How to Form a PLLC in Nebraska

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

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As a licensed professional in Nebraska you can structure your business as a Nebraska 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 a Nebraska PLLC?

A Nebraska PLLC is a limited liability company (LLC) formed specifically by people who will provide Nebraska 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.

What is a Professional Service Nebraska?

Under Nebraska's PLLC law, a professional service is a service provided by a:

  • certified public accountant
  • dentist
  • osteopathic physician
  • physician and surgeon
  • veterinarian
  • real estate broker
  • associate real estate broker
  • real estate salesperson, and
  • attorney at law.

Anyone who is licensed to practice one of these professions in Nebraska can form a Nebraska PLLC.

How Do I Form a Nebraska PLLC?

To form your Nebraska PLLC you'll need to:

  • have the state license for each professional who will be a member of the company
  • obtain a certificate of registration from the Nebraska agency responsible for regulating the profession for which the PLLC is being organized; the certificate must show the name and residential address for every PLLC member, manager, employee, and agent who is required to be licensed or otherwise authorized, and
  • file a certificate of organization (along with the certificate of registration) with the Secretary of State (SOS) that states that the company will be a PLLC and specifies what professional services it will provide.

The required certificate of registration is valid for one year. Your PLLC must apply for a new one each year.

You can file the certificate of organization and certificate of registration online by uploading the pages of each document. (Currently there is no blank certificate of organization form available for download). The current filing fee for the certificates is $100 plus $5 per page.

Naming Restrictions

Nebraska requires that your PLLC's contain the words "limited liability company" or "limited company" or the abbreviation "L.L.C.," "LLC," "L.C.," or "LC." "Limited" may be abbreviated as "Ltd.," and "company" may be abbreviated as "Co." For additional important information on LLC names, check the Business Name, Location & Licenses section of the Nolo website.

Service Restrictions

A Nebraska PLLC can only provide one kind of professional service, along with other services that are directly related (ancillary) to that professional service. The service can only be provided through the PLLC's members, managers, professional employees, and agents who are duly licensed or authorized. Nebraska 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 all members of the PLLC, 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 (technically known as "vicarious liability"), 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 Corporation

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:

  • a PLLC, like other LLCs, is comprised of members, but a PC, like other corporations, is comprised of shareholders
  • following from the previous point, PLLC ownership consists of so-called membership interests in the business, but PC 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 (including Nebraska) only the individual members have income tax obligations, while a PC, like other corporations, usually has its own income tax obligations.

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.

Nebraska 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.

Additional Information

For more information on the requirements for forming and operating an LLC in Nebraska, 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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