A professional limited liability company (PLLC) is a type of business entity that can be formed by individuals or business partners who perform a professional service.
If you are a licensed professional in Texas who is preparing to open up your own practice—whether it is as an accountant, an architect, a medical specialist, or any other type of licensed professional—forming a PLLC might be the right option for you.
In this article, our Houston business formation attorney explains the most important things that you need to know about PLLCs in Texas.
PLLC Texas: Understanding the Basics
As explained by the Texas Secretary of State, a professional limited liability company is a specialized type of limited liability company (LLC). It can only be formed by a business that renders certain types of professional services.
Although similar to an LLC in many ways, a PLLC can only be formed by a limited number of licensed professionals. Indeed, under Texas law (Texas Business Organizations Code § 301.001), PLLCs are subject to restrictions and requirements regarding their ownership and their management.
In accordance with statutory regulations, these companies can only be owned or managed by individuals who are professionally licensed in Texas. Some specific examples of professionals who may be eligible to create a PLLC in Texas include:
- Doctors and physicians;
- Other medical specialists;
- Mental health professionals;
- Dentists; and
When forming a new business entity, it is crucial that you comply with all applicable regulations and requirements. In order to form a professional LLC or PLLC in Texas, you and your business partners must satisfy the following three basic criteria:
- Ensure that every professional who is a member of your PLLC has the appropriate state license;
- If necessary, obtain express authorization from the Texas state licensing board; and
- File business formation documents with the state of Texas Secretary of State (SOS).
Of course, beyond these requirements, it is also important to take proactive steps to put your company in the best position to succeed. Among other things, this includes making sure that you have a viable business plan, getting access to start-up/operating capital, and putting a professionally drafted operating agreement in place.
PLLC vs LLC Texas: The Pros and Cons
In many ways Texas PLLCs are similar to LLCs. Though, as was mentioned, PLLCs are subject to additional legal restrictions and regulations. This raises an important question: What is the benefit of forming a PLLC instead of an LLC?
After all, if this type of corporate structure is similar to, but more restricted than an LLC, it would appear that there are advantages to simply setting up an LLC.
The answer is that for many types of professionals, it is not always reasonably practical (or possible) to set up an LLC. There are a number of different structural and legal reasons that make a PLLC the best available option in Texas.
With PLLCs, one of the key issues to consider is professional malpractice insurance. In Texas, a PLLC does not provide blanket liability protection against a malpractice claim. Instead, each professional member of the PLLC must obtain their malpractice coverage—either individually, or through the company.
How Our Houston Business Formation Attorney Can Help
If you are a licensed professional preparing to form a new company, it is imperative that you take the proper steps to protect your rights, interests, and career. With the right business structure in place, your professional practice will be in the best position to thrive.
Adam J. Curley is an experienced Houston, Texas PLLC lawyer. He has extensive experience helping business owners and business partners put the appropriate structure in place to build a successful firm. More specifically, Mr. Curley is prepared to:
- Take the time to understand your situation,
needs, and objectives;
- Prepare and submit the documents required to form
a PLLC in Texas;
- Negotiate, draft, and review a PLLC operating
- Take whatever action is necessary to protect your
personal and business interests.
We believe in building positive, effective, and long-term relationships with our clients. Our law firm knows that all businesses and business owners have unique needs. If you are forming a professional limited liability company (PLLC) or professional corporation (PC) in Texas, you deserve diligent, fully personalized legal guidance.
Get Help From a Texas Business Lawyer Today
At The Curley Law Firm, our Houston business formation lawyer is committed to helping clients plan, preserve, and protect their interests. If you have any questions about PLLCs in Texas, we are here to help. For a confidential initial business law consultation, please do hesitate to contact us today. From our law office in Houston, we serve communities throughout the region, including in Harris County, Fort Bend County, and Montgomery County.