LLC or PLLC: Which is right for licensed professionals?

February 5, 2026

In 2025, the entrepreneurial trend continued as more than 5.9 million new businesses were formed in the United States, an 8 percent increase over 2024. When launching a new business, there are countless things to plan for, consider and structure to increase the likelihood of long-term success. One of the earliest and most important decisions you can make is selecting the proper entity formation for your business.

One of the more common questions I receive from professionals is whether they must form a Professional Limited Liability Company (PLLC) or whether a simple Limited Liability Company (LLC) is sufficient. It is an important question to consider, and one that can have long-term ramifications for your business.

For entrepreneurs, the limited liability company (LLC) can feel like the obvious choice. It is flexible, familiar, and widely used across industries. As a result, many business owners assume that forming an LLC is the way to go.

In New York, that assumption can lead to serious legal and operational problems for licensed professionals. For certain businesses, forming an LLC instead of a PLLC is not just a technical error, it can be a compliance issue that puts the business at risk.

Let us examine key elements of each type of business formation.

What Is an LLC?

An LLC is a business entity that offers liability protection to its owners (called members) while allowing for flexible management and pass-through taxation. In most industries such as retail, e-commerce, manufacturing, real estate, or consulting, an LLC is an excellent option.

In the above examples, an LLC can:

• Protect personal assets from business liabilities
• Allow for simple or customized management structures
• Offer favorable tax treatment

However, in New York, not every business is permitted to operate as a standard LLC.

What Is a PLLC?

A PLLC is specifically designed for licensed professionals who provide services that require state licensure. New York law requires certain professions, including those who are licensed through the New York State Education Department (NYSED) to operate through a PLLC rather than a standard LLC.

In New York State, some of the professions licensed by NYSED that are required to operate as a PLLC include:

• Acupuncturists
• Architects
• Chiropractors
• Dentists
• Doctors
• Engineers
• Mental health counselors
• Nurses
• Nurse Practitioners
• Nutritionists
• Social workers
• Therapists (including massage therapists)
• Veterinarians

Unlike an LLC, a PLLC must obtain approval from NYSED before it can be formed. Ownership is also restricted: only individuals who hold the required professional license may be members of the PLLC.

Why an LLC Is Not “Good Enough” for Licensed Professionals

One of the most common misconceptions we hear is that an LLC provides the same protection and legitimacy as a PLLC for professional practices. In New York, that is not true.

If you form an LLC when the law requires a PLLC, you may face:

• Rejection or dissolution by the New York Department of State
• Problems obtaining professional liability insurance
• Issues with licensing boards or regulatory agencies
• Difficulties opening bank accounts or entering contracts
• Costly restructuring down the road

Additionally, forming the wrong entity can undermine the legal protections you believe you have in place. Courts and regulators may treat an improperly formed business as noncompliant, exposing the owner to avoidable risk.

Getting It Right from Day One

Choosing between an LLC and a PLLC is not just a formality, it is a foundational legal decision that affects compliance, liability, taxes, and long-term growth. What works for one business may be entirely wrong for another.

Gross Shuman has been working with New York business owners for more than 65 years on all aspects of their businesses from formation to succession planning, and every step in between.  Whether you are launching a solo professional practice or building a multi-owner enterprise, proper formation today can save you time, money and stress in the future.

Call or email me to set up a time to discuss any concerns you have, and to see how we can help you to ensure your business is properly formed and compliant with all state and federal laws and regulations.

Steven Arias is an Associate Attorney who focuses his practice in the areas of business and corporate law. He can be reached at 716-854-4300 ext. 202 or sarias@gross-shuman.com.