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Entity Formation Guide
LLC vs. PC vs. LLP: The right entity for your profession and state
Before you file anything, know which entity type your state and profession allow. For licensed professionals, the generic “just form an LLC” advice can be wrong — or illegal.
★ California practitioners: California does NOT recognize PLLCs. Most licensed professionals must use a Professional Corporation (PC) or Registered LLP — not an LLC. See the California section below before filing anything.
Why your entity choice matters more than most guides admit
Generic startup guides tell everyone to form an LLC. That advice works for lifestyle businesses and tech startups. For credentialed professionals — physicians, attorneys, CPAs, architects, licensed engineers, mental health practitioners — it can be wrong, or even illegal.
Most states restrict or prohibit licensed professionals from operating through a standard LLC or PLLC. The entity types available to you depend on two things: your state of formation and your specific professional license.
The four entity types for professional consultants
LLC — Limited Liability Company
Available to most non-licensed businesses and, in most states, to licensed professionals through a PLLC variant. Offers pass-through taxation, flexible management, and strong liability protection.
⚠ Caution: Generally not available to licensed professionals in California, and not available for medical practices in most states.
✓ Best for: Non-licensed consultants, general management consultants, researchers in most states.
PLLC — Professional Limited Liability Company
Available in most states (but not California) to specific licensed professions. Same benefits as an LLC but specifically authorized for licensed professionals.
⚠ Caution: California does not recognize PLLCs at all. Check your state’s list of authorized professions.
✓ Best for: Licensed professionals in PLLC-authorizing states outside California.
PC — Professional Corporation
Required for most licensed professionals in California and many other states. Profits taxed at entity level (C-corp) unless you elect S-corp status (IRS Form 2553). More administrative overhead than an LLC.
⚠ Caution: Required for: physicians, attorneys, accountants, architects, engineers, therapists in California.
✓ Best for: Licensed professionals in California and states that do not authorize PLLCs.
Registered LLP — Limited Liability Partnership
Available only for multi-partner firms in most states. In California, available only to attorneys, CPAs, and architects — and only for firms with two or more licensed partners.
⚠ Caution: Not available to solo practitioners. California restricts this to three professions only.
✓ Best for: Multi-partner law firms, CPA firms, and architecture firms.
★ California: What licensed professionals must know
California is the most restrictive state for professional entity formation. Rules are set by the California Corporations Code and enforced by individual licensing boards.
| Profession | Allowed Entity Types in CA | Notes |
|---|---|---|
| Attorneys | PC, Registered LLP | LLP requires 2+ licensed partners |
| CPAs / Accountants | PC, Registered LLP | LLP requires 2+ licensed partners |
| Physicians / Medical | PC only | Medical Corporation Act governs |
| Architects | PC, Registered LLP | LLP requires 2+ licensed partners |
| Licensed Engineers | PC only | Board of Engineers jurisdiction |
| Social Workers / MFTs / LCSWs | PC only | BBS jurisdiction |
| Psychologists | PC only | Board of Psychology jurisdiction |
| Contractors (CSLB-licensed) | LLC permitted with conditions | Special CSLB requirements apply |
| Non-licensed consultants | LLC permitted | Standard LLC rules apply |
Always verify with your specific licensing board before filing. California licensing boards update their rules. The consequences of filing the wrong entity type can include license suspension.
50-State Quick Reference
The table below shows the general entity framework by state. Confirm requirements with your specific licensing board — rules vary by profession even within the same state.
| State | PLLC Available? | Notes |
|---|---|---|
| Alabama | Yes | PLLC available, confirm by profession |
| Alaska | Yes | PLLC available |
| Arizona | Yes | Confirm by profession |
| Arkansas | Yes | PLLC available |
| California | No ★ | CA does not recognize PLLC — PC required for most licensed professionals |
| Colorado | Yes | PLLC available |
| Connecticut | Yes | PLLC available |
| Delaware | Yes | Popular formation state; still need home state registration |
| Florida | Yes | Confirm by profession |
| Georgia | Yes | PLLC available |
| Hawaii | Yes | PLLC available |
| Idaho | Yes | PLLC available |
| Illinois | Yes | PLLC or PC; confirm by profession |
| Indiana | Yes | PLLC available |
| Iowa | Yes | PLLC available |
| Kansas | Yes | PLLC available |
| Kentucky | Yes | PLLC available |
| Louisiana | Yes | PLLC available |
| Maine | Yes | PLLC available |
| Maryland | Yes | PLLC available |
| Massachusetts | Yes | LLP also common for attorneys |
| Michigan | Yes | PLLC available |
| Minnesota | Yes | PLLC available |
| Mississippi | Yes | PLLC available |
| Missouri | Yes | PLLC available |
| Montana | Yes | PLLC available |
| Nebraska | Yes | PLLC available |
| Nevada | Yes | PLLC available |
| New Hampshire | Yes | PLLC available |
| New Jersey | Yes | Confirm by profession |
| New Mexico | Yes | PLLC available |
| New York | Yes — limited | Available for specific professions only; verify list |
| North Carolina | Yes | PLLC available |
| North Dakota | Yes | PLLC available |
| Ohio | Yes | PLLC available |
| Oklahoma | Yes | PLLC available |
| Oregon | Yes | PLLC available |
| Pennsylvania | Yes | Confirm by profession |
| Rhode Island | Yes | PLLC available |
| South Carolina | Yes | PLLC available |
| South Dakota | Yes | PLLC available |
| Tennessee | Yes | PLLC available |
| Texas | Yes | PLLC common for attorneys and physicians |
| Utah | Yes | PLLC available |
| Vermont | Yes | PLLC available |
| Virginia | Yes | PLLC available |
| Washington | Yes | PLLC available |
| West Virginia | Yes | PLLC available |
| Wisconsin | Yes | PLLC available |
| Wyoming | Yes | PLLC available |
| District of Columbia | Yes | PLLC available |
This table reflects general guidance as of 2025. State laws change and rules vary by profession. Always verify with your state’s Secretary of State and your professional licensing board before filing. This is not legal advice.
After you choose your entity: next steps
Register with your state’s Secretary of State (or equivalent)
Obtain your EIN from IRS.gov immediately after formation
Draft your Operating Agreement (LLC) or Bylaws (PC/Corp)
Register a registered agent with a physical in-state address
Open business bank accounts using your EIN — not your SSN
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