How to Form a California Professional LLC

At this moment in time, a PLLC is not an option in California. The good news is that you have other options. In states that don’t have PLLCs, sometimes licensed professionals can form standard LLCs instead. This guide will give you a better look at some PLLC alternatives in the state of California.

*While we don't support Professional LLC formations at this time, we can help you form a standard LLC. Starts at $0 + state fees and only takes 5-10 mins

Excellent 4.8 out of 5 stars 15,363 reviews

Should You Just Form an LLC?

In California, an LLC is not permitted to provide “professional services,” which are defined as “any type of professional services that may be lawfully rendered only pursuant to a license, certification, or registration authorized by the Business and Professions Code, the Chiropractic Act, or the Osteopathic Act.”

This means that most licensed professionals in California cannot form an LLC. You should check with your profession’s regulatory board to determine whether your services are considered “professional services” under California law. If not, an LLC may be an option for you.

PLLCs and LLCs are very similar entity types. The main difference is that only licensed professionals may form PLLCs.

In states that offer both entity types, the formation process is largely the same. Forming a PLLC simply requires a few additional steps, such as providing evidence of professional licensure or obtaining approval by the applicable state licensing board.

The LLC is a popular business type because it offers the following benefits:

Flexibility

It’s relatively easy to form and maintain. It’s also suitable for a variety of ownership structures, from one-person businesses to multiple classes of owners.

How the business is managed is flexible as well — your LLC can be managed by the owners (which are called the “members” of the your LLC), or the members can appoint managers (much like the board of directors of a corporation). The members can agree to govern the LLC however they’d like by preparing and signing an operating agreement.

Liability Protection

Limited liability companies are designed to protect the personal assets of their owners. This means if your business is sued, creditors can only go after the assets of the company. Your personal assets as a member — such as your personal bank accounts, home, and other property — can’t be seized to pay liabilities or debts of the company.

One important exception is that each member is personally liable for their own malpractice, and no member is liable for the malpractice of any other member. For this reason, it’s wise for each member to maintain their own professional liability insurance.

Taxes

Many business owners like the LLC structure because these types of companies are generally classified as “pass through” entities for tax purposes. This means that the income and losses of the LLC are “passed through” to the members, and the members report the income and losses on their personal tax returns. In other words, any income tax is paid by the members, and not the entity itself.

A corporation’s income, on the other hand, is generally subject to “double taxation”. The corporation pays taxes on its income on the entity level, and if the corporation distributes profits to shareholders by paying a dividend, the shareholders must pay taxes on the dividend as well.

If you decide the LLC is the right structure for your California business, the formation process is relatively straightforward. To form an LLC, you can complete the six-step process outlined in our step-by-step guide yourself, enlist the help of an attorney, or use an LLC formation service.

Compare Packages

Identify the LLC package and services that fit your needs and then get started.

Starter

Premium

Starter

$0

Premium

$349/yr

Starter

File in 2 to 3 weeks **

$0

PLUS STATE FEES

Premium

File in 1 to 5 days **

$349/yr

PLUS STATE FEES

Top Features

More InfoWe do everything needed to file your application with the state and make your business official. Standard LLC Filing
More InfoWe’ll file your paperwork quickly and accurately. If there are any errors with your filing, our team will do what’s needed to make it right. 100% Accuracy Guarantee
More InfoKeeps you compliant with all state-required annual report and amendment filings to maintain LLC protections and avoid fines. Worry-Free Compliance
More InfoThis essential document is like the constitution for your business. Operating Agreement
More InfoOur fastest service puts you to the front of our line of filings. Our Fastest Filing Speed
More InfoOur team will secure your EIN from the IRS so you can open a business bank account, hire employees, and pay taxes. EIN
More InfoIncludes over 25 templates for contracts, service agreements, waivers, and more. Business Documents
More InfoGet online with a website builder tool optimized for traffic and customers. Business Website Builder
More InfoBuild and protect your brand by registering a private domain name that matches your business name. Domain Name with Privacy
More InfoStay organized and give your business more credibility with a business email. Business Email Address

File in 2 to 3 weeks **

1 year free, then $199/yr*
+$99
+$79
+$99
+$99
+$15/mo
+$35/yr
+$25/yr

File in 1 to 5 days **

*SPECIAL OFFER – Get Starter for $0 plus state fees. Includes one optional free year of Worry-Free Compliance that renews at $199/yr.
**These filing times are averages and include our processing times and Secretary of State turnaround times which vary by state.

