Choosing the Best New York Professional Entity in 2026: PLLC, PC, DPC, LLP, LLC, or Inc?

Why licensed professionals can’t use a regular LLC or corporation in New York

Licensed professionals can’t simply use a regular LLC or corporation. Doing so is not just a mistake — it is a crime. Under Section 6512 of the NYS Education Law, practicing a profession through a standard LLC or corporation is considered the unauthorized practice of a profession, while operating such an entity constitutes aiding and abetting unauthorized practice. Both of these are class E felonies, punishable by a fine, and up to 4 years imprisonment. Using a regular LLC or corporation can also result in professional disciplinary action, which could include suspension or loss of licensure.

A Detailed Breakdown: Choosing Your Professional Entity

In New York, selecting a business structure is a decision with lifelong consequences for your liability profile and tax obligations. Since, under New York criminal law, practicing a licensed profession through a standard LLC or business corporation is a felony, practitioners must choose from the PLLC, PC, DPC, LLP, Sole Proprietorship and Partnership. In most cases, the PLLC is usually the best option for New York practices. Below is a detailed comparison of the pros and cons of the different entities:

Number of Owners

The flexibility of your ownership structure depends heavily on the entity type:

• PLLC, PC and DPC: Highly flexible; can be owned by a single member or shareholder, or multiple professionals.
• Sole Proprietorship: Strictly limited to one owner only.
• Partnership and LLP: Legally require a minimum of two (2) partners to exist.
• Subchapter “S” Limits: PLLCs, PCs, and DPCs can choose to be taxed as Subchapter “S” corporations. Be aware that if this choice is made, there can only be a maximum of 100 owners, and all owners must be United States tax-residents.
• Winner: PLLC, PC, DPC, and Sole Proprietorship tied.

If you are starting a solo practice, your choices will be limited to a PLLC, PC, DPC, or sole proprietorship.

Non-Professional Owners (Equity Restrictions)

New York law generally maintains strict rules about professional ownership to prevent non-licensed interference in professional judgment:

• PLLC, PC, LLP, Partnership and Sole Proprietorship: 100% of owners must be licensed professionals.
• DPC: Less than 25% of owners may be non-licensed persons.
• Accounting Exception: Accounting PLLCs, PCs, LLPs, and Partnerships may have less than 50% of owners be non-licensed persons. However, the name of the entity cannot include “CPA” or “certified public accountant.” Additionally, New York charges a $900 fee per non-licensed owner every three years.
• Winner: DPC, unless practicing accounting.

Availability to Professions

Not all legal structures are available to every profession:

• PLLC, PC, LLP, Partnership and Sole Proprietorship: Available to all licensed professionals.
• DPC: Exclusively reserved for the design professions: architecture, landscape architecture, engineering, geology, and land surveying.
• Winner: PLLC, PC, LLP, Partnership, and Sole Proprietorship tied.

Protection from Business Liabilities

One of the primary reasons to avoid a Sole Proprietorship or Partnership is that they do not protect their owners from business liabilities:

• Sole Proprietorship and Partnership (None): Provide no personal liability protection. All business debts and obligations are the personal liabilities of the owners.
• PLLC, PC, DPC, and LLP: Provide a full liability shield. Members, shareholders, or partners are generally not responsible for the liabilities, debts, or obligations of the business.
• Need for Corporate Formalities (PC and DPC): Corporations can lose their liability shield if corporate formalities are not followed. PLLCs and LLPs do not need to follow corporate formalities, although they are considered a best practice. This means that the liability shield of corporations is a bit more fragile.
• Winner: PLLC and LLP tied.

Why business liability protection is of utmost importance: Imagine that a therapist starts a practice. One winter, a new patient slips on ice at the front door of the office. The court awards the patient $8,000,000. The practice has total assets of $3,000,000. If the practice were set up as a sole proprietorship or partnership, the therapist would need to pay the patient the remaining $5,000,000 out of their personal assets. If the practice were set up as a PLLC, PC or LLP, the practice would close down and pay the patient $3,000,000, and that is all the patient gets. The therapist would then just open a new PLLC, PC or LLP. (Note: This is different from professional negligence. See Protection from Malpractice Liability).

Protection from Malpractice Liability

It is a dangerous myth that a formal company structure protects you from malpractice claims. In New York, no entity type shields you from your own professional negligence. Every owner of a PLLC, PC, DPC, or LLP remains personally liable for their own malpractice and must maintain robust malpractice insurance.

Winner: None. Malpractice Insurance Required.

