What is a PLLC and Who Can Own One?

You may have seen or heard the term “PLLC” used in connection with your profession and wondered what it is and whether you should have one. This article provides basic information about PLLCs and whether one may be right for you.

“PLLC” stands for “professional limited liability company” and provides the same liability protections as a limited liability company, or LLC. However, under the Illinois Professional Limited Liability Company Act, a PLLC is intended to be used in lieu of an LLC when the owners (members) are using the company to provide professional services that are required to be licensed under Illinois law, such as medical services. Accordingly, there are restrictions as to who can own a PLLC in general and who can own a PLLC together. Only people who are licensed to provide a professional service may own a PLLC. For example, an unlicensed person cannot own a PLLC that operates as a medical practice, even if they hire licensed physicians as employees. Additionally, an unlicensed person cannot own a PLLC with a licensed person if that PLLC is providing professional services. So, for example, a husband MD and a wife who runs the medical practice cannot own the PLLC together. Only the husband MD may own the PLLC.

Going a step further, Illinois law also restricts which professional licensed persons may own a PLLC together. A PLLC can be owned by multiple people if those people are all licensed under the same Illinois law or if they are all licensed under related professions. These related professions fall under the following categories:

• Engineering/architecture
• Physician/podiatrist/dentist/optometrist
• Psychologist/social worker/marriage-family therapy/sex offender evaluations
• Acupuncture/massage/naprapathy/OT/PT/ST

To further illustrate this, a physician can own a PLLC with a podiatrist but a physician cannot own a PLLC with a registered nurse.

After determining that a PLLC is an appropriate legal entity, the next step is to file Articles of Organization with the Illinois Secretary of State. These Articles vary slightly from the traditional LLC Articles in that they require some specific information. First, instead of the company name ending in “LLC”, the company name must end in “PLLC” or an approved designation thereof. Second, the Articles of Organization must contain a specific purpose clause. This clause provides details about the type of professional services to be rendered and under what law those professional services are governed. Third, the Articles of Organization require the PLLC to list a principal place of business address. In LLCs, people often use their home address or a virtual office address as the principal place of business address. However, in a PLLC, that is not acceptable. Instead, in Illinois, the Articles of Organization must list the address where the professional services are actually rendered.

In Illinois, once the Articles of Organization have been filed with the Illinois Secretary of State, the PLLC must also be registered with the Illinois Department of Financial and Professional Regulation (“IDFPR”). It is not enough to have an individual license; the PLLC itself must also be licensed. IDFPR requires a copy of the filed Articles of Organization to verify the name matches, the specific purpose clause is included, and the principal place of business addresses matches the registration. In addition, IDFPR requires every owner of the PLLC to provide their respective individual license number in order to tie the individual to the PLLC.

Now, what if you currently have an LLC but it really should be a PLLC? The Articles of Organization must be amended to include the new “PLLC” ending and to include the specific purpose clause if one has not yet been adopted. Once the amendment is filed, the name change must be updated with IDFPR, the IRS, all other state and federal government agencies for which the LLC/PLLC deals with, insurance companies, credentialing companies, etc.

Please reach out to our office if you have any questions, wish to form a PLLC, or wish to convert your existing LLC to a PLLC.
For further information contact us.