The Meaning of a PLLC in Florida
A Professional Limited Liability Company (PLLC) in the state of Florida is an LLC formed by professionals to provide limited liability protections for its members and for its manager. In many cases, professionals may conduct business without the use of a PLLC, however, the use of one is strongly advisable in order to limit personal liability and financial exposure from professional liability judgments.
In many states, a PLLC is known as a Professional Limited Liability Partnership (PLLP) or simply a Professional Corporation (PC). A PLLC is very similar to a regular LLC in many respects, but certain professionals (as described below) are required to form a PLLC instead of a regular LLC. Some states may have liquidity requirements , dividend restrictions and other special rules for a PLLC that could affect its business operations and structure. The purpose of these special features is to provide further protections for licensed professionals who are members of a PLLC.
A PLLC is similar to a regular LLC in that it provides the same protections as noted above, while also being generally governed by the same rules and regulations as a regular LLC. However, a PLLC requires that its members be certain licensed professionals, such as: accountants, certified public accountants (CPA), architects, chiropractors, physicians, social workers, engineers, mental health counselors, professional land surveyors (PSS), opticians, cosmetologists, attorneys, and real estate appraisers.
Who Can Form a PLLC in Florida?
To qualify to form a PLLC in Florida, you must possess a license either as a physician, dentist or medical professional (referring to specific fields within the realm of medical care) or as a professional accountant (which includes individuals with CPA licenses). You also have to prove that you have a legal right to practice your craft under the laws of Florida or some other state. Board certified professionals are most likely to be among the qualified professionals who obtain a license to create a PLLC. This does not mean you can count on being board certified; you must consult with your local county authority to determine which of the professions are eligible for a license to create a PLLC. The medical professions that qualify are any type of licensed disabled, licensed advanced practice registered nurse (APRN), licensed medical doctor, licensed podiatrist, licensed dentist, licensed optometrist and licensed psychologist.
Steps to Form a Florida PLLC
Starting a Professional Limited Liability Company (PLLC) in Florida involves a precise series of steps that must be followed to ensure compliance with state guidelines and maintain the legal status of the professional practice. First and foremost, it is imperative to verify eligibility. Only those licensed by the appropriate Florida licensing board can establish a PLLC.
Once eligibility is confirmed, it is critical to file the required forms with the state of Florida through the Department of State’s Division of Corporations. Specifically, applicants must fill out two forms:
• The coversheet for the "Articles of Organization" must be completed, providing the necessary contact information for the PLLC, along with information about the licensed members of the company.
• The "Articles of Organization" document needs to include specific language mandated by state law and be filed as part of the application process.
While forming a PLLC in Florida costs a mere $100, it’s important to factor in additional fees for both the "Articles of Organization" filing and the "Certificate of Status," which is an official copy of the PLLC’s filing documents.
After filing the appropriate forms, a PLLC in Florida must also follow through with any other necessary local and state-level business permits or licensing requirements, which vary according to profession and municipality. Finally, a PLLC must pay for and obtain a "Certificate of Status" from the Department of State’s Division of Corporations. This document verifies the company’s good standing within the state and must be renewed periodically.
Requirements for Naming a Florida PLLC
This is what the law of naming a PLLC in Florida has to say about the matter: "(1) The name of an entity [LLC] may be adopted by the members and must contain the word "Limited Liability Company" or "Limited Liability Limited Company" or the abbreviation "L.L.C.," "LLC," "L.L.L.C.," or "LLP." (2)(a) The name of an entity [LLC] may not contain language implying or stating that the entity is some other type of business entity. (b) The name of a corporation, limited liability company, or limited liability partnership may not imply or state that it is authorized to engage in a trade, profession, or business for which a license is required unless such entity is licensed by the applicable licensing authority pursuant to the laws of this state." The law defines "imply" any time the name "misrepresents" what the business actually does, meaning that the name should not deceive potential clients about the nature of the business services proffered. A simple example: if your company offers only tax audit preparation, the name should include some indication that this is the manner whereby you will be assisting future clients. If you have passed the Florida Bar, you are entitled to use any of these names: Professional Limited Liability Company, Professional Company, Professional Service Company and LLC. If you hold a doctorate in medicine, you can use the suffixes "M.D." or "D.O." with or without reference to a PLLC. Any of these options may be used in if you have obtained a Florida renewable license for practicng here in the state of Florida. If you hold a doctorate in medicine and are thinking about opening a PLLC, remember that your name and the name of your practice must be the same. This means, for instance, that if you go with M.D. Professional Group, LLC, then your professional name must be Robert M.D. Professional Group, MD. In other words, even your clients will refer to you by your professional name, Robert M.D. Professional Group, MD. This enables insurance companies to create an identity for the doctor within their systems, which is in line with the way they identify doctors in general.
