As a licensed professional in Louisiana you can structure your business as a Louisiana 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.
A Louisiana PLLC is a limited liability company (LLC) formed specifically by people who will provide Louisiana 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: Louisiana law doesn't use the term PLLC. For this article, a PLLC simply means an LLC formed by licensed professionals providing professional services.
Louisiana's LLC Act allows people to form an LLC to "conduct business for any lawful purpose, unless a more limited purpose is stated in its articles of organization." (There is an exception for insurance underwriting, which is not an activity Louisiana LLCs can engage in.) This includes any professions licensed by the state or other governmental agency. However, the Act itself does not further define what is a profession or professional service. Louisiana's corporation law does include statutes for roughly a dozen types of professional corporations (which are entities similar to, though not the same as, PLLCs), including professional corporation laws for:
Moreover, Louisiana has separate laws regulating all of the latter professional areas, and in many cases those laws refer to the formation of LLCs. In sum, if you are a licensed professional, you should be able to form an LLC in Louisiana. However, if you have any question in this regard, check the statute and licensing board rules for your profession or consult with a local business attorney.
To form your Louisiana PLLC you'll need to:
The LLC Act indicates special requirements for a PLLC with a name that includes the word "engineer", "engineering", "surveyor", or "surveying". These PLLCs must obtain advance approval from the Louisiana Professional Engineering and Land Surveying Board.
You can file the articles of organization and initial report online or download the necessary forms by going to the SOS website. The downloadable articles of organization form (Form SS984) is designed for use with any LLC and does not contain any information specifically for LLCs being formed by licensed professionals. All paper filings should include the Transmittal Information cover page which is included as part of the forms download. The current filing fee is $100.
The name of a Louisiana PLLC must contain the words "limited liability company", the abbreviation "L.L.C.", or the abbreviation "L.C.". The name must not contain any word or phrase which indicates or implies that the PLLC is organized for any unlawful purpose or contrary to its articles of organization. The name also must not contain the phrase "doing business as" or the abbreviation "d/b/a". Other restrictions also apply. For additional important information on LLC names, check the Business Name, Location & Licenses section of the Nolo website.
Louisiana's LLC Act does not state whether PLLCs are limited to providing only one type of professional service. The Act also doesn't mention whether a certain proportion—or all—of a PLLC's members must be licensed in the relevant profession. (By way of comparison, Louisiana's laws for professional corporations routinely require all owners to be licensed in the relevant profession.) If you're unsure whether there are any restrictions on services or membership for PLLCs formed by members of your profession, check the regulatory statute and licensing board rules for your profession or consult with a local business attorney. Also, keep in mind that Louisiana PLLCs and/or their members are subject to the regulation of the relevant state professional licensing authorities.
You should make sure you have an operating agreement for your PLLC. Unlike professional licenses, articles of organization, naming 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.
Forming your professional service business as a PLLC will protect you personally from:
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:
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 not the same thing as a professional corporation (PC). A PLLC is a newer type of business entity than a PC. Here are some of the key differences:
The tax differences between PLLCs and PCs can become complicated. For example, a PC can elect a special tax status (S corporation status) that effectively makes it a pass-through tax entity like a PLLC. And, meanwhile, PCs that don't elect special status may be subject to double taxation—in other words, both the PC itself and its shareholders may have to pay taxes on business income.
Louisiana allows professionals to form both PLLCs and PCs, and both PLLCs and PCs provide liability protection for, respectively, their members or shareholders. Because the protection is essentially the same for both PLLCs and PCs, but PLLCs are simpler to create and operate, many professionals prefer the PLLC structure.
For more information on the requirements for forming and operating an LLC in Louisiana, 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.