PLLC or LLC for Physical Therapy in WA
Hello! I am a physical therapist interested in forming my own practice in Washington State. The legislation is a little unclear as to whether I am required to form a PLLC or an LLC. Could you advise me on which is best please? Thank you!
First, congratulations on your decision to form your own practice!
To answer your question, I will make a few comments.
First, a PLLC and an LLC are both creatures (creations) of state law. I practice as a CPA in Texas, so I cannot speak to Washington state law. From my experience in Texas, if you have a license (such as a CPA license), you are required to form a PLLC instead of an LLC (if you choose to operate through a limited liability company).
Second, from a federal income tax perspective, there is no difference in federal income tax treatment between a PLLC and an LLC. Why? Because for federal income tax purposes, there are generally only four (4) ways to get taxed – as a disregarded entity, partnership, C corporation, or S corporation. If you will be the sole owner of the company, your choices are really disregarded entity, C corporation, or S corporation. You can’t have a partnership with just one partner.
Third, I think you’re asking which is better (a PLLC or an LLC) in terms of federal income tax treatment. If that is your question, then they are treated the same. Again, the actual federal income tax treatment depends on how to choose to treat it – going back to the four choices I listed above. So the treatment doesn’t depend on whether it’s a PLLC or LLC.
I hope that answers your question. Feel free to contact me if you wish to engage me to help.