PLLC vs LLC

[bluecolourskies]

Hello all,
I will be starting an informal post doc in a private practice and I know I need to obtain a PLLC or LLC. Which one is better? I am not licensed. I won't be taking insurance in my work if that matters and will be a 1099 contractor.

(I did try looking it up and will be trying to do more research, but I thought this thread could also be helpful to others who might have a similar question in the future!)

edit: and then I also found something called a sole proprietorship??

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[WisNeuro]

I'm not sure you mean PLC. PLC is a publicly traded company. did you mean PLLC?

 

[Sanman]

You need none of the above if you are not licensed. Have you spoken to the practice about what you need to be onboarded? They should be guiding you through the process if this is a half decent position.

 

[bluecolourskies]

I'm not sure you mean PLC. PLC is a publicly traded company. did you mean PLLC?

yes! sorry about that, let me see if I can edit the thread

 

[bluecolourskies]

You need none of the above if you are not licensed. Have you spoken to the practice about what you need to be onboarded? They should be guiding you through the process if this is a half decent position.

I did, and my supervisor went through these options but then I was looking up some information and I saw that you need a license for a PLLC- which I obviously don’t have. So now I’m thinking I should be looking for my own information too.

 

[WisNeuro]

Are they saying that they can't pay you as an unlicensed independent contractor unless you have an LLC?

 

[foreverbull]

The business titles vary by state due to state business laws.

Why wouldn’t you be an employee of your supervisor’s business with a W-2? That’s how it would’ve worked had I taken the position in my state years ago when I had an offer to do PP for postdoc. It would’ve been under their business, not a separate business designation for you.

Edit: this your supervisor’s job to figure out because it’s their liability. But several folks in bigger cities do take on postdocs in PP so perhaps they should weigh in.

 

[WisNeuro]

My guess is that they want to hire the OP as a contractor to cut costs. Depends on your state laws, but this can be a legal grey area.

 

[Sanman]

My guess is that they want to hire the OP as a contractor to cut costs. Depends on your state laws, but this can be a legal grey area.

That would be my assumption as well, but why not a 1099 contractor? Unless this is CA and they are worried about a crackdown on abusing 1099 contractors.

 

[PsyDr]

Neither an LLC nor PLLC will offer liability protections from your own actions. They ONLY offer liability protection from the actions of your employees. The IRS will just disregard the LLC, anyway.

To do it right, you need real attorneys, a real office address, etc. Not some online service.

 

[WisNeuro]

Good point, for those thinking of starting an LLC/PLLC read up on disregarded entity status. In some situations, makes sense, in others, you may want to elect something like an S-Corp. In any case, schedule an appointment to speak with tax/law professionals.

 

[foreverbull]

In my state (CA):

"Generally, employees are not licensed professionals even though licensed professionals may be employed. Licensed professionals, e.g., psychologists, CPAs, attorneys, architects, engineers, etc. may operate as independent contractors. Non-licensed persons in these professions may never work as independent contractors."

Each state will be different in their business laws, so it depends on where the OP is from.

OP, you also mentioned sole proprietorship--this is common for individual private practitioners in my state as well to be designated as (vs. general partnership or S-Corp, etc. in California). We don't have LLC's for psychologists in my state, per my understanding, but the above designations (sole propietorship, general partnership, S-Corp, etc.)--I think it has to do with California essentially saying that we can't be LLCs because we are held to a higher standard of practice for our services and are thus not "limited liability" professionals.

 

[Sanman]

In my state (CA):

"Generally, employees are not licensed professionals even though licensed professionals may be employed. Licensed professionals, e.g., psychologists, CPAs, attorneys, architects, engineers, etc. may operate as independent contractors. Non-licensed persons in these professions may never work as independent contractors."

Each state will be different in their business laws, so it depends on where the OP is from.

