How to Form a Professional LLC in Massachusetts

Here are the basic rules for forming professional limited liability companies in Massachusetts.

By , Attorney

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

A Massachusetts PLLC is a limited liability company (LLC) formed specifically by people who will provide Massachusetts 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 the relevant Massachusetts law, professional services include services performed by:

  • registered physicians and surgeons
  • chiropractors
  • podiatrists
  • engineers
  • electrologists
  • physical therapists
  • psychologists
  • certified public accountants
  • public accountants
  • dentists
  • veterinarians
  • optometrists
  • acupuncturists
  • registered nurses,
  • attorneys.

If you are licensed to practice one of these professions in Massachusetts you should be able to form a Massachusetts PLLC. More generally, any person who is required by state law to have a Massachusetts license before providing services should be able to form a Massachusetts PLLC for those services.

How Do I Form a Massachusetts PLLC?

To form your Massachusetts PLLC you'll need to:

  • have the state license for each professional who will be a member of the company
  • file a certificate of organization with the Massachusetts Secretary of State that includes a statement of the professional service or services the PLLC will provide, and
  • with your certificate of organization include a certificate from the Massachusetts regulating board for your profession that indicates that the PLLC members or managers comply with the board's eligibility standards.

The Secretary of State has a blank certificate of organization form specifically for PLLCs (as opposed to standard LLCs) available on its website. The form is in PDF format and you can type in the required information on your computer (you will have to print it out in order to sign it). The current filing fee for the certificate of organization is $500 by mail and $520 for online filing.

Naming Restrictions

Massachusetts requires that your PLLC contain the words "limited liability company" or "limited company," or else the abbreviation "L.L.C.", "L.C.", "LLC" or "LC." Your PLLC's name also must not be deceptively similar to the name of a preexisting business. For additional important information on LLC names, check the Business Name, Location & Licenses section of the Nolo website.

Service Restrictions

In general, a Massachusetts PLLC can provide professional services in more than one profession if doing so isn't prohibited by the state's licensing laws or by any of the applicable regulating boards. Massachusetts 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, the certificate of organization, and naming 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 your business. 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 Massachusetts) 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.

At the same time, 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.

Massachusetts allows professionals to form both PCs and PLLCs. Massachusetts's rules for PLLCs rely in part on the state's older rules for PCs.

Additional Information

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