Ohio professional LLC rules for licensed professionals

Can licensed professionals form an LLC in Ohio?

They can. ORC 1706.05(A) says an Ohio LLC may carry on any lawful activity, and ORC 1785.09 states that the professional association chapter does not preclude a professional service from being rendered in Ohio by an LLC formed under Chapter 1705 or 1706, or by a registered foreign LLC. Corporations can do it too: ORC 1701.03(B) allows a corporation to be formed to carry on the practice of any profession.

So a dentist, architect, physical therapist, or CPA in Ohio generally has three entity choices: a regular LLC, a professional association under Chapter 1785, or a corporation formed for professional purposes under Chapter 1701. The Secretary of State files all three. Whether your profession allows each one, and on what terms, is set by your own licensing law and board.

Why the choice matters more for professionals

For most small businesses, the entity choice is about taxes and paperwork. For a licensed practice it also affects who may own the firm, what happens when a partner retires or loses a license, and what the board expects to see on file. A general contractor can bring in a silent investor. An Ohio accounting firm may not be able to, because ORC 4701.04 requires more than half of the firm's equity to be held by individuals with an Ohio permit or a foreign certificate. A professional association goes further and allows only licensed shareholders. Sort out those limits before you choose a structure, not after the articles are filed.

This guide covers the professional-specific rules. For the general filing steps, see how to start an LLC in Ohio.

Is there a PLLC in Ohio?

Not as a separate entity type. Many states create a "professional limited liability company" with its own statute and its own name ending. Ohio does not. A professional LLC in Ohio is formed on the same Articles of Organization (Form 610) as any other LLC, for the same $99 state fee.

The name rules are the same, too. ORC 1706.07(A) requires the name to contain "limited liability company" or one of the listed abbreviations: "L.L.C.," "LLC," "limited," "ltd.," or "ltd." "PLLC" is not on that list. If you are moving a firm from a state that uses PLLC, expect to adjust the ending for the Ohio entity.

Board name rules can still apply

Licensing laws sometimes restrict names on their own. For example, ORC 4733.16(B) bars a firm, LLC, or corporation from using a name with "engineer," "engineering," "surveyor," or "surveying" unless it holds a certificate of authorization from the state board, with limited exceptions. Check your board's rules before you file a name with the Secretary of State.

How an Ohio professional association under Chapter 1785 works

The professional association is Ohio's older form for licensed practices. ORC 1785.01 limits it to professions licensed under specific chapters, including CPAs and public accountants, architects, attorneys, dentists, nurses, optometrists, pharmacists, physician assistants, physicians, psychologists, professional engineers, chiropractors, veterinarians, physical and occupational therapists, and licensed counselors, social workers, and marriage and family therapists. A few combined practices are allowed, such as architects with engineers.

• Owners: only individuals licensed in Ohio to render the same professional service may organize it and hold its shares (ORC 1785.02, 1785.05).
• Transfers: a shareholder may sell shares only to another individual licensed for that service (ORC 1785.07).
• Services: the association practices only through officers, employees, and agents who are themselves licensed, other than support staff (ORC 1785.03).
• Governing law: the general corporation law in Chapter 1701 applies, except where Chapter 1785 conflicts (ORC 1785.08).
• State filing: a biennial statement listing shareholders and certifying they are licensed, due within 30 days after June 30 of each even-numbered year (ORC 1785.06).

That biennial statement has teeth. If it is not filed, the Secretary of State sends notice, and if it still is not filed within 30 days, the state cancels the association's articles (ORC 1785.06). Reinstatement is available within two years. An LLC has no equivalent biennial filing.

Professional LLC vs. professional association in Ohio

Some older practices are professional associations because, for years, that was the expected form for medicine and law. Many newer practices choose an LLC because it is simpler to run and taxes like a sole proprietorship or partnership unless it elects otherwise. Neither choice is right for every profession. Ask your attorney and accountant, and ask your board first.

Does a professional LLC protect you from malpractice claims?

Not from your own work. ORC 1785.04 says the professional association chapter does not change any law on the relationship between the professional and the person receiving the service, including liability for the service. The engineering statute says the same for firms (ORC 4733.16(F)).

What the entity can do is keep the business's other debts, like a lease or a vendor contract, from automatically becoming yours. An Ohio LLC member is not liable for the LLC's obligations solely because of being a member (ORC 1706.26). Your own negligence, and anything you personally guarantee, is a separate matter. That is why malpractice insurance stays essential after you form the entity. Ask your attorney how the protection applies to claims against a colleague in the same firm.

Treat the entity as a real business so the protection holds where it does apply. Sign engagement letters, leases, and vendor contracts in the LLC's name, keep practice money in the LLC's own bank account, and keep the operating agreement current. A practice that mixes personal and firm money gives a creditor an argument that the two are the same.

