Choosing the right business structure is an important decision for any professional in Florida. Your business structure can impact your tax liability, personal liability, and overall image as a professional. Two options to consider are a Professional Service Corporation (PSC) and Professional Limited Liability Company (PLLC). These are specific types of entities designed for licensed professionals such as certified public accountants, public accountants, chiropractic physicians, dentists, osteopathic physicians, physicians and surgeons, doctors of medicine, doctors of dentistry, podiatric physicians, chiropodists, architects, veterinarians, attorneys at law, and life insurance agents.

These entities are distinguished from those created pursuant to the Florida Revised Limited Liability Company Act (Chapter 605, Florida Statutes) the Florida Business Corporation Act (Chapter 605, Florida Statutes), and the Florida Revised Uniform Limited Partnership Act (Chapter 620, Florida Statutes). These acts will apply to a PLLC or PSC, except where the PSC and PLLC Act (Chapter 621, Florida Statutes) conflicts and then it will control. In this post, we’ll briefly explore why Florida professionals should consider a PSC or PLLC for their business.

A major benefit of a PSC or PLLC is personal liability protection. While the PSC’s or PLLC’s assets can be exposed to liability, by forming a PSC or PLLC, a professional can generally shield themselves from personal liability for the actions of other professionals in the entity and most of the debts, liabilities, and obligations of the business.

Under Florida Statutes, the liability of an officer, agent, member, manager, or employee of a PSC or PLLC is generally limited to negligent or wrongful acts or misconduct committed by that person, or by any person under that person’s direct supervision and control, with limited exception. This means that if a colleague in the PSC or PLLC is sued for malpractice, for example, the personal assets of others in the business are generally protected.

Forming a PSC or PLLC may convey to people outside the business a more professional image and the expertise of the professionals. For instance, a group of attorneys forming a PLLC may use the “PLLC” designation in the name of their law firm to signal their expertise to potential clients.

Florida law requires the name of PSCs to contain the word “chartered” or the words “professional association,” or the abbreviation “P.A.” or the designation “PA” to signal they are a professional corporation. In regard to PLLCs, the name is required to include the words “professional limited liability company,” the abbreviation “P.L.L.C.” or the designation “PLLC” to indicate that they are a professional limited liability company. However, if desired, a PSC is PLLC is permitted to do business under a name not containing these terms by registering a fictitious or doing business as (DBA) name.

Another one of the benefits of forming a PSC or PLLC is the potential tax savings. A PSC may find favorable tax treatment by electing federal S corporation status. An S corporation is a corporation meeting certain requirements that has made a federal tax election (i.e., an S election), which allows the corporation to avoid the double taxation to which corporations are normally subject (compared to a C corporation, which is a corporation that has not made such an election). Then the S corporation’s taxable income or loss is deemed to pass through to the shareholders and is taxed, or deducted, on their individual income tax returns.

In regard to a PLLC, a tax advantage is that PLLCs can elect to be treated as partnerships for federal tax purposes. In such event, a PLLC can pass through their items of income, gain, loss, and credits to their members without any taxation at the entity level.

For Florida professionals, forming a Professional Service Corporation or Professional Limited Liability Company can provide numerous benefits including tax savings, enhanced credibility, and enjoying limited liability. By understanding the specific requirements and benefits of a PSC or PLLC, professionals can decide on the best business structure for their needs. If you are a licensed professional in Florida, consider consulting with a Florida corporate attorney to determine if a PSC or PLLC is right for you. Click here to contact Guala Law Firm.

1. Section 621.03, Florida Statutes (2022). Definitions. (Defining the term “professional service” etc.). http://www.leg.state.fl.us/statutes/index.cfm?App_mode=Display_Statute&Search_String=&URL=0600-0699/0621/Sections/0621.03.html
2. Section 621.13, Florida Statutes (2022). Applicability of chapters 605 and 607. http://www.leg.state.fl.us/statutes/index.cfm?App_mode=Display_Statute&Search_String=&URL=0600-0699/0621/Sections/0621.13.html
3. Section 621.12, Florida Statutes (2022). Identification with individual shareholders or individual members. http://www.leg.state.fl.us/statutes/index.cfm?App_mode=Display_Statute&Search_String=&URL=0600-0699/0621/Sections/0621.12.html
4. Section 621.07, Florida Statutes (2022). Liability of officers, agents, employees, shareholders, members, and corporation or limited liability company. http://www.leg.state.fl.us/statutes/index.cfm?App_mode=Display_Statute&Search_String=&URL=0600-0699/0621/Sections/0621.07.html