Licensed professionals in Texas—doctors, lawyers, accountants, architects, and others—typically can’t form standard LLCs. Instead, they must form a Professional Limited Liability Company (PLLC). This structure provides liability protection while meeting state licensing requirements. Here’s what Texas licensed professionals need to know about forming a PLLC.
What Is a PLLC?
A Professional Limited Liability Company (PLLC) is a special type of LLC designed for licensed professionals. It’s essentially an LLC with additional requirements:
- All members must be licensed to perform the professional service
- Must be registered with the relevant licensing board
- Subject to professional conduct rules
- Name must include “PLLC” or “Professional Limited Liability Company”
Who Must Form a PLLC?
Texas requires PLLCs for professionals whose services require a state license. Common professions include:
Healthcare Professionals
- Physicians (MD, DO)
- Dentists
- Chiropractors
- Optometrists
- Podiatrists
- Veterinarians
- Licensed clinical social workers
- Licensed professional counselors
- Physical therapists
- Nurses (certain services)
Legal and Financial
- Attorneys
- Certified Public Accountants (CPAs)
- Licensed real estate appraisers
Engineering and Architecture
- Licensed engineers
- Licensed architects
- Licensed land surveyors
Other Licensed Professionals
- Licensed psychologists
- Licensed marriage and family therapists
- Court reporters
- Certain healthcare specialists
Check your licensing board: If your profession requires a license, check with the licensing board about entity requirements.
PLLC vs. Standard LLC
| Feature | Standard LLC | PLLC |
|---|---|---|
| Who can form | Anyone | Licensed professionals only |
| Member requirements | None | All must be licensed |
| Name designation | LLC | PLLC |
| Licensing board registration | No | Usually yes |
| Personal liability for own conduct | Protected | Not protected |
| Liability for others’ conduct | Protected | Protected |
The Key Liability Difference
A PLLC does not protect you from liability for your own professional negligence or misconduct. If you commit malpractice, you’re personally liable.
However, a PLLC does protect you from:
- Another member’s professional negligence
- General business debts
- Contract disputes
- Premises liability
PLLC Liability Protection
What’s Protected
- Your personal assets from business debts
- Your personal assets from other members’ malpractice
- Your personal assets from employee negligence (in most cases)
- Business contract disputes
What’s NOT Protected
- Your own professional negligence (malpractice)
- Your own misconduct
- Personal guarantees you make
- Direct fraud or illegal acts
Example: You and another doctor form a PLLC. Your partner commits malpractice. The patient can sue your partner personally and the PLLC’s assets, but cannot reach your personal assets. However, if YOU commit malpractice, your personal assets are at risk.
Why This Matters
Professional licensing boards and public policy require professionals to remain personally accountable for their own conduct. The PLLC structure respects this while still providing some liability protection.
Forming a Texas PLLC
Step 1: Verify Professional Eligibility
Confirm:
- Your profession qualifies for PLLC structure
- All proposed members hold valid Texas licenses
- Your licensing board allows PLLC formation
Step 2: Choose Your PLLC Name
Name requirements:
- Must include “Professional Limited Liability Company” or “PLLC”
- Must be distinguishable from other Texas businesses
- May need to include profession indicator (varies by board)
- Cannot imply services beyond your license
Examples:
- “Smith & Jones Legal PLLC” ✓
- “Austin Family Medicine PLLC” ✓
- “Texas CPA Group PLLC” ✓
Step 3: Appoint a Registered Agent
Same requirements as standard LLCs:
- Physical Texas address
- Available during business hours
- Can be yourself, another person, or a professional service
Step 4: File Certificate of Formation
File Form 205 with Texas Secretary of State:
Special requirements for PLLCs:
- Indicate professional service to be provided
- List all members and their licenses
- Include statement that members are licensed
- Reference applicable professional regulations
Filing fee: $300 (same as standard LLC)
Step 5: Register with Licensing Board
Most professional licensing boards require additional registration:
| Profession | Licensing Board |
|---|---|
| Attorneys | State Bar of Texas |
| CPAs | Texas State Board of Public Accountancy |
| Physicians | Texas Medical Board |
| Dentists | Texas State Board of Dental Examiners |
| Engineers | Texas Board of Professional Engineers |
| Architects | Texas Board of Architectural Examiners |
| Real Estate | Texas Real Estate Commission |
Submit:
- Copy of Certificate of Formation
- Proof of members’ licenses
- Board-specific registration forms
