How to Form a Professional LLC in New York

As a licensed professional in New York, you can structure your business as a New York professional service limited liability company. Other states refer to this entity structure as a professional limited liability company. (While New York uses a slightly different name, the Empire State still uses the abbreviation PLLC for this business structure.)

Structuring your business as a PLLC will give you protection from several important types of liability. It could also provide certain tax advantages compared to other ways of structuring your business.

What Is a New York PLLC?

A New York PLLC is a limited liability company (LLC) formed specifically by people who provide professional services licensed by the state of New York. In general, an LLC is a business registered with the state that consists of one or more people (or entities)—called "LLC members"—who own the business. Like other LLCs, PLLCs protect their individual members from claims for many (but not all) types of financial debts or personal injuries.

New York PLLCs are governed by Article 12 of New York's Limited Liability Company Law: N.Y. Ltd. Liab. Co. Law §§ 1201 and following (2024).

What is a Professional Service?

Under New York's LLC laws, a "professional service" is defined only generally, as any type of service to the public that can be lawfully provided by a member of a profession within the purview of that profession. (N.Y. Ltd. Liab. Co. Law § 1201 (2024).)

Other states' laws often provide itemized lists of professional services. These lists typically include, at a minimum, physicians, surgeons, dentists, lawyers, certified public accountants, engineers, architects, and veterinarians, but usually include other professions, as well.

While New York's LLC law doesn't provide an itemized list of professional services, it does have provisions that indicate that all of the following—when properly licensed by the state—constitute professional services:

• the practice of medicine
• dental services
• the practice of podiatry
• the practice of optometry
• the practice of ophthalmic dispensing
• the practice of veterinary medicine
• pharmaceutical services
• the practice of nursing
• practice of psychology
• physical therapy services
• chiropractic services
• professional engineering, land surveying, architectural, landscape architecture, or geological services
• public accountancy services
• clinical social work services
• creative arts therapy services
• marriage and family therapy services
• mental health counseling services
• psychoanalysis services
• applied behavioral analysis services, and.
• the practice of law.

(N.Y. Ltd. Liab. Co. Law §§ 1203 and following (2024).)

You can find a more comprehensive list of professions and their licensing requirements in Title 8 of New York's education laws. (N.Y. Educ. Law §§ 6500 and following (2024).)

If you're unsure whether your New York licensed or authorized profession is considered a professional service for the purpose of forming a PLLC, check with a local business attorney.

What Are the Requirements for a PLLC in New York?

PLLCs must meet several requirements under New York law.

PLLC Naming Restrictions

Your PLLC's business name must follow New York's special naming laws for PLLCs. Specifically, New York requires that your PLLC's name end with:

• "Professional Limited Liability Company"
• "Limited Liability Company"
• "P.L.L.C."
• "PLLC"
• "L.L.C.," or
• "LLC."

Generally, any name that a partnership or professional service corporation can use when practicing a profession, a PLLC can also use when practicing that same profession. (N.Y. Ltd. Liab. Co. Law § 1212 (2024).)

Membership and Service Restrictions

New York's LLC laws set certain restrictions on who can own and participate in a PLLC and what services a PLLC can provide.

All PLLC members must be licensed. Only persons who are licensed through the state to perform the services the PLLC provides can be PLLC members. (N.Y. Ltd. Liab. Co. Law § 1207 (2024).)

Moreover, if a PLLC member loses their license, they must give up their employment and financial interest in the PLLC. (N.Y. Ltd. Liab. Co. Law § 1209 (2024).)

PLLC must purchase the membership interests of former members. In New York, a PLLC is required to purchase the membership interest of any PLLC member who has died or has become disqualified to practice the professional services provided under the PLLC. However, the PLLC isn't required to purchase the membership interest if the member sells or transfers their interest to another authorized professional (N.Y. Ltd. Liab. Co. Law § 1210 (2024).)

PLLC members must sell their membership interests to other authorized professionals or to the PLLC. A departing PLLC member can sell or transfer their interest in the PLLC only to another professional who's eligible to be a member of the PLLC. At least a majority of the PLLC members, not including the departing member, must approve the sale by vote or written consent. (N.Y. Ltd. Liab. Co. Law § 1211 (2024).)

Only licensed individuals can provide professional services through the PLLC. A New York PLLC can only provide professional services through licensed individuals. (N.Y. Ltd. Liab. Co. Law § 1204 (2024).)

A PLLC can provide both professional and non-professional services. There are three main rules for the kinds of services a PLLC can provide in New York. A New York PLLC can provide:

• only professional services set forth in its articles of organization
• only professional services that its members are authorized to provide, and
• any services or activities that a regular LLC can provide or perform.

(N.Y. Ltd. Liab. Co. Law § 1206 (2024).)

Finally, remember that New York PLLCs and their members must follow the regulation of the relevant state professional licensing authorities. Your profession might have additional requirements.

How Do I Form a New York PLLC?

You must follow specific steps to form a PLLC in New York.

1. Choose a Name for Your New York PLLC

As discussed earlier, your PLLC needs to include the phrase "professional limited liability company," "limited liability company," or an abbreviation of those phrases. In addition, your PLLC must follow the same naming requirements as a New York LLC.

Specifically, the name of your PLLC must be distinguishable from the names of other business entities already on file with the New York Department of State (DOS). (N.Y. Ltd. Liab. Co. Law § 204 (2024).)

