Sometimes what is confusing most in the law is the abbreviations. For instance, there is the LLC, the PLLC and the LLP. What are the differences between each? In what business setting you would want to use each. Is one form better suited than another? Why or why not?

An LLC (Limited Liability Company) can be said to be a business entity that is more of a hybrid organization, combining the aspects of a partnership such as the tax benefits with those of a corporation such as limited liability. An LLP (Limited Liability Partnership) on the other hand, is comprised of partners who work together in sharing the management rights. It combines the tax benefits of a partnership and those of a limited liability company. A PLLC (Professional Limited Liability Company) is a special type of LLC which is only owned by professionals (those with a license in a particular field). The Internal Revenue Service does not often recognize LLC and PLLC for tax purposes (Steingold, 2017). They, therefore, stand a risk of being wrongly classified and thus complexities during taxation. LLCs and PLLCs are also often prone to double taxation, an aspect that is not seen in LLPs, making it a better option.

References

Steingold, F. S. (2017). Legal guide for starting & running a small business. Nolo.