OP, you also mentioned sole proprietorship--this is common for individual private practitioners in my state as well to be designated as (vs. general partnership or S-Corp, etc. in California). We don't have LLC's for psychologists in my state, per my understanding, but the above designations (sole propietorship, general partnership, S-Corp, etc.)--I think it has to do with California essentially saying that we can't be LLCs because we are held to a higher standard of practice for our services and are thus not "limited liability" professionals.

So, the state effort to reduce the abuse of 1099 classification for employees has led to post-docs needing to form an S-corp or Sole proprietorship? Wow. I have said it before and I will say it again....why do so many people want to live in CA? There are other places with nice weather.

 

[foreverbull]

So, the state effort to reduce the abuse of 1099 classification for employees has led to post-docs needing to form an S-corp or Sole proprietorship? Wow. I have said it before and I will say it again....why do so many people want to live in CA? There are other places with nice weather.

I’ve never heard of postdocs having their own business designation/license at all. They are supposed to be designated as employees.

The info above regarding business designations is for licensed psychologists only, per my understanding. But the OP asked about sole proprietorship, so that was what I was expanding on. I’ve never heard of a postdoc being allowed to have their own business in any state—that is why this thread is a bit confusing to me.

 

[WisNeuro]

They could technically form an LLC in some states (but not bill through that) and get paid through that, though I don't see how that'd be beneficial unless they just wanted to get a head start on private practice for when they finished. Lot of private practices have "postdocs" wherein they hire people as independent contractors, usually straight 1099. The real block in some states would be the PLLC, which is limited to licensed professionals in many states.

 

[Sanman]

I’ve never heard of postdocs having their own business designation/license at all. They are supposed to be designated as employees.

The info above regarding business designations is for licensed psychologists only, per my understanding. But the OP asked about sole proprietorship, so that was what I was expanding on. I’ve never heard of a postdoc being allowed to have their own business in any state—that is why this thread is a bit confusing to me.

Well, my guess it that the CA law you quoted restricts unlicensed professionals from being a straight 1099 contractor. However, I am guessing it does not restrict s-corp, LLC, or sole proprietor designations from being hired as that is technically a separate company not an individual. So this PP is attempting to use that to skirt around the CA 1099 rule. This is all conjecture as I am unsure. However, this article backs up my guess:

How Employers and Contractors Are Retaining Independence Under AB5

 

[PsyDr]

It doesn't really matter. The IRS requirements for someone to be a contractor includes making their own hours, using their own equipment, and submitting a bill. That is incompatible with post doc.

 

[bluecolourskies]

That would be my assumption as well, but why not a 1099 contractor? Unless this is CA and they are worried about a crackdown on abusing 1099 contractors.

Yes this will be a 1099 position! I apologize for omitting so many details

 

[WisNeuro]

It doesn't really matter. The IRS requirements for someone to be a contractor includes making their own hours, using their own equipment, and submitting a bill. That is incompatible with post doc.

Doesn't stop some places from advertising such on APPICs directory

APPIC > Unfilled Postdoctoral Positions

Association of Psychology Postdoctoral and Internship Centers, Postdoc Interns, Psychology Internships, Psych Internship Matching - APPIC

www.appic.org

 

[calimich]

So, the state effort to reduce the abuse of 1099 classification for employees has led to post-docs needing to form an S-corp or Sole proprietorship?

No. CA does not require post-docs to form S-corps or sole proprietorships. if you have sources suggesting otherwise please share. My lived experience, as an unlicensed postdoc in CA, did not require me to form any legal entity, nor am I aware of any peers who had to do so.

 

[Sanman]

No. CA does not require post-docs to form S-corps or sole proprietorships. if you have sources suggesting otherwise please share. My lived experience, as an unlicensed postdoc in CA, did not require me to form any legal entity, nor am I aware of any peers who had to do so.

Did you post-doc before or after AB5 was passed?

 

[bluecolourskies]

So the consensus seems to be- wait to get any kind of business license as I may not even need it.