Charging Order Protection (The Takeover Defense)

This is the “Gold Standard” of business asset protection, yet it is only available to specific entities:

• The Advantage (PLLC, LLP, and Partnership): These entities provide Charging Order Protection. If an owner is sued personally, a creditor cannot foreclose on the owner’s interest or take over the business. They can only receive distributions when the owner is normally paid, protecting the other owners from unwanted business partners.
• The Risk (Sole Prop, PC, and DPC): These provide no charging order protection. A creditor can request a court to foreclose on assets or shares, potentially causing the business or shares to be sold to the highest bidder.
• Winner: PLLC, LLP, and Partnership tied.

The Burden of Corporate Formalities

Certain legal entities are required to follow strict “corporate formalities” in order to keep the personal liability protection of their owners intact:

• PLLC, LLP, Partnership, and Sole Proprietorship: No corporate formalities required. Owners do not need to hold formal annual meetings, appoint officers, or record minutes to maintain their legal status.
• PC and DPC: Must follow strict corporate formalities to maintain their liability shield. This includes adopting corporate bylaws, issuing stock certificates, electing a Board of Directors, appointing corporate officers (President, Secretary, Treasurer), holding mandatory annual meetings, and recording formal written minutes of those meetings.
• Winner: PLLC, LLP, Partnership, and Sole Proprietorship tied.

Why corporate formalities are burdensome: Corporate formalities impose an administrative burden on the operations of a business. For example, when required, a solo practitioner would need to hold meetings with themselves, and then record the minutes of those meetings. Failing to maintain even one piece of this paperwork could allow courts to “pierce the corporate veil,” destroying the owner’s personal liability protection.

Professional Business Activity

Depending on your profession and entity type, you may be restricted in how many professions you can legally practice:

• Broad Authority (PLLC, LLP, Sole Proprietorship, Partnership): Can generally practice the professions of all their licensed owners.
• Severely Restricted (PC): Generally limited to practicing one profession only, with the exception of PCs that practice the design professions, or that have only one shareholder only.
• Restricted (DPC): Generally limited to practicing the design professions.
• Specific Profession Limits: Regardless of entity type, entities practicing certified behavior analyst assistant, creative arts therapy, dentistry, licensed behavior analyst, licensed clinical social work, marriage and family therapy, medicine, mental health counseling, psychoanalysis, and veterinary medicine, can only practice one profession unless owned by a single owner.
• Winner: PLLC, LLP, Sole Proprietorship and Partnership tied.

Non-Professional Business Activity

Depending on the entity type, your ability to provide non-professional services, or to sell goods might be limited:

• Broad Authority (PLLC, LLP, Sole Proprietorship, Partnership): These entities can conduct almost any other lawful non-professional business activity simultaneously.
• Severely Restricted (PC and DPC): Professional Corporations and Design Professional Corporations cannot conduct any other non-professional business activities.
• Winner: PLLC, LLP, Sole Proprietorship, and Partnership tied.

Why the ability to conduct non-professional activity might be important: Some of our clients include mental health professionals that want to provide coaching services, or doctors that want to sell health supplements. Larger practices might want to incorporate a small cafe in their offices. Since the provision of coaching services, the sale of health supplements, and the operation of a cafe are not “professional practice,” these can’t be done through a PC or DPC.

Taxation Options

The PLLC is the most tax-efficient entity because it offers the widest range of “check-the-box” elections:

• PLLC (Very Broad): Can choose between Sole Proprietorship (if limited to one member), Partnership (if multi-member), Subchapter “S” Corporation or Subchapter “C” Corporation treatment. If taxed as a sole proprietorship, PLLCs pay a flat $25/year tax to New York State. Otherwise, follows the tax structure of the other entity types.
• PC and DPC (Broad): Limited to Subchapter “S” Corporation or Subchapter “C” Corporation treatment. Subject to an annual minimum NYS corporation tax between $25 and $200,000, based on gross NYS income. Corporation taxes can exceed the minimum.
• LLP (Narrow): Restricted to Partnership taxation. Subject to an annual minimum partnership tax between $25 and $4,500, based on NYS income.
• Partnership (Narrow): Restricted to Partnership taxation. No minimum tax unless gross NYS income exceeds $1 million. After which, subject to an annual minimum partnership tax between $500 and $4,500, depending on gross NYS income.
• Sole Proprietorship (Narrow): Reported only on the owner’s personal annual tax return.
• Regional New York Taxes: Regardless of your entity, if you operate in New York City, you may be subject to NYC-specific taxes (such as the unincorporated business tax or general corporation tax). Additionally, practices operating or employing staff within the Metropolitan Commuter Transportation District (MCTD) may be subject to the metropolitan commuter transportation mobility tax (MCTMT).
• Winner: PLLC

What tax-option is best: Each tax-option has its pros and cons. Sole proprietorship taxation has the least administrative burden. Sole proprietorship and partnership taxation are also advantageous for asset transfers between the business and its owners because the law treats them as a transfer from the right hand to the left. Subchapter “C” Corporation taxation offers superior employment-related tax-deductions for owner-employers, and the ability to defer portions of taxable income from one year to another. Subchapter “S” Corporation taxation allows savings on self-employment taxes, particularly the uncapped 2.9% medicare portion. We recommend consulting with an accountant to determine what tax structure makes the most sense for your financial objectives.

