Understanding PLLCs in Michigan
What is a PLLC?
A professional limited liability company (PLLC) offers personal asset protection for licensed professionals. Approved by licensing boards, PLLCs follow LLC laws. A PLLC protects owners from financial debts or personal injuries.
Who is Eligible?
Any licensed Michigan professional can structure as a PLLC, getting liability protection and tax advantages. Michigan’s LLC Act lists professionals allowed PLLCs: chiropractors, physicians, surgeons, architects, engineers, surveyors, attorneys. The name must say "professional limited liability company" or abbreviate as "P.L.L.C."
PLLC vs. LLC
The main difference between a PLLC and an LLC is that the PLLC has restrictions on who may be a member and the limitation of liability of the members. With an LLC, anyone can be a member or owner of the business. State PLLC laws provide that only licensed professionals can be members, or that a certain number of members must be licensed professionals.
People form an LLC or a PLLC to separate themselves from the business entity. With both structures, members will not be individually liable for the judgments and debts of the company. However, malpractice liability is one exception with PLLCs.
Compliance and Legal Requirements
Both an LLC and a PLLC must file tax returns and pay taxes on time, manage accounts separately, and have a registered agent to maintain legal status. States may have different standards for compliance requirements.
PLLC Benefits
A Michigan PLLC provides protection from multiple types of liability and various tax advantages. One advantage of a PLLC is that it protects individual owners from claims for most types of personal injuries and financial debts. However, malpractice liability is one exception.
Forming a PLLC
To form a PLLC, a licensed professional must sign all filing documents and include their license number and a certified copy of their license.
Choosing Between PLLC and Corporation
PLLC stands for Professional Limited Liability Company. A PLLC offers limited liability protection to its owners. If you plan a small professional service, a PLLC is better. But for a large firm, a corporation may be preferable.