By alphacardprocess July 11, 2025
When you’re forming your new business, one of the most important decisions you’ll need to make is determining the legal structure of your business. It affects everything from taxes and liability to how you’re perceived by clients, suppliers and even payment processors. The decision often comes down to PLLC vs LLC for entrepreneurs and licensed professionals.
At first, they both provide the same liability protection; your personal assets are protected from business debts or lawsuits. But they are not the same thing, particularly if your occupation is licensed by a state. That’s where the PLLC (Professional Limited Liability Company) comes in. It’s intended for licensed professionals such as doctors, lawyers, architects and accountants.
An LLC (Limited Liability Company) on the other hand is less formal and operates for a variety of businesses from an eCommerce startup to a creative agency. It’s a go-to for entrepreneurs who want some protection without the formalities of a corporation.
If you are wondering about whether you should establish your venture as PLLC, vs. LLC, then this guide is for you. We will describe the fundamental differences between the two formations, list out the advantages and disadvantages of both, let you know who qualifies for what and give you tips on selecting the best for your business objectives and industry requirements.
What is an LLC?
To understand the differences of PLLC vs LLC, you first need to understand what an LLC actually is.
Definition and Overview
An LLC (Limited Liability Company) is a widely used business structure in the U.S. that offers a mix of flexibility and protection. It blends the simplicity of a sole proprietorship or partnership with the liability protection typically associated with corporations. LLCs are ideal for entrepreneurs who want legal separation between their personal and business assets without too much administrative complexity.
Who Can Form an LLC?
While the PLLC is restricted to licensed professionals, almost any kind of business can form an LLC. Whether you’re a freelancer, online seller, consultant, marketing agency owner or operate family-owned stores across the country, an LLC can be an ideal choice. Its primary popular among startups or small businesses that do not need any professional state licensing to practice.
If you run an LLC, applying for business credit cards can help you build company credit, separate personal and business expenses, and manage cash flow more efficiently—making it a smart financial tool for long-term growth and financial organization.
Key Features
The following are some of the key features which make LLC a popular choice:
- Personal liability protection: Owners (known as members) generally are not held personally responsible for business debts or lawsuits.
- Pass-through taxation: As an entity, LLCs don’t pay federal income tax. Instead, profits and losses are passed through to the owners’ personal tax returns, reducing the risk of double taxation.
- Ownership and management flexibility: An LLC can have one or more members and management can be by the members or by managers they appoint.
- Fewer formalities: LLCs are also less formal entities than corporations and have fewer reporting, compliance and meeting requirements.
As we get further into PLLC vs. LLC, remember that although LLCs offer significant general business benefits, they aren’t for everyone. Also, they are even permissible, in some locales—especially when it comes to professionals needing state licenses in order to practice.
What is a PLLC?
To fully explain the PLLC vs. LLC discussion, we should first understand what distinguishes a PLLC (Professional Limited Liability Company), particularly for individuals in regulated professions.
Definition and Overview
A PLLC (Professional Limited Liability Company) is a unique type of business entity designed for licensed professionals. Think doctors, lawyers, architects, accountants, therapists and engineers. Though it enjoys many of the same structural perks as an LLC, such as liability shielding and pass-through taxation, an PLLC is designed to satisfy the legal and ethical requirements of state-licensed professions.
Unlike regular LLCs, PLLCs are usually regulated by the state, requiring professionals to maintain industry-specific standards when running the business.
Who Can Form a PLLC?
PLLCs are not available to everyone. Only individuals working in regulated, licensed professions, can form one and rules differ from state to state. The members of most LLCs must be licensed professionals in the same profession (i.e., each partner in a law firm must be a licensed attorney). And, of course the state licensing board typically has to sign off on the business formation before the registration.
For instance, a licensed dentist launching a private practice would create a PLLC rather than an LLC to meet the mandates of its state’s regulation of medical practices.
Key Features
- Liability protection: Similar to how LLCs protect the personal assets of business owners against legal or financial issues, PLLCs do the same.
- Licensing Review Formations: Formations generally require submission of documents and approval from the applicable state licensing board.
- Professional organization: Several states require a PLLC organization to offer a level of ethical and legal protection in licensed professions.
