As a licensed professional in Missouri you may be able to structure your business as a Missouri 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.
In Missouri, a PLLC is simply a limited liability company (LLC) formed specifically by people who will provide Missouri 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: Missouri law doesn't use the term PLLC. For this article, a PLLC simply means an LLC formed by licensed professionals providing professional services.
Missouri's LLC Act does not mention professional services. The Act merely states that an LLC may be formed "for any lawful businesses or purposes" and defines "business" to include "every trade, occupation or profession." By contrast, other states' LLC laws frequently provide specific lists of professional services. These lists typically include, at a minimum, physicians, surgeons, dentists, lawyers, certified public accountants, professional engineers, architects, and veterinarians, but often include other professions, as well. (Missouri's law for professional corporations, which are entities similar to PLLCs, does provide a list of professionals who can form professional corporations, including: accountants, architects or engineers, attorneys at law, chiropodist-podiatrists, chiropractors, dentists, optometrists, physicians, surgeons, doctors of medicine or doctors of osteopathy, psychologists, veterinarians, registered nurses, licensed real estate salespersons, and physical therapists.)
In a few instances, Missouri regulatory laws or licensing board rules regulating for specific professions (such accounting or veterinary medicine) indicate that professionals in these areas can form LLCs. Moreover, as a practical matter, many Missouri LLCs in areas like accounting and law already exist. However, regulatory laws for some other professions (such as dentistry) may indicate that professionals in those areas are specifically prohibited from forming LLCs. In sum, if you have any question about whether your licensed or authorized profession is prohibited from forming a Missouri LLC, you should check the state law and rules regulating your profession as well as consult with a local business attorney.
Assuming you're not otherwise prohibited from doing so, to form your Missouri PLLC you'll need to:
You can file your articles online or download a blank articles of organization form by going to the SOS website. The downloadable form is intended for use with any LLC and does not contain any information specifically for PLLCs. The current filing fees are $50 for online filings and $105 for paper filings.
A Missouri LLC's name must contain the words "limited company" or "limited liability company" or the abbreviation "LC", "LLC", "L.C." or "L.L.C." Other naming restrictions also apply. For additional important information on LLC names, check the Business Name, Location & Licenses section of the Nolo website.
There can be service or membership restrictions on Missouri PLLCs providing specific types of professional services. For example, for an accounting PLLC, Missouri law requires a majority of the ownership to be licensed accountants. Check the regulatory statute and licensing board rules for your particular profession and consult with a local business attorney for more details. Also, keep in mind that Missouri PLLCs and/or their members are subject to the regulation of the relevant state professional licensing authorities.
Starting in 2018, Missouri's LLC law requires LLC members to adopt a written operating agreement. The Operating Agreement is purely an internal document and is not filed with the Secretary of State. If an existing or newly created PLLC does not adopt an operating agreement, its existing articles of organization, bylaws or operating agreement, and/or its member control or limited liability company agreement will collectively become its operating agreement.
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.
Missouri 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 Missouri, 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.