- Registration fee (varies)
Step 6: Create Operating Agreement
Your PLLC operating agreement should address:
- Professional services provided
- Member licensing requirements
- What happens if a member loses their license
- Professional liability insurance requirements
- Compliance with professional conduct rules
Step 7: Obtain Professional Liability Insurance
Most PLLCs carry professional liability (malpractice) insurance:
- Often required by licensing boards
- Protects against claims of negligence
- Covers defense costs
PLLC Ongoing Requirements
Annual Compliance
| Requirement | Due Date |
|---|---|
| Texas Franchise Tax Report | May 15 |
| Licensing Board Registration | Varies |
| License Renewals | Varies |
| Malpractice Insurance Renewal | Varies |
Member License Maintenance
All members must maintain active, valid licenses. If a member loses their license:
- They typically must cease practicing through the PLLC
- May need to withdraw from membership
- PLLC may need restructuring
Professional Conduct
PLLC members remain subject to:
- Professional conduct rules
- Licensing board discipline
- Continuing education requirements
PLLC Taxation
PLLCs are taxed like standard LLCs:
Default Taxation
- Single-member PLLC: Disregarded entity (Schedule C)
- Multi-member PLLC: Partnership (Form 1065)
Optional Elections
- S-Corp: May reduce self-employment tax
- C-Corp: Rarely beneficial
Texas Franchise Tax
- Same rules as standard LLCs
- No tax due under $2.47M revenue
- Annual report required regardless
Common Questions
Can a non-licensed person own part of a PLLC?
Generally, no. Texas law requires all members of a PLLC to be licensed to perform the professional service. Some limited exceptions may exist for certain professions—check with your licensing board.
Can I form a PLLC with professionals from different fields?
Generally, no. A PLLC is typically limited to providing one type of professional service. A doctor and a lawyer usually can’t form a PLLC together because they provide different services.
What if my partner loses their license?
Your operating agreement should address this. Typically:
- The unlicensed member cannot continue practicing
- They may need to sell their membership interest
- The PLLC may need to dissolve if no licensed members remain
Do I need malpractice insurance if I have a PLLC?
A PLLC doesn’t protect you from your own malpractice, so yes—malpractice insurance is essential. Many licensing boards require it.
Can my PLLC employ non-licensed staff?
Yes. Your PLLC can hire non-licensed employees (receptionists, administrative staff, etc.). However, professional services must be performed by licensed members or licensed employees.
Can a PLLC become a regular LLC later?
If members stop providing licensed professional services, the PLLC may convert to a standard LLC. This requires amending the Certificate of Formation and potentially notifying the licensing board.
PLLC vs. Professional Corporation (PC)
Texas also allows Professional Corporations (PCs). Here’s how they compare:
| Feature | PLLC | PC |
|---|---|---|
| Formation document | Certificate of Formation | Articles of Incorporation |
| Management structure | Flexible | Board of Directors |
| Taxation | Pass-through default | C-Corp default |
| Annual formalities | Lower | Higher |
| Paperwork | Less | More |
For most professionals: A PLLC offers the same liability protection with less formality and more flexible taxation than a PC.
PLLC Formation Costs
| Item | Cost |
|---|---|
| Texas Certificate of Formation | $300 |
| Registered Agent | $0-$300/year |
| Licensing Board Registration | $0-$200 |
| Operating Agreement | $0-$500 |
| Malpractice Insurance | Varies significantly |
| Total Formation | $300-$1,300 |
Common Mistakes
1. Not Registering with Licensing Board
Filing with the Secretary of State isn’t enough. Register with your professional board.
2. Including Unlicensed Members
All members must hold valid licenses for the professional service provided.
3. Assuming Full Liability Protection
Remember: PLLCs don’t protect you from your own professional negligence.
4. Skipping Malpractice Insurance
A PLLC is not a substitute for professional liability insurance.
5. Ignoring Operating Agreement
Address license loss, professional conduct, and insurance in your operating agreement.
6. Using Wrong Name Designation
Use “PLLC” not “LLC” in your business name.
Start Your Texas PLLC Today
If you’re a licensed professional in Texas, a PLLC provides liability protection while meeting your licensing requirements. Understanding the structure’s benefits and limitations helps you make informed decisions about your practice.
IncCraft helps Texas professionals form PLLCs correctly—including proper naming, Certificate of Formation filing, and guidance on licensing board registration.
Form your Texas PLLC with IncCraft today.