LLC vs. PLLC in Texas: What Healthcare Professionals Should Know Before Choosing a Business Structure
This article has been written by Elissa Brewster
LLC or PLLC? The Right Structure Depends on More Than the Name
For healthcare professionals starting a business or private practice in Texas, choosing a legal entity is one of the first important decisions.
Two structures you may encounter are the Limited Liability Company (LLC) and the Professional Limited Liability Company (PLLC).
While the names sound similar, they are not necessarily interchangeable.
Texas recognizes a PLLC as a limited liability company formed to provide a professional service. Under the Texas Business Organizations Code, a professional service includes services that require a Texas license, including services provided by physicians, dentists, attorneys, and other licensed professionals.
The appropriate entity can depend on your profession, ownership structure, services, licensing requirements, and long-term business plans.
What Is an LLC in Texas?
A Limited Liability Company, or LLC, is a business entity governed primarily by Chapter 101 of the Texas Business Organizations Code.
The owners of an LLC are called members, and an LLC may have one or more members. Texas's Secretary of State explains that members can generally include individuals and various types of legal entities.
LLCs are widely used by businesses because they provide flexibility in areas such as ownership and management.
For healthcare professionals, however, the analysis doesn't necessarily end with deciding that an LLC is desirable.
The nature of the professional services being provided also matters.
What Is a PLLC in Texas?
A Professional Limited Liability Company, or PLLC, is a type of limited liability company specifically formed to provide professional services.
The Texas Business Organizations Code defines a professional limited liability company as an LLC formed for the purpose of providing a professional service and governed as a professional entity.
This distinction becomes particularly important for licensed professionals.
The Texas Secretary of State explains that if a business will perform professional services and its owners want to organize it as a corporation or LLC, they may be required to form a professional entity.
In other words, deciding between an LLC and PLLC shouldn't be based simply on which name sounds better or which form is easiest to file.
What Is the Difference Between an LLC and a PLLC in Texas?
At a high level:
An LLC is a limited liability company that can be used for many types of businesses.
A PLLC is a limited liability company formed specifically to provide professional services.
But for healthcare professionals, one of the most important distinctions involves who can own and govern the entity.
Texas imposes particular requirements on professional entities. According to the Texas Secretary of State, owners and governing persons of a PLLC generally must be professional individuals or qualifying professional organizations, while officers must be professional individuals. The exact rules depend on the entity and professional services involved.
This is why healthcare professionals should evaluate the proposed ownership structure before forming the entity.
Can Healthcare Professionals Form a PLLC in Texas?
Potentially, yes—but the answer depends on the profession and the services being provided.
Texas law defines “professional service” broadly to include services requiring a state license and specifically identifies professions such as medicine and dentistry among its examples.
However, different licensed professions can be subject to different rules.
For example, Texas Secretary of State guidance specifically states that an entity formed to provide medical services may use a professional association or professional limited liability company, while a professional corporation cannot be formed for the practice of medicine.
There are also specific rules governing when certain types of licensed professionals may jointly own a professional entity.
That makes it important to analyze the particular profession rather than assuming the same entity structure works for every healthcare provider.
Why Ownership Matters When Choosing a Healthcare Business Structure
Healthcare professionals sometimes begin their formation analysis by asking:
“Should I choose an LLC or PLLC?”
A better starting point may be:
Who will own the business, what professional services will it provide, and how will it operate?
Those questions can affect the available structure.
Before forming the entity, consider:
Who will own the practice?
What professional licenses do the owners hold?
Will there be one owner or multiple owners?
Will professionals from different disciplines own the business together?
Who will manage the entity?
Will additional owners be added later?
What happens if an owner leaves?
How does the proposed structure support future growth?
These considerations can become especially important for clinical founders who anticipate bringing additional professionals into the business later.
Formation Is Only the Beginning
Filing a certificate of formation establishes the entity, but it does not address every legal issue involved in creating a strong business structure.
Healthcare professionals should also consider how the entity will actually operate.
Depending on the circumstances, that can involve:
Ownership and governance
Who owns the company and how important decisions will be made.
Operating or company agreements
How ownership, governance, responsibilities, and other internal business matters will be addressed.
Provider and contractor relationships
How physicians, providers, nurses, contractors, and other professionals will work with the organization.
Healthcare compliance
How the entity's operations interact with applicable healthcare regulatory requirements.
Long-term planning
How the structure will accommodate growth, new owners, changes in operations, or future transactions.
This broader approach is why choosing an entity should be part of the practice's overall legal strategy rather than viewed as a filing exercise.
Related Legal Service:
Business Formation & Structuring →
LLC vs. PLLC: Questions to Consider Before Choosing
Rather than selecting an entity based on a generic online comparison, healthcare professionals should consider questions specific to their situation.
1. What professional services will the business provide?
The services being provided can affect which Texas entity structures are available.
2. Who will own the entity?
Professional entities can have specific ownership requirements.
3. Will there be multiple licensed professionals?
If several professionals will own the organization, their licenses and professional disciplines may affect the analysis.
4. How will the business be governed?
Ownership and management aren't necessarily the same thing. The governing documents should clearly address how important decisions will be made.
5. What are the long-term plans for the practice?
An entity should support not only today's ownership structure but also reasonably anticipated growth and changes.
Key Takeaways
An LLC and PLLC are related structures, but they are not interchangeable for every Texas healthcare professional.
The appropriate choice can depend on:
Your profession
The professional services provided
Who will own the entity
How the business will be governed
Applicable licensing requirements
Your long-term plans
The goal should not simply be to create an entity.
It should be to create a business structure that supports the legal, professional, and operational realities of the healthcare practice.
Sources & References:
Texas Secretary of State — Formation of Texas Entities FAQs
Texas Business Organizations Code
Texas Secretary of State — Professional Corporation Formation Guidance
FAQs
Frequently Asked Questions
About LLCs and PLLCs in Texas
Is an LLC the same as a PLLC in Texas?
No. A PLLC is a type of limited liability company formed for the purpose of providing professional services and is governed as a professional entity under Texas law.
Does every healthcare professional in Texas need a PLLC?
Not necessarily. The appropriate entity depends on the profession, services being provided, ownership structure, and applicable professional regulations. Texas provides different rules for different types of professional entities and professions.
Can a physician form a PLLC in Texas?
Texas Secretary of State guidance states that when an entity's purpose is to provide medical services, the professional may form either a professional association or a professional limited liability company.
Can different healthcare professionals own the same PLLC?
Sometimes, but Texas has specific rules governing joint ownership by certain professionals. The answer depends on the professions involved and the professional services the entity will provide.
Does forming a PLLC protect a healthcare professional from malpractice liability?
A PLLC should not be viewed as a substitute for professional liability protection or insurance. Entity-level liability considerations and an individual professional's responsibility for their own professional services are separate legal issues. This is an area where the article should avoid making broad promises and where Elissa should review the final wording before publication.
Do I need an operating agreement for my healthcare business?
The governing documents are an important part of establishing how a business will operate. Depending on the entity and circumstances, they can address ownership, governance, decision-making, responsibilities, and changes among owners.
Still have a question?
Building a Healthcare Business in Texas?
Brewster Law Firm helps healthcare professionals and business owners evaluate entity formation, ownership, governance, organizational agreements, and broader business-structuring considerations.
Whether you're establishing a new practice, bringing in additional owners, or reconsidering an existing structure, legal guidance can help you understand your options before important decisions are made.
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