As a licensed professional in Pennsylvania you can structure your business as a limited liability company (LLC). LLCs in general are businesses registered with the state that consist of one or more people—called LLC members—who own the business. LLCs protect their individual members from people with claims for many (but not all) types of financial debts or personal injuries. LLCs also may provide certain tax advantages compared to other ways of structuring your business.
Most states refer to professional limited liability companies (PLLCs) but Pennsylvania adds the word “restricted” for certain types of professionals. Moreover, Pennsylvania law generally refers to “restricted professional companies” rather than to professional limited liability companies (even while state agencies use the PLLC abbreviation).
Both restricted professional companies and other professionals can form an LLC under Pennsylvania law, although restricted professionals are subject to certain additional rules about forming and operating their LLC.
Under Pennsylvania’s LLC law, certain licensed professionals must form a restricted professional LLC instead of a regular LLC. Restricted professional companies are:
Anyone who holds a state license to provide one of the above services must follow the rules for forming a Pennsylvania restricted PLLC instead of a regular LLC. All other professionals can form a regular LLC but may be subject to additional rules and restrictions for professionals under Pennsylvania state law or their professional licensing board.
To form an LLC in Pennsylvania, you must file a Certificate of Organization Domestic Limited Liability Company (Form DSCB:15-8913) with the Department of State. This is the form you use to create a restricted professional LLC (if you are a restricted professional company) or a regular LLC if you are any other type of professional.
The certificate must include the LLC's name and address; the name and address of the LLC’s registered agent; the name and address of each organizer of the LLC; and whether the LLC will be run by a manager. Restricted professional companies must include a statement that they are a restricted professional company and a brief description of the restricted professional services to be provided by the LLC. The Certificate of Organization form (both online and the PDF form) includes this optional paragraph for restricted professional companies.
You can file the Certificate of Organization online or download a fillinable PDF version of the Certificate of Organization (Form DSCB:15-8913) and mail it in. The certificate must be accompanied by a completed New Entity Docketing Statement (Form DSCB:15-134A). The current filing fee is $125.
Before filing your Certificate of Organization, be sure to 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). Certain professionals (not just restricted professional companies) must include a name approval certificate from their licensing board when they file their Certificate of Organization. This includes engineers, architects, surveyors, educational institutions (such as a college, university or seminary), banks, credit unions, insurance companies, psychologists, social workers, and marriage and family therapists (there may be others). You should also make sure you have the state license for each professional who will be a member of the company.
Pennsylvania requires that an LLC’s name contain term "company," "limited," or "limited liability company," or an abbreviation of one of those terms. Check with your state professional licensing board about any other restrictions that may apply.
The general rule is that a Pennsylvania restricted professional LLC can only provide the restricted professional service or services for which it was organized. However, a Pennsylvania LLC can own real estate or personal property, and make certain kinds of investments, in relation to providing those restricted professional services. In general, all members of a Pennsylvania restricted LLC must be licensed to provide the professional services offered by the LLC. All Pennsylvania LLCs providing professional services and their members are subject to regulation bu the relevant state professional licensing authorities.
Unlike most states, Pennsylvania doesn't require LLCs to file an annual report. However, an LLC that provides restricted professional services must file an annual registration with the Department of State. Blank annual registration forms for are available for download from the DOS website or you can file online. The due date for LLCs filing annual registrations is April 15. There is an annual fee of $520 times the number of LLC members.
You should make sure you have an operating agreement for your LLC. Unlike professional licenses, articles of organization, naming restrictions, and service restrictions, this generally is not a state requirement. However, it is important to have an operating agreement so that other members of the LLC (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 an LLC will protect you personally from:
Regarding protection from liability for the malpractice of fellow LLC members, be aware that, for some professions in some states, LLC 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 LLC 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.
Pennsylvania allows professionals to form both LLCs and professional corporations (PCs), and both LLCs and PCs provide liability protection for, respectively, their members or shareholders. Because the protection is essentially the same for both LLCs and PCs, but LLCs are simpler to create and operate, many professionals prefer the LLC structure.
For more information on the requirements for forming and operating an LLC in Pennsylvania, such as those relating to annual registration and taxes, see Nolo’s articles in 50-State Guide to Forming an LLC and LLC Annual Report and Tax Filing Requirements: A 50-State Guide, along with the other articles on LLCs in the LLC section of the Nolo website.