There are four business entity options when setting up a professional practice in the State of New York: (1) Professional Limited Liability Company (PLLC); (2) Professional Corporation (PC); (3) Design Professional Corporation (DPC); and (4) Limited Liability Partnership (LLP). These are the appropriate entities for people who provide professional services that require a license in order to practice their profession. For example, doctors, lawyers, engineers, dentists, LCSWs and other professionals are required to form a professional entity when establishing a new practice.
Forming a professional business entity in New York is similar to forming a regular business entity, however there are additional regulations to comply with. In New York many occupations are subject to Title VIII of the Education Law, which is regulated by the New York State Education Department, Office of the Professions. This organization is the gatekeeper of professional entities.
In order to get their authorization, we must provide the Dept. of Education with the articles of organization for the proposed professional entity, comply with their business naming restrictions, pay fees associated with their authorization process and credential checking process, and complete a certificate of authorization form and/or other preliminary documents depending on the profession. Once their authorization is obtained, we must file it with the New York Dept. of State along with your organizational documents. Then, these documents must be certified and filed back with the Dept. of Education. The formation process takes several weeks is fairly difficult. The Dept. of Education loves rejecting PLLC applications for various reasons so yourself a favor and give us a call if you plan on setting one up.
Similarly, attorneys who seek to form a professional entity will need a certificate of good standing from their governing bar association, but do not need to receive authorization from the New York State Education Department.
If you’re forming a PLLC or LLP, after the entity is formed you should have an operating agreement drafted and complete the NY LLC publication requirement. If you’re forming a PC, there’s no publication requirement but you should still make sure that you execute the appropriate corporate documents including your bylaws, resolutions, shareholders agreement, etc. For more information check out our Form a Professional Business Entity page or contact us for a free phone consultation!