Operating Agreement for a Florida PLLC
An operating agreement is a binding document that governs the processes, management and operation of a business, while also defining the owner’s relationship with the business. Similar to a corporate by-law, an operating agreement is a requirement for a PLLC and is not optional. Without this agreement in place, a Florida court would look to state law when determining the relationship between the LLC and its owners. By having a carefully constructed operating agreement in place, a PLLC can avoid conflicts for control, while at the same time update as necessary , instead of having to amend the by-laws of a corporation.
A well-constructed PLLC operating agreement should: The Florida Department of State requires a copy of the operating agreement or declaration of trust for PLLCs that have two or more active members.
There are PLLC operating agreement templates widely available online. However, these forms can be ineffective if the particular nuances of the provider’s business are not sufficiently addressed. A Florida attorney should be consulted for the preparation of an effective PLLC operating agreement.
Ongoing Requirements and Important Notes
A Florida PLLC is generally required to file an annual report with the Division of Corporations of the Department of State each year. The filing fee for this report is currently $138.75, and if it is not timely filed a late fee of $400.00 is due.
Florida does not require a PLLC to file a separate federal income tax return. The business income earned by a single member Florida PLLC is reported on the owner’s personal income tax return. The income earned by a multi-member Florida PLLC is reported on the partners’ joint or separate federal partnership income tax return.
In addition to this, some professional licenses require additional continuing education. If a PLLC member does not meet the requirements for continuing education during their license term, they may be fined and may lose the right to practice their profession.
An attorney member of the PLLC is required to be a member of the Florida Bar. In order to maintain good standing with The Florida Bar and to be able to continue practicing law, lawyers must pay their annual dues each year and complete 33 hours of continuing legal education ("CLE"). Of the CLE hours, 5 hours must be ethics credit and 4 hours must be technology credit. Furthermore, attorneys are required to take a Technology CLE course in their first three years of practice.
In Florida, Chartered Companies, also known as Professional Corporations, are generally not permitted to render professional services to the public.
Advantages to Setting up a PLLC in Florida
Forming a PLLC for a medical or professional practice offers protections beyond the statute providing liability protection for a professional service corporation or other professional association formed by a shareholder or owners of a Florida professional corporation who is licensed to provide professional services. In addition to the liability shield, a PLLC also provides the limited liability protection provided to all members and managers of the company formed under the corporate statutes. This dual protection makes forming a PLLC an attractive option for professional practices of all kinds looking to reduce their exposure to liability while also enjoying the protections afforded by modern limited liability entity laws.
The second benefit to forming a PLLC is tax savings. A PLLC may elect to be taxed as an S-corporation (or a C-corporation) to have its business income taxed at the entity level (or to avoid 30% withholding tax for foreign clients) rather than having the corporations’ income taxed as partnership income. The S-corporation election allows the owners to avoid Net Investment Income tax for S corporation income allocated to shareholders. By making an S-corporation election , members of the PLLC can also avoid the extra self-employment tax on the profits of the PLLC paid by partners in a traditional partnership. S-corporation shareholders in Florida also do not pay states income tax. Many clients would benefit from the income tax reduction provided by the S-corporation election. The PLLC is the perfect choice for these types of tax planning opportunities.
Finally, a PLLC offers professional credibility. Because most state governmental agencies only allow PLLCs to be formed for professional services, the PLLC has a patina of being a "professional" entity that customers expect. While some try to form P.A. and LLCs as professional services entities, the fact is that these entities are often treated by various agencies in Florida as standard commercial enterprises. This lack of consistency in the treatment of similar entities by different agencies highlights the need to form a PLLC instead of a P.A. or an LLC. A PLLC provides consistent treatment across all agencies and consistency that is acceptable to all parties involved (including landlords, customers, creditors, and government agencies). PRoduce a consistent entity which all parties will treat as a professional entity when viewed from the outside of the PLLC.