How to Form a Professional LLC in Washington

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

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

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

Under the applicable Washington law, a professional service is a service performed by:

  • certified public accountants
  • chiropractors
  • dentists
  • osteopaths
  • physicians
  • podiatric physicians and surgeons
  • chiropodists
  • architects
  • veterinarians, and
  • attorneys-at-law.

More generally, a professional service is any type of personal service to the public which requires the provider to obtain a license or other legal authorization before rendering the service. (Washington law includes a long list of additional professional services.) Anyone who is licensed to practice one of the above listed professions in Washington, or is otherwise properly licensed or legally authorized, can form a Washington PLLC. If you’re unsure whether your Washington-licensed or -authorized profession is considered a professional service for the purpose of forming a PLLC, check with a local business attorney.

How Do I Form a Washington PLLC?

To form your Washington 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 a certificate of formation with the Washington Secretary of State (SOS).

Regarding the first point (having licenses for all professionals who will be PLLC members), be aware that formanager-managed PLLCs, at least one manager must be legally authorized to practice the PLLC’s profession in Washington.

You can file the certificate of formation online or download a blank certificate form (Washington PLLC – Formation) from the SOS website. The downloadable form is specifically for PLLCs rather than for regular LLCs and includes detailed instructions. The current filing fee for the certificate of formation is $200 for online filings (processed in 2-3 business days) or $180 for paper filings (processed in the order received).

Naming Restrictions

In almost all cases, the name of a Washington PLLC must contain either the words “Professional Limited Liability Company,” or the words “Professional Limited Liability” and the abbreviation “Co.,” or the abbreviation “P.L.L.C.” or “PLLC.” The one exception is PLLCs that provide dental services; these must contain the full names or surnames of all members and no other word than “chartered” or the words “professional services” or the abbreviation “P.L.L.C.” or “PLLC.” For additional important information on LLC names, check the Business Name, Location & Licensessection of the Nolo website.

Service and Membership Restrictions

A Washington PLLC can only provide the professional services indicated in its certificate of formation. Generally speaking, all members of a Washington PLLC must be licensed to provide the professional services offered by the PLLC. However, not all members must be licensed by the State of Washington as opposed to other states. As mentioned above, at least one manager must be licensed in Washington. In addition, members in charge of offices in Washington must be licensed in Washington.

The general rule is that a Washington PLLC will provide only one type of professional service. However, Washington law does allow PLLCs to provide certain specified combinations of professional services. More specifically, professionals licensed under Washington’s businesses and professions statutes for any of the following can combine to form a single PLLC:

  • East Asian medicine practitioners
  • mental health counselors, marriage and family therapists, social workers
  • podiatric medicine and surgery
  • chiropractic
  • dental hygienists
  • dispensing opticians
  • hearing and speech services
  • naturopathy
  • midwifery
  • optometry
  • ocularists
  • osteopathy - osteopathic medicine and surgery
  • osteopathic physician assistants
  • pharmacists
  • physicians
  • physician assistants
  • nursing care
  • psychologists
  • respiratory care practitioners
  • massage practitioners; and
  • dietitians and nutritionists

Also, professionals licensed under Washington’s businesses and professions statutes for, respectively, physical therapy and occupational therapy can combine and form a single PLLC.

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 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. 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 (though not Washington) 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. Unlike most other states, Washington taxes PLLCs through a so-called business and occupation (B&O) tax. (More information on this tax is available in other Nolo LLC articles.) Moreover, 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.

Washington’s laws for PLLCs largely rely on the state’s preexisting laws for PCs. Washington 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 Washington, 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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