Some professionals practice their profession as individual licensed practitioners. Others practice in some sort of corporate or other business entity structure. Not all business structures may legally provide professional services. The following brief descriptions are based in law1 and address different corporate practice venues. These descriptions provide basic information on common acceptable organizational structures for licensed professionals. This general information is no substitute for consulting the law and/or an attorney directly for guidance before deciding to practice in a specific corporate arrangement. There are many factors, including tax consequences, and personal and professional liability, to consider when deciding which form a professional practice should take.
Licensed professionals may set up a professional service corporation (PC), a professional service limited liability company (PLLC) or a registered limited liability partnership (LLP) if they want to be incorporated. In addition, the professions of architecture, landscape architecture, engineering, and land surveying may set up a design professional service corporation, or "D.P.C.". Generally, licensed professionals may not set up a general business corporation (GBC) to provide professional services. There are a number of exceptions to the general rule prohibiting the practice of the professions by an entity that is not specifically established to provide professional services such as a professional services corporation. One such exception is a hospital that is authorized to provide health services pursuant to the public health law. Other exceptions include entities established to offer optometry, ophthalmic dispensing, massage therapy, pharmacy, speech-language pathology and audiology services.
- Except where specifically authorized by law, a general
business corporation may not:
- provide professional services to the public;
- exercise any judgment over the delivery of professional services;
- have employees who offer professional services to the public;
- hold itself out as offering professional services; or
- share profits or split fees with licensed professionals.
- A GBC may employ licensed professionals to provide in-house on site services to its own employees. For example, General Industries may employ a company nurse to provide services to the employees of General Industries. However, General Industries may not set up a business to provide these services to the public.
- A GBC may provide services used by professionals. In these cases,
there must be a clear distinction between who is providing professional
services and who is providing the management services. Failing
to do so may result in professional misconduct and/or unlicensed
practice of the profession. For example, a GBC may:
- find jobs for licensed professionals;
- find licensed professionals for potential employers; and
- provide non-professional services to licensed professionals, including providing services to the professional for a fee, e.g., scheduling or billing.
- A professional corporation may not serve as a management services corporation. A PC may only provide services in its field. For example, a hypothetical PC named "Occupational Therapists For Everyone, PC" may only provide occupational therapy services. It cannot offer physical therapy services, speech services or any other professional services. Also, because it is allowed only to provide professional services, it can only manage the services that it provides. That is, it cannot provide management services to other occupational therapists.
- A professional limited liability corporation may not serve as a management services
corporation. A professional service limited liability company may provide professional services in more than one profession* provided that the company includes an "owner" (i.e., member) licensed in each of the professions in which the company will offer services. For example, the hypothetical LLC, Sunn Acupuncture, Occupational Therapy and Physical Therapy, PLLC, has three members: an acupuncturist, an occupational therapist and a physical therapist. This LLC may provide services in all of these professions. It may not, however, provide respiratory therapy or chiropractic services, because none of its "owners" are licensed in those two professions. Additionally, only professionals licensed in one of the areas that the PLLC is authorized to practice may become a member or owner of that entity.
*Note that this does not apply in the professions of medicine, dentistry, veterinary medicine, licensed clinical social work, mental health counseling, psychoanalysis, creative arts therapy, or marriage and family therapy.
The information on these pages is provided as general guidance, is not binding, and does not supercede the relevant laws, rules and regulations that apply. Should you have specific questions about the application of the specific laws in the formation of a professional entity, you should seek personal legal counsel.
1 The following statutes, rules and regulations are applicable:
Education: Education Law, Title 8, Article 130, Section 6507; Regulations of the Commissioner of Education, Part 59, Section 59.10; Board of Regents Rule 29.1
Other Laws: Business Corporation Law, Articles 4, 15 and 15-A; Limited Liability Company Law, Articles 12 and 13; and Partnership Law.