What is a PLLC in Arizona?
Asked by: Modesto Connelly | Last update: May 24, 2026Score: 4.7/5 (2 votes)
In Arizona, a Professional Limited Liability Company (PLLC) is a business structure for licensed professionals (like doctors, lawyers, architects, and accountants) that offers liability protection similar to a standard LLC, but with strict rules requiring all members to be licensed for the professional service provided, limiting the business's scope, and mandating specific name designations like "P.L.L.C.".
What is the difference between a PLLC and an LLC in Arizona?
LLCs and PLLCs both allow business owners to keep their personal assets separate from their company's assets. However, the main difference between LLCs and PLLCs is that PLLCs are limited to specific professions and are somewhat limited in terms of protection from individual member liability.
Who can own a PLLC in Arizona?
But before you elect to file as a PLLC, you'll have to ensure:
- All members are licensed professionals.
- All members' licenses are current.
- At least one member is legally licensed in Arizona.
How is a PLLC different than an LLC?
What's the main difference between an LLC and a PLLC? The biggest difference is who can own the business. Anyone can own an LLC—individuals, other companies, or even groups of people. But a PLLC can only be owned by people who have professional licenses, like doctors, lawyers, or accountants.
What is the purpose of a PLLC?
The professional corporation or PLLC's sole purpose must be to provide the services of the licensed professionals, such as providing legal or medical services. In addition to the standard state-naming requirements, the name must clearly indicate that it is a professional corporation or PLLC.
How to Form a PLLC in Arizona
What are the disadvantages of a PLLC?
Disadvantages of a PLLC include state-by-state recognition issues, strict licensing/ownership rules, potential self-employment tax complexities, difficulty with member turnover (requiring reformation), and more paperwork/restrictions than standard LLCs, all while still requiring owners to be personally liable for their own malpractice.
How do you pay yourself from a PLLC?
Here are your three main options:
- Owner's draw: This is the most common method for single-member LLCs. You simply draw money from the business profits as needed.
- Guaranteed payments: This method is often used in multi-member LLCs. ...
- Salary: If your LLC is taxed as an S Corporation, you can pay yourself a salary.
What professions use a PLLC?
Doctors and medical professionals, lawyers and legal professionals, accountants and financial professionals, and several other types of professionals can use the PLLC structure when opening their own practice or firm.
Does the IRS recognize PLLC?
The IRS doesn't recognize the LLC or PLLC as an entity for income tax filing purposes, so anyone who owns one of these must choose a filing status for their company to use when filing federal income taxes.
Does a PLLC protect your personal assets?
PLLCs offer limited liability protection and additional coverage for malpractice claims against licensed professionals, making them safer for shielding personal assets. However, PLLC members are not protected against their own negligence or malpractice liabilities.
How much does it cost to start a PLLC?
FAQs about starting a PLLC
Filing fees can range from $50 to $200, depending on the state. If you choose to use an LLC formation service or work with an attorney, you'll pay more for their professional guidance. LegalZoom's LLC formation services start at $0 plus state filing fees.
What are common LLC mistakes to avoid?
Common LLC mistakes include mixing personal and business finances, neglecting the Operating Agreement, failing ongoing compliance (annual reports, taxes), choosing the wrong state for formation, and not having a proper Registered Agent, all of which risk "piercing the corporate veil" and losing personal liability protection. To avoid these, establish separate bank accounts, create and follow the Operating Agreement, maintain strict records, and understand state-specific rules for registration and annual upkeep.
What are the 4 types of businesses?
The four main types of business structures are Sole Proprietorship, Partnership, Corporation, and Limited Liability Company (LLC), each offering different levels of liability, taxation, and administrative complexity, with sole proprietorships being simplest and corporations providing the most separation for owners.
What is another name for a PLLC?
Another name for a professional LLC is a PLLC or professional limited liability company. It's important not to confuse a professional LLC or PLLC with a limited liability partnership (LLP) or a professional services corporation (PC).
Are PLLCs taxed differently than LLCs?
From a taxation standpoint, the IRS treats both LLC and PLLC in the same way. Both have pass-through taxation and can elect to be taxed as an S-Corp. Also, an LLC or a PLLC with only a single member is treated as a disregarded entity, which means the business income is treated as an individual's personal income.
Does a PLLC need an EIN?
Employer Identification Number (EIN)
The entity could be your professional limited liability company (PLLC), professional corporation (PC), or another entity type. This number will be associated with the business entity for its entire lifespan. Each entity must have its own EIN.
Why choose a PLLC over an LLC?
The main benefit of a PLLC (Professional LLC) over an LLC is specific liability protection for licensed professionals, shielding them from a partner's malpractice but not their own, while still offering LLC perks like pass-through taxation; however, PLLCs are restricted to licensed professionals (doctors, lawyers, etc.) and require state board approval, whereas an LLC is open to anyone and protects against general business debts, making the choice dependent on your profession and liability needs.
What are the tax advantages of a PLLC?
Taxation: One key advantage for LLCs and PLLCs compared to other structures is taxation. Single-Member LLC's and PLLC's are commonly considered disregarded entities. A disregarded entity is a single-owner business entity that the IRS disregards for federal income tax purposes.
Do PLLC file tax returns?
By default: A single-member PLLC is treated as a disregarded entity, meaning income is reported on the individual owner's personal tax return using Schedule C (Form 1040). A multi-member PLLC is classified as a partnership, and must file Form 1065 with each member receiving a Schedule K-1.
What are PLLC requirements?
What is needed to set up a PLLC. Depending on the state, a PLLC will have to prove that the Members, and Managers, if any, are duly licensed to practice the profession. In some states, prior permission must be obtained from a licensing body prior to incorporation.
Who owns PLLC?
Only people who are licensed to provide a professional service may own a PLLC. For example, an unlicensed person cannot own a PLLC that operates as a medical practice, even if they hire licensed physicians as employees.
What is a PLLC used for?
What Is a Professional Limited Liability Company? A professional limited liability company (PLLC) is a business entity. This entity is designed for professionals like doctors, lawyers, accountants, architects, and therapists. These professionals offer services like medical services, legal services, and more.
What is the most tax efficient way to pay yourself in an LLC?
The most tax-efficient way for many active LLC owners is to elect S-corporation status, paying yourself a "reasonable" W-2 salary subject to payroll taxes, with remaining profits taken as distributions (dividends) not subject to self-employment tax, saving ~15% on the distribution portion. For single-member LLCs or those with lower profits, owner's draws (flexible withdrawals) are simpler but all profits are subject to self-employment tax, while a salary-only approach (default LLC/sole prop) also taxes all net income at full self-employment rates. Always consult a tax professional, as the best method depends on your specific income and business structure.
Can I transfer money from my LLC to my personal account?
Yes, you can transfer money from your LLC to a personal account, typically as an owner's draw (for single-member LLCs) or distribution, but it's crucial to document it properly (e.g., "Owner's Draw" in your books) to avoid jeopardizing your liability protection and facing tax issues, using methods like online transfers or writing a business check. For LLCs taxed as S-corps or C-corps, you may need to pay yourself a salary, but the principle of clear record-keeping remains essential.
How is a single member PLLC taxed?
A single-member PLLC is taxed as a sole proprietorship by default but can elect S corp status for tax savings. Unlike sole proprietorships, PLLCs limit personal liability and must meet licensing requirements. Formation requirements vary by state and typically include licensing board approval.