One of the questions that comes up most often is whether or not you have to form a professional entity such as a professional corporation (PC) or professional limited liability company (PLLC).
The answer, as per the Office of Professions is as follows: Licensed professionals may set up a professional service corporation (PC), a professional service limited liability company (PLLC) or a registered limited liability partnership (LLP) if they want to be incorporated. Those are the three options for professionals looking to incorporate.
In addition, the professions of architecture, landscape architecture, engineering, geology, and land surveying may set up a design professional service corporation, or “D.P.C.”.
Generally, licensed professionals may not set up a general business corporation (GBC) to provide professional services.
There are a number of exceptions to the general rule prohibiting the practice of the professions by an entity that is not specifically established to provide professional services such as a professional services corporation. One such exception is a hospital that is authorized to provide health services pursuant to the public health law. Other exceptions include entities established to offer optometry, ophthalmic dispensing, massage therapy, pharmacy, speech-language pathology and audiology services.
The Office of Professions also specifically states: “Except where specifically authorized by law, a general business corporation may not: provide professional services to the public; exercise any judgment over the delivery of professional services; have employees who offer professional services to the public; hold itself out as offering professional services; or share profits or split fees with licensed professionals.”
Some other noteworthy rules for professionals looking to incorporate: “a professional service limited liability company may provide professional services in more than one profession provided that the company includes an “owner” (i.e., member) licensed in each of the professions in which the company will offer services”. This rule does not apply to the professions of medicine, dentistry, veterinary medicine, licensed clinical social work, mental health counseling, psychoanalysis, creative arts therapy, marriage and family therapy, or applied behavior analysis. So, if your company provides professional services of medicine, dentistry, veterinary medicine, licensed clinical social work, mental health counseling, psychoanalysis, creative arts therapy, marriage and family therapy, or applied behavior analysis, then you cannot form a PLLC that offers any other professional service.
If you’re a professional looking to form an entity for your business, then your first step should be to contact attorneys that are knowledgeable about this startup niche.