As with the LLC, the PLLC separates the business members from the corporation itself, but there is an important difference. Professional members of a PLLC are personally liable for misconduct claims related to their own actions. Unlike a partnership, where all business partners would be liable regardless of who is being prosecuted for misconduct, LLPC members are not responsible for the misconduct of another LLPC member. In all cases, it is important that every LLP member has professional liability insurance. As in a business, the PC requires more administrative requirements than a PLLC. Owners must create a formal structure composed of shareholders, officers and directors. Annual meetings of shareholders must be held and the board of directors must keep minutes of such meetings. As with the PLLC, incorporation documents must first be approved by the state`s licensing authority before being submitted to the Secretary of State. In a society, we speak of statutes. The PC also protects owners from any personal liability related to company debts and lawsuits from other owners, but does not protect against malpractice lawsuits directly related to your own work. The only real downside to incorporation is that you have to run your business at a higher level of government than you`re used to as a sole proprietorship, partnership, or LLC. You must form a board of directors, hold regular shareholder meetings, and comply with your state`s requirements. Social media doesn`t have to be scary.
By mixing an entertainment potion with education, you provide valuable information in a way that keeps people coming back for more. Note that not all states allow licensed professionals to structure themselves as LLCs, including accountants. Many States believe that professionals should be held personally liable for professional misconduct. Because the LLC has fewer compliance regulations and management formalities, it is more difficult to supervise an LLC. States also want to ensure that all members of the LLC are duly licensed. As an LLC or C Corp, your accounting firm has the option to be taxed as a subchapter S or S Corp. Although the S Corp is formed in the same manner as a C Corp, the legal entity makes the election with the IRS to be taxed as an “intermediate unit” under Subchapter S of the Internal Revenue Code. Therefore, the business is not a separate taxable entity; Profits and losses are “passed on” as in a partnership and appear on the income tax returns of the partners` individuals. S Corp retains corporate liability protection. A partnership is a legal entity in which two (or more) people run a business. Like a sole proprietorship, each partner owns a portion of the assets and liabilities of the business. A partnership agreement documents partner responsibilities, contributions, decision-making authorities, dispute resolution, etc.
As you`ve probably guessed, the process and requirements to form a PLLC are more complicated than forming an LLC. As in a regular LLC, you need to create documents that describe how your PLLC will be structured and organized. These documents are called the articles of association, and for a PLLC, you must have them approved by the state licensing authority before filing incorporation documents with the state. The corporation`s articles of association and other required incorporation documents can be filed directly with the Office of the Secretary of State, or you can have an online legal deposit service for the entire filing. Similar to a PLLC, an individual partner of an LLP is not legally liable for the liability of another partner and is not liable for the business debts of the LLP. As with the LLC, if your state does not allow professionals to create a C Corp. In this case, you may be able to form a professional corporation. As noted above, although California does not allow professionals to form an LLC or PLLC, it does allow the formation of a registered limited liability company (RLLP) or limited liability company (LLP). The designation is similar to PLLCs in other states, but is only open to California law firms and accounting firms. In states where professionals are not allowed to structure their activities as LLCs, licensed professionals may form a PLLC. A PLLC is a special form of LLC designed for licensed professionals such as accountants. In the absence of corporate documents or paperwork, the sole proprietorship is a popular entity to begin with.
Owners can even deduct most business losses on a personal income tax return by attaching a Schedule C – Business Profit or Loss form. In general, the LLP is a specific designation that requires all members providing professional services to be licensed. The rules for LLCs and PLLCs vary from state to state, so you`ll need to check with the state secretary of state`s office where your business is located to find out what`s allowed. In California, for example, professionals are not allowed to form LLCs or PLLCs. California allows professionals to form registered limited liability companies (RLLPs) or professional enterprises (PCs). More on that later. New York professionals can form a PLLC, but not an LLC. The primary function of the LLC is to limit members` personal liability arising from the financial and legal actions of the corporation. If the corporation is sued or is unable to pay its debts, you and all members retain personal liability protection. This means that your personal assets are prohibited as long as your business is operating in good condition and complying with state laws. Are you ready to start your own accounting practice? Here`s how to decide which type of entity is best when starting a new practice. Any office established or maintained in that State shall be under the direct supervision of a resident licensee.
A simple majority of the ownership of the approved company with respect to the financial interests and voting rights of all partners, owners or shareholders must: The personal liability of the shareholders of Body C is limited to the amount they have invested individually in the company. Once your accounting firm is registered, it exists as a separate business entity. Inclusion also increases your company`s credibility and allows you to protect your company`s name and brand at the state level. Regardless of the positions or contributions of the partners, everyone is equally responsible for the actions of the company. If the business is sued or unable to pay its debts, all partners will be held liable and their personal assets will be threatened. Each partner is also contractually bound to everything a partner accepts in the company name. University of the East, Manila • ACCOUNTING BAT 421 A sole proprietorship is the simplest business unit you can start. If you start your new accounting business and are the sole owner, you are automatically a sole proprietorship under the law. You don`t need to register a sole proprietorship with your state, you just get your accounting license and off you go! AICPA News is a summary of the association`s recent announcements. Before deciding how to structure your accounting firm, talk to your attorney (or an incorporation expert) and research how other accounting firms in your state choose their business unit.
For small professional businesses, the LLC has grown in popularity. The LLC structure provides owners/operators (called members in the LLC) with the liability protection of a corporate structure, but brings fewer administrative compliance requirements than a corporation. Some states offer professionals the opportunity to form a professional corporation (PC), and California is one of them. A PC is a company specifically designed for licensed professionals that goes through the same process as incorporation. Because of the liability associated with running a professional accounting firm, most business owners choose to structure their businesses as a limited liability company (LLC), a professional limited liability company (PLLC), C Corp., or a professional corporation (PC). However, some still run their accounting firms as sole proprietors and partnerships. Here`s what you need to know about each. The disadvantage of the sole proprietorship is that the owner has no protection against the liabilities associated with running an accounting business.
The sole proprietor is personally liable for all business debts and lawsuits against your business that endanger your personal assets. Philippine College of Technology • BSA ACCOUNTING Ivy Tech Community College, Indianapolis • NURSING D028. The Tax Cut and Jobs Act (TCJA) of 2017 gave C Corps a flat tax rate of 21%. Combined with liability protection, C Corp is a good choice for accounting firms if your condition allows professionals to integrate as a C Corp. Nellie Akalp is a passionate entrepreneur, business expert, and mother of four. She is CEO of CorpNet.com, a provider of trusted resources and services for business insights, LLC filings, and corporate compliance services in all 50 states. Nellie and her team recently launched an affiliate program for accountants, lawyers, and business professionals to help them streamline the business formation and compliance process for their clients.