Understanding the Difference Between a PLLC and an LLC in Massachusetts
When forming a business, professionals in Massachusetts often wonder whether they need a Professional Limited Liability Company (PLLC) or a standard Limited Liability Company (LLC). While both structures offer limited liability protection and flexible management, they serve different purposes, particularly when it comes to licensed professionals.
What is a Limited Liability Company (LLC)?
An LLC is a popular business entity that provides liability protection for its owners while offering flexibility in management and taxation. It can be owned by individuals, other business entities, or even foreign entities, and it is used for a wide range of businesses across various industries.
What is a Professional Limited Liability Company (PLLC)?
A PLLC is a specialized type of LLC designed specifically for licensed professionals who provide services requiring state licensure. In Massachusetts, professionals who offer services in regulated fields must form a PLLC rather than a standard LLC to comply with state law.
Who Needs a PLLC in Massachusetts?
Professionals who are required to obtain state licensure in order to practice their trade must generally form a PLLC rather than a standard LLC. This includes:
- Physicians
- Dentists
- Lawyers
- Accountants
- Architects
- Engineers
- Chiropractors
- Psychologists
- Other licensed professionals regulated by Massachusetts state boards
Ownership Requirements for a PLLC
Unlike a standard LLC, where ownership is open to various individuals and entities, a PLLC in Massachusetts must be owned and managed by licensed professionals in the same field. This means that only individuals holding the required professional license can be members or managers of the PLLC.
Licensing and Compliance: Certificate of Good Standing
To form a PLLC in Massachusetts, professionals must provide a Certificate of Good Standing from their respective licensing board. This certificate confirms that the professional is in good standing with the regulatory authority overseeing their field. Without this certification, the state will not approve the PLLC formation.
Key Differences Between a PLLC and an LLC in Massachusetts
| Feature | LLC | PLLC |
| Business Purpose | Any lawful business | Professional services requiring a license |
| Ownership | Open to individuals, entities, and foreign owners | Restricted to licensed professionals in the same field |
| Liability Protection | Protects owners from business debts and liabilities | Protects owners, but individual malpractice liability remains |
| Formation Requirements | Standard Articles of Organization | Articles of Organization plus Certificate of Good Standing from licensing board |
| Regulatory Oversight | No special oversight beyond business laws | Subject to professional licensing regulations |
Choosing the Right Entity for Your Business
If you are a licensed professional in Massachusetts, forming a PLLC is often a legal requirement, ensuring compliance with state regulations. However, if your business does not require professional licensure, a standard LLC may be the better choice due to its flexibility and broader ownership options.
For assistance with forming your PLLC or LLC, Trident Legal LLC is here to guide you through the process, ensuring compliance and protecting your business interests. Contact us today to get started!
This content is for general educational purposes only and does not to provide any specific legal advice. By using this Site you understand that there is no attorney-client relationship between you and Trident Legal or Attorney Lingos. This information should not be used as a substitute for competent legal advice from a licensed professional attorney in your jurisdiction.