Who Needs A PLLC?
The information in this article applies to professionals who receive their licenses from the Illinois Department of Financial and Professional Regulation (the “IDFPR”). The IDFPR licenses a wide range of professions including counselors, licensed social workers, psychologists, occupational therapists, physical therapists, physicians, people in medical professions, salon owners, hairdressers, barbers, cosmetologists, nail techs, chiropractors, architects, engineers, pawnbrokers, and many others. You can find a full list of regulated professions on the IDFPR’s website, or ask a PLLC attorney if you’re unsure.
Change In The Law!
In August 2018, Illinois updated the Illinois Professional Limited Liability Act and the Illinois LLC Act. Before this change, businesses providing professional services could form either an LLC or a PLLC. Now, those working in an applicable profession under the IDFPR cannot provide their professional services under an LLC. The law requires them to form a PLLC instead, and any such businesses already formed as LLCs must convert to PLLCs.
Ready to talk to a PLLC attorney about protecting your personal assets and forming a PLLC in Illinois?
PLLC vs. LLC: Why Form An Entity For Your Business?
Setting up a PLLC confers the same legal benefits as setting up an LLC: they both provide liability protection. Both entities create a shield between your personal assets and your business’s assets, which makes it harder for someone with a collection or judgment against your business to collect your personal assets. They keep your personal accounts, property, and real estate away from judgment collectors and creditors, limiting your liability as your business grows. This liability protection does not extend to individual malpractice claims, although it can apply to a partner’s malpractice.
How To Form A PLLC
To form a PLLC, you must file Articles of Organization with the Secretary of State. Unlike regular LLCs, PLLCs cannot be filed online at the time of this writing, so they must be directly mailed to the Secretary. When filing, the business must put PLLC or P.L.L.C. after their business name (i.e. “Jane Doe Therapy PLLC”) and include specific language in the purpose clause. We also recommend drafting and entering into an Operating Agreement that outlines the high-level management and governance of your business.
If you prefer, you can delegate this process to a PLLC attorney at G & G Law.
First, we learn about your business and how you expect to operate your business. This includes information needed to fill out the Articles of Organization, such as your business name and address, among other details that will become important later. As part of this process, we help you draft a purpose section that the State will accept your filing. Then, we mail it in and monitor the Secretary’s records to see when it’s approved.
When the Secretary does approve your PLLC, they send a copy of your filed Articles of Organization back to your registered agent (a representative for your business for administrative purposes). After the Secretary approves your business, we will send you details on how to operate a PLLC in Illinois, such as how to get an EIN, set up a business bank account, and register your PLLC with the IDFPR. Finally, your PLLC attorney will help you craft an Operating Agreement. This is an important document that outlines a PLLC’s decision-making, governing, and financial and functional operations.
How Long Does It Take To Form A PLLC?
It varies wildly. Standard filing, which gets your PLLC reviewed and approved within two weeks, comes with a $150 filing fee. We cannot guarantee an approval date because that depends on when the postal service delivers the Articles of Organization submission to the Secretary of State.
We can also file your PLLC with expedited service, which guarantees review (and hopefully approval!) within 24 hours, for ~$350. Because PLLCs must be mailed, and mailed filings cannot be expedited, we have our contact in Springfield walk into the Secretary’s office so you can get expedited service without waiting on the Postal Service.
Important: Register Your PLLC With The IDFPR
Once formed with the Secretary of State, you must register your PLLC with the IDFPR. The IDFPR actually blocked one of our clients, a salon owner, from registering their business as an LLC. Our client received a notice stating that, until they converted their business to a PLLC, the IDFPR would not register it. Note that the forms required to register a PLLC with the IDFPR vary depending on the type of license.
What If I’m Already Set Up As An LLC?
You must convert under the new Illinois statute. The IDFPR may or may not have started enforcing conversions yet, but we anticipate that it will happen soon. Talk to any PLLC attorney – we recommend that you convert as soon as possible!
How To Convert An LLC To A PLLC
Our conversion and formation processes share many of the same steps. The main differences are the form itself and the filing fee. For conversions, you file Articles of Amendment to change the name and purpose of your business and pay a $50 filing fee.
Our process for PLLC conversions is mostly the same as formation. A PLLC attorney with G & G Law will assist you with the forms and drafting your purpose. Once the Secretary of State approves your PLLC conversion, we will send you a letter outlining steps to take to ensure that you’re operating correctly – the same letter alluded to above. Then, your PLLC attorney will draft an updated Operating Agreement to reflect the change from LLC to PLLC.
PLLC v. LLC: What’s The Difference?
A PLLC is considered a type of LLC but with a few different requirements. A PLLC must have a more specific purpose delineated in the Articles of Organization and the Operating Agreement. The purpose needs to specify the professional services that the business provides. You also must include the letters PLLC (or Professional Limited Liability Company or P.L.L.C.), instead of LLC, in your business name.
An LLC converting to a PLLC will remain the same business and entity. You’ll have the same tax I.D. (EIN). You can keep your same bank account and tax election. So far, clients have been able to keep the same malpractice insurance and insurance contracts, although you should alert any insurance contacts regarding the change.
An important note: Only certain professionals are permitted to partner to form a PLLC together. Generally, you can only form a PLLC with other licensed professionals with the same license as you, but contact a PLLC attorney regarding complex cases. There are some exceptions for related licenses.
When Should I Form A PLLC?
You should form a PLLC when you’re starting a business based on your professional services. After forming an entity, you can get a tax I.D. (FEIN) for your business and set up your bank account. You also obtain pivotal liability protection. It’s important to sign important initial documents and contracts through your entity’s name to get liability protection.
Freelancers, or those being paid as a 1099, are considered business owners and highly encouraged to contact a PLLC attorney to form a PLLC and get liability protection.
When Should I Convert A PLLC?
As soon as possible! We assume that the IDFPR will start requiring registered LLCs to convert to PLLCs soon. If you formed an LLC but haven’t registered with the IDFPR yet, you will likely be required to convert before you can.
How Much Does A PLLC Attorney Cost?
We keep our services simple, solid, and affordable.
Conversion: Single-Member PLLC
- +Secretary of State fees
Conversion: Multi-Member PLLC
- +Secretary of State fees
Formation: Single-Member PLLC
- +Secretary of State fees
Formation: Multi-Member PLLC
- +Secretary of State fees
Ready To Get Going?
Are you ready to start a PLLC? Are you an IDFPR-licensed professional who already owns a business? Get in touch! A PLLC attorney with G & G Law is ready and waiting to help.