How to Form a PLLC in West Virginia

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

A West Virginia PLLC is a limited liability company (LLC) formed specifically by people who will provide West Virginia 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 in West Virginia?

Under West Virginia's PLLC law, a professional service is a service provided by any of the following:

• attorneys-at-law
• physicians and podiatrists
• dentists
• optometrists
• accountants
• veterinarians
• architects
• engineers
• osteopathic physicians and surgeons
• chiropractors
• psychologists
• social workers
• acupuncturists, and
• land surveyors.

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

How Do I Form a West Virginia PLLC?

To form your West Virginia PLLC you'll need to:

• have the state license for each professional who will be a member of the company
• check with the state licensing board for your profession to see if its prior approval is required, (and, if so, obtain the necessary documentation showing that approval), and
• file articles of organization with the West Virginia Secretary of State (SOS) which include a statement of the company's intended professional activities.

You can file the articles online through the West Virginia Secretary of State website or download a blank articles of organization form by going to the SOS website. Be aware that the downloadable form (Form LLD-1) is designed for use with all LLCs, not just PLLCs. The form includes detailed instructions, including some specifically concerning PLLCs. The current filing fee is $100.

Naming Restrictions

West Virginia requires that your PLLC's name contain the words "professional limited liability company" or the abbreviation "P.L.L.C.", "PLLC", "Professional L.L.C.", or "Professional LLC". Other naming requirements also apply. For additional important information on LLC names, check the Business Name, Location & Licenses section of the Nolo website.

Membership and Service Restrictions

Generally speaking, all members of a West Virginia PLLC must be licensed to provide the professional services offered by the PLLC. West Virginia allows a group of professionals to form a PLLC in which they "collectively practice the same or compatible professions." In addition, a PLLC may form, own, and operate separate LLCs. West Virginia PLLCs and/or their members are subject to the regulation of the relevant state professional licensing authorities. If you want to form a PLLC encompassing more than one profession and have questions about whether the members practice legally compatible professions, or whether any business activity you want your PLLC to engage in is prohibited, check with a local business attorney.

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 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, which has long been an option in virtually every state. West Virginia, however, allows PLLCs but not PCs.

Notwithstanding West Virginia's rather unique exclusion of the PC form, here are some of the key differences between PLLCs and PCs (based on the law in the other states):

• 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 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.

Additional Information

For more information on the requirements for forming and operating an LLC in West Virginia, 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.