You can see which names have already been registered with the state by searching through the DOS's business entity database.

Before registering your PLLC, you can reserve a business name for 60 days with the DOS. To reserve a name, mail an Application for Reservation of Name to the DOS. (N.Y. Ltd. Liab. Co. Law § 205 (2024).)

As of 2024, the fee to reserve a name is $20.

2. File Articles of Organization With the DOS

To form your New York PLLC, you must file Articles of Organization with the DOS. Your articles must include the following information:

• the name of your PLLC
• the county where the PLLC's principal office will be located
• a designation of the secretary of state as the PLLC's registered agent
• the profession or professions to be practiced by the PLLC
• the names and addresses of the PLLC's original members and managers, and
• the names and addresses of the owners and governing individuals of any entity to be a member of the PLLC.

(N.Y. Ltd. Liab. Co. Law §§ 203 and 1203 (2024).)

You must also attach certificates issued by an authorized licensing authority certifying that each of the proposed members and managers of the PLLC (including owners and governing individuals of any entity that's a member or manager of the PLLC) is authorized by law to practice the profession the LLC is being formed. If a business is a member or manager of the PLLC, then you must also attach a certificate issued by the authorized authority showing that the business is validly existing and authorized to do business. (N.Y. Ltd. Liab. Co. Law § 1203 (2024).)

As of 2024, the filing fee for Articles of Organization (Professional Service) for LLCs is $200.

3. File a Copy of Articles of Organization With the Licensing Authority

Within 30 days of filing your articles of organization with the DOS, you must send a certified copy of the articles to the relevant licensing authority over your PLLC's profession. (N.Y. Ltd. Liab. Co. Law § 1203 (2024).)

4. Publish Notice of Articles of Organization

Within 120 days of filing your PLLC's articles of organization, you must publish a copy of the articles or a notice containing the same information in the articles. You must file the notice once a week for six consecutive weeks. You must publish the notice in two newspapers in the county where your PLLC's principal office is located. The county clerk will designate the available newspapers. One newspaper must be printed daily and one newspaper must be printed weekly.

You must provide a Certificate of Publication to the DOS proving that you fulfilled this publication requirement. As of 2024, the fee to file this certificate is $50. Newspapers also charge a fee to publish notices.

(N.Y. Ltd. Liab. Co. Law § 1203 (2024).)

5. Draft and Adopt a Written Operating Agreement

One of the first tasks after officially registering your PLLC with the state should be to create an operating agreement. New York requires PLLCs (and LLCs) to adopt a written operating agreement. You must adopt this agreement within 90 days of filing your articles of organization. However, the agreement doesn't need to be filed with the state. (N.Y. Ltd. Liab. Co. Law § 417 (2024).)

A PLLC's operating agreement should contain information about:

• the business of the PLLC
• the conduct of its affairs, and
• the rights, powers, preferences, limitations, or responsibilities of its members, managers, employees, and agents.

(N.Y. Ltd. Liab. Co. Law § 417 (2024).)

Because New York has specific rules about who can own an interest in PLLCs, your operating agreement should include buyout (also called "buy-sell") provisions. Alternatively, you can draft a separate buyout agreement. A buyout agreement covers what happens to a member's ownership share when that member is no longer part of the company, including who can buy their share, how much the share is worth, and what events can trigger a buyout.

Depending on your level of knowledge and expertise, you should consider having a lawyer assist you in preparing an operating agreement and buyout agreement.

6. Comply With Licensing, Tax, and Regulatory Requirements

In addition to filing articles of organization with the DOS, your PLLC might have other filing and financial obligations. PLLC members also have their own legal responsibilities, such as maintaining and renewing their professional licenses.

Your PLLC might be responsible for paying and filing the following taxes:

• business taxes
• annual filing fees
• employer taxes (if it has employees), and
• sales and use tax (if it sells taxable goods or services).

You can learn more about these taxes in our articles about New York LLC biennial report and tax filing requirements and New York's state business income tax.

Depending on your location and service industry, you could have additional regulatory requirements to follow.

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 (technically known as "vicarious liability"), 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're 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.

PLLCs give owners limited liability, meaning you'll still be liable in some instances, such as 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're 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.

PLLC vs. Professional Corporation

Every state has different rules for what kind of business entity professionals can form. Some states require professionals to form a special entity, while other states give professionals the option. The type of professional entity available also depends on your state. Some states recognize PLLCs and professional corporations (PCs). Other states recognize only one or neither.

There are some important differences between PLLCs and PCs:

• 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 only the individual members have income tax obligations (and not the PLLC), while a PC, like other corporations, usually has its own, separate income tax obligations in addition to the shareholders' tax obligations.

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. PCs that don't elect special status can be subject to double taxation—in other words, both the PC itself and its shareholders have to pay taxes on business income.

New York allows professionals to form both PLLCs and PCs. New York calls PCs "professional service corporations." 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 About Forming a New York PLLC

The DOS has helpful information about forming and running a business and business licenses. You can also check out the LLC section of our website for guidance and tips on how to form, manage, operate, and dissolve your PLLC.

Before forming a PLLC, make sure you understand the advantages and disadvantages as well as the requirements and restrictions of the business entity structure. Consider speaking with a local business attorney about your options.