Nevada PLLC vs. LLC: What’s the Difference?

If you’re starting a business in Nevada, you have several options for business structures. They include LLCs with various types, such as a professional LLC (PLLC).

A PLLC offers the same advantages as an LLC, although both entities are different in some aspects. NCH’s business formation experts have broken down the key differences between PLLCs and LLCs to help you make the right decision.

Key Takeaways

• Traditional LLCs offer limited liability protection, a flexible management and operational structure, fewer corporate formalities, and no ownership restrictions.
• You can get these benefits when you form a professional LLC, but you must be a licensed professional to do so.
• PLLCs can’t protect licensed professionals from claims of their own negligence or malpractice.
• Nevada allows accountants, architects, doctors, lawyers, and other licensed professionals to form PLLCs.
• When choosing between PLLCs and traditional LLCs, consider your specific business activity. PLLCs work best for offering professional services that require licensing.

What’s a Nevada LLC?

A Nevada LLC combines limited liability protection with operational flexibility. It separates you and your personal assets from business liabilities while offering a flexible management and tax structure.

Nevada LLCs can engage in almost any legal business activity, from retail operations and consulting services to real estate investment and technology development. The state’s business-friendly environment makes it attractive, with strong legal protection, minimal reporting requirements, and no corporate income tax.

Why Form a Nevada LLC?

Forming a Nevada LLC offers the following benefits:

• Limited liability protection – Again, an LLC protects your personal assets from business obligations.

• Flexible taxation – An LLC’s profits and losses flow through to your personal tax return. Alternatively, you can choose to be taxed as a partnership or corporation.

• Fewer corporate formalities – Unlike corporations, Nevada LLCs aren’t required to have a board of directors and hold annual meetings. Still, they must practice proper record-keeping to maintain their legal protection.

• No membership restrictions – LLCs can be owned by individuals, corporations, other LLCs, or foreign entities. In Nevada, you’re allowed to form and operate an LLC with out-of-state owners.

Related Resource

Watch the video below to learn the difference between a corporation and an LLC.

What’s a Nevada PLLC?

A Nevada PLLC is meant for licensed professionals. Like a traditional LLC, a PLLC offers limited liability protection to these individuals. However, it only applies when the business owes debts or another owner faces legal claims of malpractice or negligence. A doctor with a PLLC can be held personally liable for medical malpractice.

Despite this drawback, forming a PLLC leaves licensed professionals free to choose how they’re taxed and how they’ll run their business.

Who Can Form a Nevada PLLC?

Under Nevada law, you can form a PLLC if you’re:

• An architect
• A legal professional
• An engineer
• A health care practitioner (think a doctor or dentist)
• A Certified Public Accountant
• A mental health practitioner, like a psychologist or therapist

Nevada PLLC vs. LLC: Key Differences at a Glance

To recap, here’s a quick breakdown of the key differences between Nevada LLCs and PLLCs.

Which Type of LLC Should I Choose?

Generally, you should choose between an LLC and a PLLC based on your specific business activity. Traditional LLCs are ideal for businesses with non-professional services or taxable goods, while PLLCs work best for licensed professionals.

If you can’t make a final decision, talk to a trusted business formation expert. They’ll assess your specific needs and explain the differences between LLCs and PLLCs.

How to Form a Nevada LLC or PLLC

Whether you’re starting a traditional LLC or a PLLC in Nevada, you must follow these steps.

1. Choose a unique business name. For a PLLC, its name must include any of the following terms:
   1. “Professional Limited Liability Company”
   2. “Chartered”
   3. “Limited”
   4. An abbreviation such as “PLLC,” “Chtd,” or “Ltd”
2. Check if your chosen business name has been registered with the state.
3. Appoint a registered agent to receive official documents on your behalf.
4. File your Articles of Organization with the Nevada Secretary of State.
5. Obtain a state business license and other applicable permits. If you’re forming a PLLC, make sure you’re licensed in Nevada.
6. Draft an operating agreement. This document outlines how your LLC will operate.
7. Get an Employer Identification Number (EIN) from the Internal Revenue Service.
8. Open a business bank account to separate personal and business funds.

Do Nevada LLCs & PLLCs Have Ongoing Compliance Obligations?

Nevada LLCs and PLLCs have ongoing compliance obligations. At most, they must file an annual report (Annual List of Managers or Members) and renew their state business license every year.

For PLLCs, they must meet professional licensing board requirements. Some licensed practitioners may need ongoing training to stay compliant with these prerequisites.