Licensing board approvals and firm registrations

The Secretary of State files your articles without asking whether you are licensed. The board that regulates your profession is a separate gate, and some boards regulate the firm, not just the individual. Two examples from the Revised Code:

• Engineering and surveying firms, including LLCs, must get a certificate of authorization from the state board, designate a registered full-time member or manager in responsible charge, and file owner information with the board each year (ORC 4733.16(B), (D)).
• Public accounting firms located in Ohio must register with the Accountancy Board within 90 days after formation or after starting to practice, renew every three years, and have more than 50 percent of the equity owned by individuals holding an Ohio permit or a foreign certificate (ORC 4701.04).

Other professions have their own rules, and they change. Before you file, ask your board:

• Does the firm itself need a registration, permit, or certificate?
• Must every owner be licensed, or only a majority?
• Are there name or advertising rules for the entity?
• Do you need to notify the board when owners or the firm's address change?
• Is professional liability insurance required, and at what amount?

Get the answers in writing or print the board's current rule, and keep it with your formation records. If the board's process takes weeks, you can still form the LLC first; just do not practice or bill through it until the firm-level approval is in place.

Out-of-state professional firms coming into Ohio

A firm formed in another state does not need a new Ohio entity to practice here. ORC 1785.09 covers a foreign LLC registered with the Secretary of State, and the registration is the same Form 617 any foreign LLC files, explained in our guide to Ohio foreign LLC registration. The board side still applies. ORC 4733.16(H), for example, requires engineering and surveying firms organized elsewhere to obtain an Ohio certificate of authorization, and the individuals doing the work generally need Ohio licenses or the board's recognition of their out-of-state credentials.

How to form an Ohio professional LLC, step by step

1. Confirm with your licensing board that an LLC is allowed for your profession and what it requires of the firm.
2. Pick a name that meets ORC 1706.07 and any board name rules, and search it on Ohio Business Central.
3. Appoint an Ohio statutory agent with a street address in Ohio.
4. File Articles of Organization (Form 610) with the Secretary of State, $99.
5. Sign an operating agreement that covers license loss, death, disability, and buyouts.
6. Get an EIN and open a business bank account in the LLC's name.
7. Complete any firm registration with your board before practicing through the LLC.
8. Move malpractice and general liability coverage to the LLC, and update payer and client contracts.

Our Ohio LLC formation service files Form 610 with us named as agent. Board registrations are yours to file, because they turn on your license and your profession's rules.

What happens when an owner loses a license or leaves?

This is the clause professional firms most often leave out. If your board requires owners to be licensed, an owner whose license lapses, is suspended, or is surrendered at retirement may put the firm out of compliance. Chapter 1706 will not fix that for you. A member of an Ohio LLC cannot voluntarily dissociate under ORC 1706.41(A), so the exit has to be built into the operating agreement.

Write in what triggers a mandatory buyout, how the price is set, and how fast the interest has to be transferred. The same applies to death. A deceased owner's estate is usually not licensed, so the agreement should say who buys the interest and on what terms. Our guide to Ohio LLC member changes covers the mechanics of admitting and removing members.

Clauses worth adding to a professional LLC operating agreement

• A requirement that every member hold and keep the license the board requires, with notice to the firm within a set number of days of any discipline
• Automatic dissociation, or a mandatory buyout, if a member's license is revoked, suspended past a set period, or surrendered
• A valuation method for the departing member's interest, and a payment schedule the practice can afford
• Who takes over the departing professional's client or patient files, consistent with the board's record-keeping rules
• Which member is the firm's designated licensee or person in responsible charge, if your board requires one
• How a new professional is admitted, including any trial period before ownership vests

Choosing a statutory agent for a professional practice

Every Ohio LLC needs a statutory agent under ORC 1706.09, and for a professional practice the agent is where malpractice suits and board-related legal papers get served. Many professionals name themselves or an office manager. Under ORC 1706.09(C)(1), an individual agent's address on the public record is the street address of that person's primary residence in Ohio, so the owner's or manager's home becomes the address where malpractice suits are served. When that person retires or leaves, the firm has to remember to file a change.

Our Ohio statutory agent service is $49 per business per year. Service of process is scanned to your portal the same business day, every authorized contact is notified, and we call if nobody acknowledges it. You can give your own attorney a portal role limited to that entity. If you are an attorney or CPA managing agent service for clients, see our page for attorneys and CPAs.

Taxes and when to get advice

A professional LLC is taxed like any other LLC: disregarded with one member, a partnership with two or more, unless it elects corporate or S corporation treatment. Many practices look at an S election once income is steady; the S corp election service handles the IRS filing once your accountant agrees it fits. Choosing between an LLC, a professional association, and a corporation, and drafting ownership rules your board will accept, are judgment calls for an attorney who knows your profession. We do not give legal advice.