If you’re a doctor, lawyer, accountant, architect or another licensed professional, you typically can’t form a standard LLC in Texas. You form a Texas PLLC (professional limited liability company) instead. It gives you most of an LLC’s protection, with one big exception: it won’t shield you from your own malpractice.
What is a Texas PLLC?
It’s an LLC with extra rules for licensed professionals. Every member has to be licensed to perform the professional service. The company usually registers with the relevant licensing board, stays subject to professional conduct rules, and has “PLLC” or “Professional Limited Liability Company” in its name.
Who has to form a PLLC?
Texas requires a PLLC for professionals whose services require a state license. The common ones:
| Field | Professions |
|---|---|
| Healthcare | Physicians (MD, DO), dentists, chiropractors, optometrists, podiatrists, veterinarians, licensed clinical social workers, licensed professional counselors, physical therapists, nurses (certain services) |
| Legal and financial | Attorneys, CPAs, licensed real estate appraisers |
| Engineering and architecture | Licensed engineers, architects and land surveyors |
| Other | Licensed psychologists, licensed marriage and family therapists, court reporters, certain healthcare specialists |
If your work requires a license and you’re not sure, ask your licensing board what entity it expects before you file anything.
How is a PLLC different from a 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 your own conduct | Protected | Not protected |
| Liability for others’ conduct | Protected | Protected |
What does a PLLC protect you from, and what doesn’t it?
A PLLC protects your personal assets from the business’s debts, contract disputes, premises liability, another member’s professional negligence, and in most cases an employee’s negligence.
It doesn’t protect you from your own professional negligence or misconduct, from personal guarantees you sign, or from fraud or illegal acts.
Here’s how that plays out. You and another doctor form a PLLC, and your partner commits malpractice. The patient can sue your partner personally and go after the PLLC’s assets, but can’t reach your personal assets. If you’re the one who commits malpractice, your personal assets are on the line.
That’s deliberate: public policy and licensing boards want professionals personally accountable for their own work.
How do you form a PLLC in Texas?
- Confirm eligibility. Check that your profession qualifies, that every proposed member holds a valid Texas license, and that your licensing board allows PLLCs.
- Choose a name. It must include “Professional Limited Liability Company” or “PLLC” and be distinguishable from other Texas businesses. Some boards want a profession indicator, and the name can’t imply services beyond your license. “Smith & Jones Legal PLLC,” “Austin Family Medicine PLLC” and “Texas CPA Group PLLC” all work.
- Appoint a registered agent. The rules match a standard LLC: a physical Texas address and availability during business hours. It can be you, another person, or a professional service.
- File the Certificate of Formation (Form 205) with the Texas Secretary of State. For a PLLC, you indicate the professional service, list the members and their licenses, include a statement that the members are licensed, and reference the applicable professional regulations. The filing fee is $300, the same as a standard LLC.
- Register with your licensing board, if it requires that (most do).
- Write an operating agreement.
- Get professional liability (malpractice) insurance.
Which licensing board do you register with?
| 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 and Land Surveyors |
| Architects | Texas Board of Architectural Examiners |
| Real estate | Texas Real Estate Commission |
Boards typically want a copy of your Certificate of Formation, proof of members’ licenses, their own registration forms, and a fee that varies by board.
What should the operating agreement cover?
Beyond the usual LLC terms, a PLLC agreement should spell out the professional services provided, the requirement that members stay licensed, what happens if a member loses a license, malpractice insurance requirements, and compliance with professional conduct rules.
The license-loss clause is the one we’d never skip. Without it, a partner losing their license can leave you without a clear way to buy them out.
What do you have to keep up after formation?
| Requirement | Due date |
|---|---|
| Texas franchise tax filing | May 15 |
| Licensing board registration | Varies |
| License renewals | Varies |
| Malpractice insurance renewal | Varies |
Every member has to keep an active, valid license. One who loses it typically has to stop practicing through the PLLC and may need to withdraw or sell their interest. If no licensed members remain, the PLLC may need to dissolve. Members also stay subject to their profession’s conduct rules, board discipline and continuing education requirements.
How is a PLLC taxed?
Exactly like a standard LLC. A single-member PLLC reports on Schedule C as a disregarded entity, and a multi-member PLLC files Form 1065 as a partnership. An S-Corp election may reduce self-employment tax. A C-Corp election is rarely worth it. For the Texas franchise tax, there’s no tax due under $2.47M in revenue, but the annual filing is required regardless.
Should you form a PLLC or a professional corporation?
Texas also allows professional corporations (PCs).
| Feature | PLLC | PC |
|---|---|---|
| Formation document | Certificate of Formation | Certificate of Formation |
| Management structure | Flexible | Board of directors |
| Taxation | Pass-through default | C-Corp default |
| Annual formalities | Lower | Higher |
| Paperwork | Less | More |
For most professionals, we’d choose the PLLC. You get the same liability protection with less formality and more flexible taxation.
What does a Texas PLLC cost?
| 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 questions
Can a non-licensed person own part of a PLLC?
Generally, no. Texas law requires all members to be licensed to perform the professional service. Some professions may have limited exceptions, so check with your licensing board.
Can professionals from different fields form one PLLC?
Generally, no. A PLLC is typically limited to one type of professional service, so a doctor and a lawyer usually can’t share one.
Do I need malpractice insurance if I have a PLLC?
Yes. The PLLC doesn’t cover your own malpractice, and many licensing boards require insurance anyway.
Can my PLLC hire non-licensed staff?
Yes. Receptionists, administrative staff and other non-licensed employees are fine. Professional services must be performed by licensed members or licensed employees.
Can a PLLC become a regular LLC later?
If the members stop providing licensed professional services, the PLLC may convert to a standard LLC. That means amending the Certificate of Formation and possibly notifying the licensing board.
Where do professionals go wrong?
Most often by filing with the Secretary of State and stopping there. Board registration is a separate step. After that, it’s using “LLC” instead of “PLLC” in the name, or bringing in a member who isn’t licensed.
Form your Texas PLLC
IncCraft helps Texas professionals form PLLCs correctly, with the right name, a properly filed Certificate of Formation, and guidance on licensing board registration.
Form your Texas PLLC with IncCraft today.