PLLC vs. LLC: Understanding The Differences
When comparing PLLC vs. LLC, keep in mind that, while they both provide the same legal protection and tax advantages, they are really used for very different purposes—especially when it involves professional credentials and legal licensing. Here are the key differences that may help you decide which is best for your business.
Professional Licensing Requirement
Among the most significant differences in an PLLC vs. LLC comparison is the professional licensure requirement.
- An LLC does not need a license from the state to be created. And it’s applicable to a range of businesses from retail stores to marketing agencies.
- A PLLC can be formed only by professionals who can obtain a license to provide services in a regulated and licensed industry.
Formation Process
The process to form an LLC is usually fast and easy.
- LLCs are often easy to form online, with little bureaucracy or paperwork.
- But PLLCs typically require an extra step: approval from your state’s licensing board. That requires you to show your license and that your business complies with your profession’s requirements.
Ownership Rules
Ownership rules also vary:
- For instance, all of the members in a PLLC usually hold the same type of professional license. For instance, it is not legally possible for a non-licensed dentist to co-own a dental PLLC.
- An LLC, on the other hand, is more flexible as its members don’t have to share any specific background or credentials.
How to Decide Between LLC and PLLC?
When comparing PLLC vs. LLC, the right choice depends on your business type, state regulations, and long-term goals. Making the correct decision at the start can save you legal headaches, extra costs, and compliance issues down the road. Here’s a step-by-step approach to help guide your decision.
Step 1: Identify Your Business Type
The first step is understanding what kind of business you’re running.
- If you’re offering licensed professional services—like medical, legal, architectural, or psychological care—your state may require you to register as a PLLC.
- If you’re launching a non-licensed business like consulting, eCommerce, design, or tech services, an LLC is generally the better fit.
Step 2: Check State Laws
State requirements play a big role in the PLLC vs. LLC choice.
- Some states mandate a PLLC for licensed professionals and won’t allow you to operate as an LLC.
- Other states may offer more flexibility, allowing LLC formation as long as you meet licensing requirements separately.
Always consult your state’s Secretary of State website or a legal advisor to confirm what’s allowed where you live and work.
Step 3: Evaluate Complexity and Cost
PLLCs are often more complex and costly to form due to licensing board approval, professional compliance, and additional paperwork.
- If you’re just starting out and don’t need to meet strict regulatory standards, an LLC offers lower startup costs and fewer ongoing requirements.
- However, if your business carries more legal risk or you must follow state licensing rules, the PLLC ensures compliance and credibility.
Weigh your risk level, growth plans, and professional obligations before deciding which structure best aligns with your venture. No matter what legal structure you choose, you must have the right paperwork, meet necessary compliance and ensure top notch credit card processing and POS systems for smooth payment.
Conclusion
Both LLCs and PLLCs share many of the same benefits, with both offering limited liability and pass-through taxation, and both being popular options for small business owners and highly skilled professionals. But the best choice from PLLC vs. LLC will vary based on your profession, your state’s legal requirements and your long-term objectives.
Don’t rush this decision. Selecting the wrong structure can cause you licensing problems, penalties, and possibly make you have to refile your business entity down the line. Remember always to seek the advice of a business attorney if you are uncertain of how best to proceed.
Getting the right structure in place launches your business to be successful — legally, financially and from a professional standpoint.
Frequently Asked Questions
1. Can an LLC convert to a PLLC later?
Yes. Many states allow an LLC to convert into a PLLC, but you must meet specific requirements. These often include providing proof of licensure and receiving approval from your state’s licensing board.
2. Do I need a PLLC if I’m the only owner?
Absolutely. If you are a licensed professional (e.g., doctor, lawyer, therapist), you may still be required to form a PLLC—even if you’re the sole member. This ensures your practice complies with professional regulations.
3. What happens if I form an LLC but actually need a PLLC?
Operating under the wrong entity can lead to compliance issues or even legal penalties. You may be required to dissolve your LLC and form a PLLC, causing delays and added expenses.
4. Are PLLCs subject to more taxes than LLCs?
No. Generally, both PLLCs and LLCs enjoy pass-through taxation. However, your tax treatment may vary depending on your state and how your entity elects to be taxed (e.g., as an S Corp or C Corp).
5. Can I have multiple members in a PLLC?
Yes, but most states require that all members hold the same professional license. This rule helps ensure compliance with industry and ethical standards.