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Forming New York Professional Entities

A New York professional entity (PLLC, P.C.) is a unique intersection of the business law and the licensed professions. In short, if you are a licensed professional in New York State, through the New York State Department of Education, (e.g., doctor, architect, etc.) and you with to open an entity to do business, then you must establish a professional variant of the standard LLC or corporation (hence P in PLLC or the P in P.C.). Under Section 6507 of Title 8 of New York State Education Law, the Department must issue Certificates of Authority to any professional seeking to organize an entity under Section 1503 of the Business Corporation Law. The ?Certificates? certify ?that the individuals organizing the professional service corporation are licensed and currently registered to practice in their respective professions. Hence, before you get the blessing from the Department of State for your entity, you have to go through the Department of Education.

The interesting thing to note that if you want to provide your special brand of services to the public, you can do so without opening an entity as a sole proprietor (meaning no business entity, just you and the public). However, the very nature of most professional services means tremendous personal liability and a maze of malpractice issues. So in the end it?s a checkmate on the chessboard of options. In any instance where there is a high level of malpractice liability, an entity is the first best level of defense. Hence, those individuals must almost always seek to organize as a professional entity. Of course, the standard array of malpractice insurance must also be acquired, but having an entity to render services through and enter into contracts on behalf of you is highly advised.

Opening a PC or PLLC is not any more difficult than opening the standard LLC or Corporation, but requires a letter to the Education Department requesting a Certificate of Authority with an attached copy of the formation papers for the proposed entity. Once that certificate is acquired it is submitted to the Department of State with the formation papers. Although, as with all such matters, it is best to consult an attorney.

Full post as published by BizMediaLaw Blog from Wahab, Riveles & Medenica LLC on February 07, 2008 (boomark / email).