How to Form a PLLC in Idaho

Here are the basic rules for forming professional limited liability companies (PLLC) in Idaho.

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As a licensed professional in Idaho you can structure your business as an Idaho professional limited liability company (PLLC). This will give you protection from several important types of liability. It also may provide certain tax advantages compared to other ways of structuring your business.

What is an Idaho PLLC?

An Idaho PLLC is a limited liability company (LLC) formed specifically by people who will provide Idaho licensed professional services. LLCs in general are businesses registered with the state that consist of one or more people—called LLC members—who own the business. Like other LLCs, PLLCs protect their individual members from people with claims for many (but not all) types of financial debts or personal injuries.

Note: Idaho law frequently refers to professional limited liability companies simply as “professional companies.”

What is a Professional Service in Idaho?

Under Idaho’s LLC Act, for the purpose of forming a PLLC, a professional service is limited to the practices of:

  • architecture
  • chiropractic
  • dentistry
  • engineering
  • landscape architecture
  • law
  • medicine
  • nursing
  • occupational therapy
  • optometry
  • physical therapy
  • podiatry
  • professional geology
  • psychology
  • certified or licensed public accountancy
  • social work
  • surveying, and
  • veterinary medicine.

Anyone who is licensed to practice one of these professions in Idaho can form an Idaho PLLC.

How Do I Form an Idaho PLLC?

To form your Idaho PLLC you’ll need to:

  • have the state license for each professional who will be a member of the company
  • check with the relevant state licensing board for your profession to see if its approval is required (and, if so, obtain the necessary documentation showing that approval), and
  • file a certificate of organization with the Idaho Secretary of State (SOS) that includes statements that the company will be a PLLC and the profession or professions for which the members are licensed to provide professional services.

You can download a blank articles of organization form by going to the SOS website. The form (Form cert_org_pllc.pmd) is specifically designed for PLLCs rather than regular LLCs. The current filing fee is $100, plus a $20 processing fee.

Naming Restrictions

An Idaho PLLC’s name must contain the words “professional company” or the abbreviations “P.L.L.C.” or “PLLC.” The name may not contain language falsely stating or implying government affiliation. For additional important information on LLC names, check the Business Name, Location & Licenses section of the Nolo website.

Service and Membership Restrictions

An Idaho PLLC only provides professional services, allied professional services, and directly related (ancillary) services. PLLCs cannot offer combinations of different professional services (allied professional services) if the laws or codes of ethics for any of the professions involved prohibit such combinations. All members of an Idaho PLLC must be licensed to provide the professional services offered by the PLLC. Idaho PLLCs and/or their members are subject to the regulation of the relevant state professional licensing authorities.

Operating Agreement

You should make sure you have an operating agreement for your PLLC. Unlike professional licenses, articles of organization, naming restrictions, and service restrictions, this is not a state requirement. However, it is important to have an operating agreement so that other members of the PLLC (if any), as well as outside companies and businesses (for example banks), know what the internal rules are for the company. Depending on your own level of knowledge and expertise, you should consider having a lawyer assist you in preparing this document.

A PLLC Will Not Protect You From All Liability

Forming your professional service business as a PLLC will protect you personally from:

  • creditors seeking to collect unpaid debts owed solely by the PLLC
  • liability for the malpractice of other PLLC members, and
  • people who are personally injured in connection with your PLLC because of things having nothing to do with your own professional malpractice or torts (for example, if someone slips and falls in your PLLC’s offices).

Regarding protection from liability for the malpractice of fellow PLLC members, be aware that, for some professions in some states, PLLC members are required to have a minimum amount of malpractice insurance before they are eligible for such protection. Therefore, it’s always a good idea to double check your state’s PLLC laws, as well as your state’s rules for your particular profession, regarding minimum insurance requirements.

Meanwhile, you are personally responsible if:

  • you personally guarantee repayment of a business loan
  • you engage in professional malpractice (such as completely botching a patient’s treatment or egregiously mishandling a client’s case), or
  • you intentionally or negligently commit a tort (such as assaulting someone).

Because you are not protected from your own malpractice, you should make sure you have professional liability insurance—and, if applicable, that your coverage meets any minimum insurance requirements.

A PLLC is Different From a Professional Service Corporation

A PLLC is not the same thing as a professional service corporation (PSC). A PLLC is a newer type of business entity than a PSC. (In most other states, PSCs are known simply as professional corporations or PCs.) Here are some of the key differences:

  • a PLLC, like other LLCs, is comprised of members, but a PSC, like other corporations, is comprised of shareholders
  • following from the previous point, PLLC ownership consists of so-called membership interests in the business, but PSC ownership is based on shares of stock; and
  • a PLLC, like other LLCs, is a so-called pass-through tax entity, meaning that in most states (though not Idaho) only the individual members have tax obligations, while a PSC, like other corporations, usually has its own income tax obligations.

The tax differences between PLLCs and PSCs can become complicated. For example, Idaho imposes a separate state tax directly on LLCs. (More information on this tax is available in other Nolo LLC articles.) Moreover, a PSC can elect a special tax status (S corporation status) that effectively makes it a pass-through tax entity like a PLLC. And, meanwhile, PSCs that don’t elect special status may be subject to double taxation—in other words, both the PSC itself and its shareholders may have to pay taxes on business income.

Idaho allows professionals to form both PLLCs and PSCs, and both PLLCs and PSCs provide liability protection for, respectively, their members or shareholders. Because the protection is essentially the same for both PLLCs and PSCs, but PLLCs are simpler to create and operate, many professionals prefer the PLLC structure.

Additional Information

For more information on the requirements for forming and operating an LLC in Idaho, such as those relating to annual reports and taxes, see Nolo’s articles in 50-State Guide to Forming an LLC and 50-State Guide to Annual Report and Tax Filing Requirements for LLCs, along with the other articles on LLCs in the LLC section of the Nolo website.

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