Finally, LLCs and PLLCs need to maintain their registered agents. They can update registered agent information by filing an amendment with the Nevada Secretary of State.

Related Resources

• Read NCH’s ultimate guide to forming traditional LLCs in Nevada or learn how to form a Nevada PLLC.
• Learn about the ongoing compliance requirements for Nevada LLCs.

Frequently Asked Questions

Can a Nevada PLLC operate as a single-member LLC?

Yes, a Nevada PLLC can operate as a single-member LLC, as long as its owner is licensed in Nevada. State law allows licensed professionals to start and run a PLLC regardless of the number of its members.

Can a Nevada PLLC have non-professional members?

No, a Nevada PLLC can only have non-professional members. Its owners must be licensed professionals in their specific industry. Under Nevada law, architects, doctors, dentists, engineers, lawyers, and other licensed professionals can operate a PLLC.

How is a Nevada PLLC taxed?

A Nevada PLLC is a pass-through entity, just like a traditional LLC. The PLLC’s profits and losses flow through to the owner’s personal tax return.

Moreover, PLLCs can elect partnership or corporate tax status. Do note that these LLCs need to file specific tax returns for their current tax classification.

What happens if a PLLC member loses their professional license?

If a PLLC member loses their professional license, they may need to leave the business or give up their voting rights. Your operating agreement should include clauses for handling member departures and relinquishing voting rights. In any case, these terms must be followed.

Can I form a Nevada PLLC if I’m licensed in another state?

You can only form a Nevada PLLC if you’re licensed in the Silver State. Check whether Nevada recognizes your profession and license type before starting a PLLC.

Can PLLC maintenance cost more than LLC maintenance?

Yes, PLLC maintenance can cost more than LLC maintenance. PLLCs tend to spend more on professional license renewal, ongoing education, and professional liability insurance (if their owners have it). They must shoulder these costs along with those for Nevada’s ongoing compliance requirements.

Can a PLLC provide non-professional services?

There’s no definitive answer to this question, although we recommend that PLLCs focus on their specific services. If a PLLC offers non-professional services, it risks violating professional licensing requirements and losing good standing with the state.

Do Nevada PLLCs need professional liability insurance?

Yes, Nevada PLLCs need professional liability insurance since their owners can be held liable for malpractice or negligence. Also, some of the state’s professional licensing boards may require it to issue you a license. (Consider checking your respective licensing board’s guidelines to determine whether your PLLC needs professional liability insurance.)

Can I convert a Nevada PLLC into a traditional LLC?

You can convert a Nevada PLLC into a traditional LLC if it no longer offers professional services or its licensing requirements change. To do this, you may need to file an amendment with the Nevada Secretary of State. Include your company’s new business activity in your amendment form.

Does a Nevada PLLC fully protect me from malpractice claims?

No, a Nevada PLLC doesn’t fully protect you from malpractice claims. You remain responsible for your own actions. However, a PLLC can protect you from business debts and legal claims of negligence or malpractice against other members of the business.

Expert Tips From NCH

1. Research and review professional licensing requirements before forming a PLLC. Check the specific guidelines of Nevada’s licensing board for your profession to prevent potential complications during business formation.
2. Keep detailed records of business compliance. Store copies of annual state filings, professional license renewal applications and approvals, and similar documents in a secure and accessible location.
3. If you’re forming a PLLC, write an operating agreement with clauses relevant to it. These provisions may cover license maintenance, practitioner conduct, and procedures for handling license suspension or revocation.
4. Choose a professional liability insurance policy with adequate coverage. Some of Nevada’s professional licensing boards may require you to carry sufficient insurance coverage.
5. Plan for eventual ownership transfers. Include a clear procedure for these scenarios in your LLC’s operating agreement and implement it.

Open an LLC in Nevada Today

Nevada PLLCs and LLCs share the same benefits, including limited liability protection and a flexible tax structure. However, the Silver State only allows licensed professionals to form a PLLC. If you’re choosing between PLLCs and LLCs, you must consider your venture’s specific activities and other factors such as long-term goals.

Ready to start a Nevada LLC? Let NCH’s business formation experts help you throughout the process.

Set Up Your Nevada LLC Today

DISCLAIMER: The above material has been prepared for informational purposes only, containing opinions of the provider and is not intended to provide, and should not be relied on for, tax, legal, or accounting advice. Please consider consulting tax, legal, and accounting advisors before engaging in any transaction.