Your Other Options

The standard LLC isn’t the only business structure option available in California. Another common business type for licensed professionals is the professional corporation.

Note, however, that corporations are generally subject to stricter requirements than LLCs regarding how you can manage and run your business. You can learn more about California professional corporations in our How to Form a Professional Corporation in California guide.

If you have a one-person business, you may also choose to just operate as a sole proprietorship. A sole proprietorship is not a legal business entity formed with the state, and there’s no distinction between the business and the sole owner for legal or tax purposes. This is the simplest form of operating a one-person business and gives the owner complete control. However, a major disadvantage is that the owner of a sole proprietorship is subject to unlimited liability for all of the liabilities and debts of the business.

If your business has more than one owner, you can also form a partnership. In California, there are three types of partnerships:

General Partnership: A general partnership, or GP, consists of at least two owners, which can be either individuals or entities. Like a sole proprietorship, a GP is not a legal business entity that is formed with the state. Who controls the GP and how it’s managed can be outlined in a partnership agreement, but if there’s no partnership agreement, the partners generally share equal control and management rights. As with a sole proprietorship, the owners are subject to unlimited personal liability, meaning that their personal property can be seized to pay the liabilities and debts of the GP.

Limited Partnership: A limited partnership, or LP, is a legal business entity that consists of at least one general partner and at least one limited partner. The general partners control and manage the LP, while the limited partners can only have very minimal participation in running the business. In exchange for giving up management control, the limited partners only risk their financial investment in the LP. General partners, on the other hand, are responsible for all of the liabilities and debt of the LP.

Limited Liability Partnership: In California, a limited liability partnership, or LLP, is a partnership that may be formed to engage in the practice of public accountancy, law, architecture, engineering, or land surveying, or to provide services or facilities to either a California registered LLP that engages in the practice of public accountancy or law or to a foreign LLP. An LLP is a legal “person” separate from its partners. Each partner of the LLP is an individual or entity admitted to the LLP. All partners can actively manage the LLP, but the LLP should have a limited liability partnership agreement that defines the role of each partner. The liability of each partner can be limited to his or her respective financial contribution.

Many professional businesses with two or more owners choose to form an LP or LLP because like an LLC, they offer limited liability, “pass through taxation,” and flexibility. Each type of entity has legal and tax implications, so if possible, you should consult with an attorney and accountant to discuss your specific situation.

Resources for California Professional Business Owners

We also recommend contacting your profession’s state licensing board to discuss their requirements before forming an entity for the purpose of rendering professional services. California’s Department of Consumer Affairs maintains a list of professional regulatory boards in the state on its website. Contact information for some common professional regulatory boards in California is below.

State Bar of California180 Howard Street San Francisco, CA 94105 Phone: 415-538-2000 Email: AttorneyRegulation@calbar.ca.gov
Medical Board of California2005 Evergreen Street, Suite 1200 Sacramento, CA 95815 Phone: 916-263-2389 Email: webmaster@mbc.ca.gov
Dental Board of California2005 Evergreen Street, Suite 1550 Sacramento, CA 95815 Phone: 916-263-2300 Email: dentalboard@dca.ca.gov
California Board of Accountancy2450 Venture Oaks Way, Suite 300 Sacramento, CA 95833 Phone: 916-263-3680 Email: firminfo@cba.ca.gov
California Veterinary Medical Board1747 N. Market Boulevard, Suite 230 Sacramento, California 95834 Phone: 916-515-5220 Email: VMB@dca.ca.gov

Disclaimer: The content on this page is for information purposes only and does not constitute legal, tax, or accounting advice. If you have specific questions about any of these topics, seek the counsel of a licensed professional.

zenbusiness logo

Written by Team ZenBusiness

Start Your California LLC Today