Professional Corporation and PLLC Formation Attorney

Licensed professionals in New York City face a unique challenge when starting a practice: they cannot simply form a standard corporation or limited liability company. New York law requires physicians, dentists, attorneys, architects, engineers, accountants, mental health practitioners, and dozens of other licensed professionals to organize their practices through specialized entities — the professional service corporation (PC) or the professional service limited liability company (PLLC). These entities carry formation requirements, ownership restrictions, and compliance obligations that do not apply to ordinary businesses, and mistakes made at the formation stage can delay your ability to practice, expose you to personal liability, or jeopardize your professional license.

Our firm guides physicians, dentists, therapists, design professionals, accountants, and other licensed practitioners through every step of forming a professional entity in New York City. From securing consent from the New York State Education Department to satisfying the publication requirement and structuring ownership agreements among professional colleagues, we handle the legal complexity so you can focus on building your practice.

Why New York Requires a Professional Entity

Under New York law, individuals and businesses generally may not render professional services through a standard business corporation or LLC. Instead, Article 15 of the New York Business Corporation Law governs professional service corporations, and Article 12 of the New York Limited Liability Company Law governs professional service limited liability companies. These statutes exist to preserve the integrity of licensed professions by ensuring that only duly licensed individuals own, control, and render services through professional practice entities.

This framework has real teeth. The New York State Education Department's Office of the Professions oversees most licensed professions and must consent to the formation of professional entities in those fields. Practicing through an improperly formed entity can constitute the unauthorized or unlawful practice of a profession, create fee-collection problems, and trigger professional discipline. Getting the structure right from day one is not a formality — it is foundational to a lawful practice.

PC vs. PLLC: Choosing the Right Structure

Both the professional corporation and the PLLC allow licensed professionals to practice through a limited liability entity, but they differ in governance, taxation, and ongoing obligations. The right choice depends on your profession, your growth plans, how you intend to compensate owners, and your tax position — particularly given New York City's distinct business tax regimes.

Many solo practitioners and small group practices favor the PLLC for its operational flexibility and pass-through taxation. However, the PC remains attractive in certain situations — for example, where owners want a traditional corporate structure with salaries and a board, or where the publication requirement's cost in New York County is a meaningful consideration. We analyze your specific circumstances, including New York City tax exposure, before recommending a structure.

Who May Own a New York Professional Entity

One of the most consequential features of New York professional entity law is its strict ownership rule. With limited statutory exceptions, every shareholder of a PC and every member of a PLLC must be licensed in New York to practice the profession the entity is formed to provide. This has several practical consequences:

• No non-professional investors. A spouse, friend, or outside investor who is not licensed in the relevant profession generally cannot hold an ownership interest, no matter how passive.
• Officers, directors, and managers must be licensed. Governance roles in professional entities are reserved for licensed professionals.
• Death or disqualification of an owner triggers mandatory transfer rules. New York law requires that shares or membership interests of a deceased or disqualified professional be redeemed or transferred to a qualified professional within a statutorily prescribed period. A well-drafted shareholder or operating agreement addresses this in advance.
• Certain professions may combine. New York permits some combinations of related licensed professions — particularly among design professions such as architecture, engineering, and land surveying — to practice together in a single entity, subject to specific statutory conditions.

Structuring around these rules improperly — for example, through side agreements that give an unlicensed person de facto control — can expose the practice to fee disgorgement, regulatory action, and personal liability. We design ownership and management structures that achieve your business goals while remaining squarely within New York law.

The Formation Process, Step by Step

1. Name Clearance and Compliance

The entity's name must comply with both the Department of State's rules and the naming standards of the relevant licensing authority. Professional entity names typically must include a designation such as "P.C." or "PLLC," must not be misleading about the services offered, and in many professions must conform to rules about using practitioners' surnames or descriptive terms. We run name availability checks and confirm compliance before any filings.

2. Certificates of Good Standing and Education Department Consent

For most professions overseen by the Office of the Professions, formation requires submitting the proposed Certificate of Incorporation or Articles of Organization to the New York State Education Department, together with certificates of good standing (Certificates of Authority) for each professional owner. The Department reviews the documents, confirms each owner's licensure, and issues its consent. This step is frequently where do-it-yourself formations stall — documents are rejected for technical defects in the professional purpose clause, name, or supporting certificates. We prepare submissions that satisfy the Department's requirements the first time.

3. Filing with the New York Department of State

Once consent is obtained, the formation document is filed with the Department of State, accompanied by the Education Department's consent and the applicable filing fees. Upon filing, the entity legally exists — but it is not yet ready to operate.

