A unique kind of limited liability corporation (LLC) called a professional limited liability company, or PLLC, is created to offer clients professional services. Professionals like lawyers, accountants, architects, and engineers who wish to reduce their personal liability while taking advantage of an LLC’s flexibility and tax advantages frequently choose to form a PLLC. In this post, we’ll go over what a PLLC is used for, how it differs from an LLC, and how to create one in Washington and California. What Is the Function of a PLLC?
A PLLC’s primary goal is to offer clients professional services while limiting the proprietors’ personal liability. Owners are referred to as members in a PLLC and are typically exempt from personal liability for the mistakes made by other members. The personal assets of the members are thus safeguarded in the event that a customer sues the PLLC for negligence, with only the PLLC’s assets being at stake. This is one of the main factors influencing professionals’ decision to create a PLLC.
In many ways, a PLLC and an LLC are similar, but there are some significant differences as well. An LLC and a PLLC are both legal entities, but the key distinction between them is that a PLLC is created especially for professionals who offer services that demand for a license or certification. In some states, professionals cannot create a standard LLC; instead, they can only create a PLLC. Another distinction is that some states require PLLCs to have operating agreements with specific clauses that are not necessary for standard LLCs.
In order to create a PLLC in Washington, you must do the following: 1. Pick a name for your PLLC that is both legal and available without violating any existing trademarks.
2. Submit the articles of incorporation to the secretary of state in Washington. 3. Create an operating agreement that specifies the PLLC’s ownership and management structure. 4. Acquire any licenses and permits required by your profession. 5. Ask the IRS for an Employer Identification Number (EIN). 6. Sign up for a state tax ID number with the Washington Department of Revenue.
7. Submit annual reports to the Secretary of State in Washington. How Do I Establish a PLLC in California?
In California, you must take the following actions to establish a PLLC: 1. Pick a name for your PLLC that is both legal and available without violating any existing trademarks.
2. Submit your articles of incorporation to the Secretary of State in California.
3. Create an operating agreement that describes the PLLC’s ownership and management structure. 4. Obtain all licenses and permits required by your trade. 5. Ask the IRS for an Employer Identification Number (EIN). 6. Sign up for a state tax ID number with the California Franchise Tax Board. 7. Submit annual reports to the Secretary of State of California.
To sum up, creating a PLLC is a fantastic alternative for professionals who wish to restrict their personal liability while offering consumers professional services. Although the procedure for creating a PLLC and an LLC are identical, there are several important distinctions that professionals should be aware of. You can successfully create a PLLC in Washington or California by following the instructions provided in this article, and you’ll get to take advantage of the advantages of limited liability and tax flexibility.
Yes, the $800 California LLC fee must be paid in the first year if you are incorporating a PLLC (Professional Limited Liability Company) in California. All LLCs, including PLLCs, must pay this charge; it doesn’t matter if the PLLC has generated any revenue or conducted any business in California.