other hand, the formation of a PLLC requires compliance requirements such as business name, registered agent, business licenses, articles of organization, operating agreement, statement of information form, professional licenses, member approval from the state licensing board, documents to verify the licensing status of the members and management structure.

Liability Protection
Both business structures offer their members liability protection where the owners are protected from the company’s liabilities or debts. However, a PLLC offers added protection where it protects the licensed professionals from personal liability originating from the malpractice of other members of the company.

But do they have any similarities?
Yes, they do. Both business structures have similar ongoing compliance requirements, such as filing tax returns, paying taxes, and renewing required business licenses and permits, among others. Additionally, in both business structures, taxation is done on a pass-through basis.

To sum up, how do they compare – LLC or PLLC?
I like a PLLC because it protects the members from other members’ malpractice, which means that an individual member’s wrongdoing does not create liability for other members. However, I like an LLC because it has fewer compliance requirements during formation and has no restrictions when it comes to membership. Therefore, an LLC is the overall winner.

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