4. The Publication Requirement (PLLCs)

New York imposes a publication requirement on PLLCs. Within 120 days of formation, the PLLC must publish a notice in two newspapers — one daily and one weekly — designated by the county clerk of the county where the PLLC's office is located, for six consecutive weeks, and then file a Certificate of Publication with the Department of State. In New York County, publication costs are among the highest in the state, which is one reason office location and county designation should be considered carefully. Failure to complete publication suspends the PLLC's authority to carry on business until the requirement is satisfied. We coordinate the entire publication process, including newspaper designation, affidavits, and the certificate filing.

5. Post-Formation Essentials

After formation, a professional practice needs more than a filing receipt. We assist with:

• Obtaining an EIN and making federal and New York tax elections, including S corporation elections where appropriate;
• Drafting bylaws and shareholder agreements (PCs) or operating agreements (PLLCs) — New York law requires LLCs to adopt a written operating agreement;
• Registering the entity with the Education Department and the relevant professional licensing boards as required;
• Buy-sell, redemption, and disability provisions that satisfy the mandatory transfer rules for deceased or disqualified owners;
• Employment agreements, compensation structures, and restrictive covenants consistent with professional ethics rules;
• Banking, insurance, and malpractice coverage coordination.

What Liability Protection Does — and Does Not — Cover

A common misconception is that forming a PC or PLLC shields a professional from malpractice claims. It does not. Under New York law, every professional remains personally liable for his or her own negligence, wrongful acts, and misconduct, and for the conduct of persons under his or her direct supervision and control while rendering professional services. What the entity does protect against is significant:

• Vicarious liability for colleagues' malpractice. In a properly structured entity, one owner is generally not personally liable for the professional negligence of another owner or employee whom they did not supervise.
• Ordinary business liabilities. Leases, vendor contracts, employment claims, and other commercial obligations of the entity generally do not reach the owners' personal assets, absent personal guarantees.

This distinction makes the combination of a professional entity and adequate malpractice insurance the standard risk-management framework for New York practices. We help clients calibrate both.

New York City Tax Considerations

Entity choice in New York City carries tax consequences that practitioners elsewhere in the state do not face. A PLLC taxed as a partnership or sole proprietorship is generally subject to the New York City Unincorporated Business Tax (UBT) on its allocated business income, while a PC is subject to the City's corporate-level tax regime. The interplay among federal taxation, New York State taxes, the pass-through entity tax (PTET) election, owner compensation, and City-level taxes can materially affect after-tax income. We work alongside your accountant to model the alternatives before you commit to a structure, because converting later is possible but rarely simple.

Ongoing Compliance Obligations

Formation is the beginning, not the end, of a professional entity's legal obligations. New York PCs and PLLCs must file biennial statements with the Department of State, and professional corporations must file a triennial statement with the Education Department confirming that shareholders, directors, and officers remain duly licensed. Owners must maintain active registrations with their licensing boards, and changes in ownership, name, or professional purpose typically require amended filings and, in many cases, renewed Education Department involvement. Our firm offers ongoing compliance support so that routine filings never become license or enforcement problems.

Frequently Asked Questions

How long does it take to form a PC or PLLC in New York?

Timing depends largely on the Education Department's review of the consent application, which can take several weeks or longer depending on the profession and volume. Department of State filing is comparatively fast once consent is in hand. PLLCs must then complete the six-week publication process. We provide realistic timelines at the outset and use expedited handling where available.

Can I convert my existing practice into a PC or PLLC?

Yes. Sole proprietors and existing entities can transition into a professional entity, but the conversion must be sequenced carefully to address contracts, payor enrollments, tax elections, and licensure filings. We manage these transitions regularly.

Can my practice operate under a different name?

Many professions restrict or regulate the use of assumed names. Where permitted, an assumed name must be properly filed and, for regulated professions, approved by the appropriate authority. We advise on what your profession allows and complete the necessary filings.

Speak With a New York Professional Entity Formation Attorney

Forming a professional corporation or PLLC in New York City is a process where precision matters — in the purpose clause, the ownership structure, the regulatory consents, and the agreements that govern your practice for years to come. Our attorneys have guided licensed professionals across the medical, dental, mental health, legal, accounting, and design fields through formation, growth, and ownership transitions.

Contact our office today to schedule a consultation. We will assess your profession's specific requirements, recommend the structure that fits your goals, and handle every filing from Education Department consent through your first day of practice.

You can contact us by phone at 212-233-1233 or by email at [email protected].