Limited liability companies, called LLCs, and professional limited liability companies, called PLLCs, shield their owners, or members, from personal legal responsibility for the acts of others. Both LLCs and PLLCs can be operated by their owners or managers, and avoid double-taxation of their profits. Unlike standard LLCs, PLLCs perform only professional services, and have individuals such as attorneys, physicians, dentists and engineers as their owners. As a result, they have more rules and restrictions than LLCs on how and in what name they conduct business.
Generally, any person or business can become a member, or owner, of an LLC and act on its behalf. Only persons licensed to provide professional services can own an interest in a PLLC. The services provided by a PLLC in its name can only be provided by members, managers and employees who hold professional licenses. Non-licensed employees must work under the supervision or direction of a licensed professional so that the professional retains ultimate responsibility for the work.
An LLC can engage in most lawful business activities, but a PLLC's business is restricted to that for which its members are licensed. Certain standard LLCs cannot conduct practices for which a license is required, such as medical or legal services. In cases where an LLC can render professional services, its non-licensed owners or managers cannot interfere with the licensed professionals in providing the professional services; therefore, a doctor who works for a standard LLC retains the independent authority and duty to diagnose and treat patients.
Standard LLCs have more flexibility in using names than PLLCs. An LLC may use generally any name, so long as it is not already in use and does not imply that it is a government agency or affiliate. LLCs can do business under a trade name, sometimes called a "fictitious name." Certain PLLCs cannot use a name other than their registered name, or "true name," and must include the names of their members, but state laws vary. For example, Arizona prohibits lawyers and real estate brokers from using trade names, but not dentists. A PLLC may not include or refer to non-licensed persons in its name.
The law does not like excusing parties from their careless actions. A regular LLC may limit its liability if it expresses such an intent clearly and without question so that customers understand that they are assuming the risk of any carelessness by the company. PLLCs, especially law firms and medical practices, are not permitted to require their clients or patients to give up the right to sue for malpractice. Licensed professionals are held to higher standards of ethics, loyalty and care than non-professionals because the clients rely upon the professionals' superior knowledge, skill and expertise.