Forming a Professional Corporation or PLLC
For many licensed professionals, the ordinary LLC isn’t an option — the law requires a professional entity.
Last updated September 19, 2026
Professional corporations (PCs) and professional limited liability companies (PLLCs) are entity types for licensed professionals — like doctors, lawyers, and accountants — whose professions often require a professional entity rather than a standard LLC or corporation. They provide liability protection with important limits, and their availability and rules vary by profession and state.
For most businesses, the choice of entity is relatively open. But licensed professionals — physicians, attorneys, accountants, and others — often face special rules requiring them to use a professional entity, such as a professional corporation (PC) or professional limited liability company (PLLC), rather than a standard LLC or corporation. These structures have particular features and limits. This guide explains how professional entities work, who needs them, and what makes them different. Because rules vary by profession and jurisdiction, it’s general information, not a substitute for advice on your specific situation.
We help businesses get this right from the start. This is general information, not advice on a specific situation.
Using the wrong entity as a professional
Licensed professionals may be required to use a PC or PLLC, not a standard entity.
Form the right professional entity
Use the professional structure your profession and state require, set up correctly.
Compliant professional practice
Your practice is structured properly for a licensed professional.
For many licensed professionals, the ordinary LLC isn’t an option.
What professional entities are
Professional corporations (PCs) and professional limited liability companies (PLLCs) are entity types designed for licensed professionals. They function similarly to standard corporations and LLCs — providing a formal entity structure — but are subject to special rules reflecting the professional nature of the business. As the Legal Information Institute’s overview of the law.cornell.edu and law.cornell.edu reflects, entity forms carry distinct legal characteristics, and professional variants add profession-specific requirements. These structures exist because many professions have rules governing how their practitioners may organize, which standard entities don’t satisfy. Understanding that a professional entity is a specialized version of a familiar structure is the starting point.
A professional entity protects you — but not from your own malpractice.
Who needs one
Whether you need a professional entity depends on your profession and jurisdiction. Many licensed professions — such as medicine, law, accounting, and others — require or restrict practitioners to professional entities when they incorporate or form an LLC, rather than allowing a standard entity. The specific rules, and which entity forms are available, vary significantly by profession and by state. So a licensed professional can’t assume a standard LLC is available or appropriate; they must check the rules governing their profession in their jurisdiction. As the SBA’s guidance on how to sba.gov reflects, choosing the right structure requires attention to the rules that apply to you — and for professionals, those rules are often specific.
Liability protection and its limits
Professional entities generally provide liability protection similar to standard entities — shielding owners’ personal assets from many business debts and liabilities — but with an important limit: they typically do not shield a professional from liability for their own professional malpractice. A professional remains personally responsible for their own negligent professional acts, even within a PC or PLLC. The entity can, however, still protect against many other business liabilities and, in some cases, the malpractice of other owners. Understanding this crucial limit — that the professional entity is not a shield against your own malpractice — is essential to having accurate expectations about what protection it provides.
Forming one correctly
Forming a professional entity involves the standard entity-formation steps plus profession-specific requirements, which may include ownership restrictions (often limiting owners to licensed members of the profession), naming rules, and approvals or registrations tied to the professional licensing body. Getting these details right matters, because a professional entity that doesn’t comply with the applicable rules can create problems. Because the requirements vary by profession and state and include specialized rules, licensed professionals benefit from legal guidance in choosing and forming the correct entity. Done properly, a professional entity gives a licensed practitioner an appropriate, compliant structure for their practice.
Your action checklist
If you’re a licensed professional forming a practice, work through these steps:
- Confirm whether your profession and state require or restrict you to a professional entity (PC or PLLC).
- Identify which professional entity forms are actually available to you in your jurisdiction.
- Understand the ownership restrictions — many professional entities limit ownership to licensed members of the profession.
- Recognize that the entity generally won’t shield you from liability for your own malpractice.
- Maintain appropriate professional liability insurance as a separate layer of protection.
- Form the entity with the profession-specific requirements (naming, approvals, registrations) handled correctly.
A starting framework, not a substitute for advice on your specific situation.
Common mistakes to avoid
Needs source + attorney review before publish- Assuming a standard LLC is available. Many licensed professions require or restrict practitioners to a professional entity rather than a standard LLC or corporation. Forming a regular LLC when your profession doesn’t permit it can create real problems.
- Expecting the entity to shield you from malpractice. A professional entity typically does not protect a professional from liability for their own malpractice. Relying on it as malpractice protection — instead of carrying proper professional liability insurance — is a serious misunderstanding.
- Overlooking ownership restrictions. Professional entities often limit ownership to licensed members of the profession. Structuring ownership or bringing in partners without accounting for these rules can create compliance issues.
- Skipping profession-specific formation steps. Naming rules, licensing-board approvals, and registrations specific to your profession all matter. Missing them can leave the entity non-compliant.
How this plays out: a quick example
Illustrative hypothetical — review before publishA group of clinicians forms a standard LLC to run their practice, assuming it protects them like any business entity. Two issues surface: their profession actually required a professional entity, not a standard LLC, and one clinician wrongly believed the entity would shield them personally from a malpractice claim. Neither assumption held. Forming the correct professional entity from the start — and understanding that professional liability insurance, not the entity, is what addresses their own malpractice exposure — would have put the practice on solid, compliant footing.
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Sources
- Legal Information Institute, Cornell Law — Corporation. law.cornell.edu
- Legal Information Institute, Cornell Law — Limited Liability Company. law.cornell.edu
- U.S. Small Business Administration — Choose a Business Structure. sba.gov