Perceived Legitimacy & Branding

The name of your practice is often your first “credential” in the eyes of the public and institutional partners, particularly new ones that may be unfamiliar with your work:

• Sole Proprietorship: Often perceived as a solo practitioner “hanging a shingle.” Without an entity suffix, it may be viewed as a less substantial or less “serious” arrangement.
• Partnership: Carrying multiple professional names provides a higher level of “group legitimacy” than a sole proprietorship, but still lacks a formal entity indicator suffix.
• PLLC, PC, DPC, and LLP: These are the “gold standards.” The legally mandated suffixes tell the world that you are a formally registered entity that has met all requirements for state registration. They also let insurance panels know that the business is well structured with personal liability protection.
• Winner: PLLC, PC, DPC, and LLP tied.

Minimum Start-Up Time: The dance with the professional licensing authority.

Timeline is the single biggest hurdle for most PLLCs, PCs, and DPCs in New York. NYSED works on their own time, and there is no way to fully estimate how long they will take:

• PLLC, PC, and DPC (3.5 to 5 Months): Obtaining approval to establish a PLLC, PC or DPC requires a minimum of 60 days for NYSED review, plus 2 to 10 weeks in the NYSED mailroom, plus 5 to 10 business days mailing time.
• Attorney PLLC or PC (1 week): Attorneys aren’t regulated by NYSED, and do not need their approval to set-up a PLLC or PC. Instead, a certificate of good standing from the appellate division needs to be obtained. This can take 1-2 business days. Upon receipt, registration with the NY department of state is nearly immediate.
• LLP (1-2 Business Days): Registration with the NY department of state is nearly immediate.
• Sole Prop and Partnership (Immediate): Can begin immediately, though a DBA filing may be required depending on the name choice.
• Winner: Sole Proprietorship and Partnership tied.

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Minimum Non-Tax Maintenance Costs

Ongoing compliance costs vary by the complexity of the entity’s filing requirements:

• PLLC: Lowest cost for a limited liability entity, averaging approximately $4.50/year (calculated from the $9 biennial statement fee).
• PC and DPC: Higher costs, averaging approximately $39.50/year due to the $105 triennial renewal fee to the Education Department.
• LLP: Averages approximately $4/year (from a $20 five-year statement fee).
• Winner: Sole Proprietorship and Partnership tied.

State Recognition

If you intend to practice in multiple states, check the recognition rules:

• Universally Recognized: Sole Proprietorships, Partnerships, PCs, and LLPs are recognized in almost all states.
• Restricted (PLLC): While most states recognize PLLCs, some (like California) do not. A New York PLLC may not be able to operate in those states without forming a different entity type.
• Narrow (DPC): Design Professional Corporations have very narrow state recognition compared to universally recognized entities, making cross-border expansion more complex.
• Winner: PC, LLP, Sole Proprietorship, and Partnership tied.

DBA (Doing Business As) Names

The names of most professional entities are governed by both the NYS education department (NYSED) and the NY department of state (NYDOS):

• Strict (PC and DPC): Must always meet NYSED naming requirements.
• Less Strict (PLLC, Sole Proprietorship, Partnership): Must only meet NYSED naming requirements if the DBA will be registered with the NYSED.
• Attorney PLLCs, PCs, Sole Proprietorships and Partnerships: Must conform to the rules of professional conduct governing lawyers.
• No Applicable Law (LLP): New York doesn’t actually have a law that allows LLPs to register DBA names.
• Winner: PLLC, Sole Proprietorship, and Partnership tied.

Why the PLLC is usually the best professional entity type in New York

For most New York professionals, and especially for solo practitioners, the PLLC is usually the best form of professional entity because it combines the best parts of the PC and LLP, while avoiding most of the worst parts. A PLLC provides you the strongest personal liability protection available, while also providing takeover protection against creditors. Beyond liability risks and asset defense, the PLLC gives you the absolute broadest options for how your practice is taxed, alongside the freedom to conduct a wide variety of both professional and non-professional business activities.

Ready to get started? Now that you know which entity is right for your practice, you have two options: You can head over to our complete New York PLLC Formation Guide to learn the exact steps to do it yourself, or you can skip the paperwork and have our firm handle the entire formation process for a flat fee ↓.