A single member PLLC is automatically treated as a disregarded tax entity, the same as a sole proprietor, giving it pass-through tax treatment. However, a single member PLLC may choose to be taxed either as a C Corporation or an S Corporation. Self-employment income incurs an additional tax of 15.3 percent.
Is PLLC same as LLC?
PLLCs and LLCs are essentially the same business structure. However, anyone looking to form a business that provides professional services will need to consider which structure is best for them. While only three states require licensed professionals to form a PLLC, at least thirty states offer the option.
Do you need a PLLC to own a business?
While many businesses choose to form a limited liability company (“LLC”) because of the tax, limited liability, and other benefits, some states don’t allow LLCs to be owned by professionals whose occupation requires a license. In these states, licensed professionals who want the benefits of an LLC must form a PLLC instead.
How does a limited liability company ( PLLC ) work?
A limited liability company is a business type for single-owner or multiple-owner businesses. An LLC works like a partnership, but it has the liability protection of a corporation. For tax purposes, an LLC is taxed like a sole proprietorship (for a one-owner LLC) or a partnership (for a multiple-owner LLC).
Can a business owner be a member of a LLC?
There is no limitation on who can be a member (owner) in an LLC. So, the business may be owned by one or more individuals and even other business entities. It can be organized for any kind of business from selling shoes to cutting grass. However, each state bars specific businesses from forming an LLC.
Who can be a member of a PLLC?
While specifics vary by state, many states limit who can be an owner/member of a PLLC. In some states, only licensed professionals of the specific service can be members of a Professional Limited Liability Company. How does limited liability work with a PLLC? Like an LLC, the PLLC creates a separation between the individual owners and the business.
