As a licensed professional in Virginia you can structure your business as a 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.
A Virginia PLLC is a limited liability company (LLC) formed specifically by people who will provide 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.
Under Virginia’s PLLC law, a professional service is a licensed, certified, or otherwise legally authorized service rendered by:
Anyone who is licensed to practice one of these professions in Virginia can form a Virginia PLLC.
To form your Virginia PLLC you’ll need to:
Regarding the first item (having state licenses for each professional), Virginia law requires that all members of PLLCs providing most kinds of professional services be licensed. However, for PLLCs providing the services of architects, professional engineers, land surveyors, or landscape architects, or using the title of certified interior designers, or any combination of those services, only two-thirds of the members must be licensed. The latter types of PLLCs must obtain a certificate of authority from the Board for Architects, Professional Engineers, Land Surveyors, Certified Interior Designers and Landscape Architects.
Additional registration requirements also apply specifically to PLLCs whose members will practice either accounting or law, and additional membership restrictions apply to PLLCs providing accounting services. For more information, check Virginia’s PLLC Act or talk with a local business attorney.
You can file the articles of organization online using the SCC eFile system with PDF Submission or download a blank articles of organization form (Form LLC-1103) by going to the SCC website. The downloadable form is specifically for PLLCs (as opposed to regular LLCs) and includes helpful instructions. The form is available in both MS-Word format and PDF format so 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 is $100.
The name of a Virginia PLLC must contain the words “limited company” or “limited liability company”, or the abbreviation “L.C.”, “LC”, “L.L.C.”, or “LLC.” Or, alternatively, in place of the latter words or abbreviations, the PLLC’s name may use the initials “P.L.C.”, “PLC”, “P.L.L.C.”, or “PLLC”, or the phrase “professional limited company”, “a professional limited company”, “professional limited liability company”, or “a professional limited liability company” at the end of its name. For additional important information on LLC names, check the Business Name, Location & Licenses section of the Nolo website.
A Virginia PLLC can only provide the professional services for which it was specifically organized and may not engage in any other business. As mentioned above, for most Virginia PLLCs, all members must be professionally licensed. However, Virginia PLLCs are allowed to engage in investment of PLLC funds (for example in real estate or securities). In most cases, Virginia PLLCs are allowed to provide only one type of professional service. However, certain combinations of related services are permitted under the PLLC Act. More specifically:
Virginia PLLCs and/or their members are subject to the regulation of the relevant state professional licensing authorities.
You should make sure you have an operating agreement for your PLLC. Unlike professional licenses, articles of organization, naming restrictions, and service and membership 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.
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.
Virginia 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 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.