Small business owners and entrepreneurs understand the importance of protecting their assets. Forming an LLC is an option that many start-ups chose over forming a legal corporation. In Arizona, corporations must file annual reports and articles of incorporation. Medical practices have specific requirements to consider.
A professional LLC is a good option for a medical practice. Licensed professionals may form a professional LLC to legally protect their assets, which is common for accountants and lawyers.
Differences between an LLC and a PLLC
Unlike a standard LLC, a professional LLC protects personal assets in industries with professional certifications. Additionally, PLLCs are strictly for licensed professionals. The Arizona Corporation Commission recommends confirming requirements with the license issuing board. Forming a PLLC is common practice for doctors who have concerns about or are prone to malpractice lawsuits. A standard LLC will not protect members from a malpractice lawsuit. Unlike a PLLC, the partners in an LLC may find themselves liable for malpractice that they did not cause. Under an LLC, doctors must settle a lawsuit from their own pockets. A PLLC protects other members a single owner becomes embroiled in a malpractice suit.
Similarities between an LLC and a PLLC
The articles for an LLC and a PLLC are similar; both protect owner assets. There are tax advantages that both types of business entities claim. In each case, the business profits avoid corporate taxes. Instead, members claim their share of profits on individual tax returns. Both offer limited liability protection for major assets. A person’s home, auto or financial assets are all off-limits in a lawsuit. Both LLC and PLLC require timely reports and regular license filing.
Some states do not allow the option of professional LLCs. In California and other states, professionals must form a professional corporation instead. In Arizona, PLLCs are an option that smart professionals choose over incorporation. It ensures that the personal assets of a physician remain secure in the event that a lawsuit moves forward.