LLC vs PLLC for Medical Practices — MD, DO, and Dental 2026 Complete Guide

Before you start

What to know first

PLLC requirement by state: many states require licensed healthcare professionals (MDs, DOs, dentists, nurse practitioners, PAs) to form a Professional Limited Liability Company (PLLC) rather than a standard LLC when operating a medical practice. States with PLLC requirements for medical professionals include: Texas (TX Bus. Org. Code § 301.003 — medical practices must organize as PLLCs), New York (NY LLC Law Art. 12), California (only licensed professionals may use the name 'medical corporation' or 'professional medical corporation' under Cal. Corp. Code § 13401 et seq. — California does not use the PLLC designation but requires professional corporations for many licensed professions; MDs typically form a professional medical corporation, not an LLC), Florida (§§ 621.011–621.13 Fla. Stat. — professional associations or PLLCs for licensed health professionals). The forthcoming PLLC guide at /pllc-guide/ covers PLLC-specific formation requirements in detail. This guide focuses on the LLC/PLLC decision framework and medical practice compliance requirements common to all entity types.
State-by-state PLLC requirement for medical professionals: Texas — MDs and DOs must use a PLLC; dentists must use a PLLC or professional association. Florida — licensed health professionals may use a PLLC (§ 608.406 Fla. Stat.) or professional service corporation. California — MDs must use a professional medical corporation (a PC or Inc., not an LLC or PLLC); the California Medical Board does not authorize medical practice through an LLC. New York — licensed medical professionals must use a professional service LLC (PLLC) or professional corporation. The PLLC form differs from a standard LLC primarily in: (1) only licensed members of the specific profession may own interests; (2) the entity name must reflect the licensed profession; (3) the licensing board must approve or register the entity. CHECK YOUR STATE's medical board and SOS requirements before filing.
Corporate practice of medicine doctrine: most states prohibit the 'corporate practice of medicine' — the principle that only licensed physicians can practice medicine, and that unlicensed entities (corporations, non-physician investors) cannot control clinical decisions. In California, the CPOM doctrine is strictly enforced — management service organizations (MSOs) structured to give non-physician investors effective control of a medical practice may be challenged by the Medical Board. In Texas, the prohibition is statutory (TX Occ. Code § 165.156). In Florida, the CPOM doctrine applies with some nuance. The PLLC/PC structure for medical practices is designed to satisfy CPOM by ensuring physician ownership and control. Non-physician investors (PE firms, health systems) that acquire physician practices typically use a physician-owned PLLC paired with a non-physician MSO — a 'friendly PC' or 'friendly PLLC' arrangement — to navigate CPOM restrictions while allowing capital investment.
DEA registration: any medical practice in which controlled substances are prescribed, dispensed, or administered must register with the Drug Enforcement Administration. The DEA registration is specific to: (1) the registered practitioner (individual physician); (2) each registered location (office address). A physician practicing at two locations needs two DEA registrations ($888/yr each). A PLLC or PC that has hospital-employed physicians who prescribe at the clinic level may need a DEA registration for the practice entity itself, depending on state law and dispensing model. DEA registrations are issued per location — a mobile practice or multi-site group must carefully map DEA registrations to each service address.
Malpractice insurance: medical malpractice (professional liability) insurance is the dominant insurance cost for medical practice entities. The named insured should be the licensed physician AND the professional entity (PLLC or PC). Occurrence vs. claims-made: occurrence policies cover claims for incidents that occurred during the policy period, regardless of when the claim is filed — more expensive but preferred. Claims-made policies cover claims reported during the policy period — require a 'tail' policy (retroactive coverage) when the physician leaves or retires. Tail coverage typically costs 200%–300% of the annual premium. Malpractice premiums vary enormously by specialty: a family medicine physician in Texas: $5,000–$15,000/yr; an OB/GYN in Florida: $50,000–$150,000+/yr; a general surgeon in California: $20,000–$80,000/yr. Texas enacted significant tort reform (Prop 12, 2003) capping non-economic damages at $250,000 per defendant — this reduced malpractice premiums significantly in TX compared to FL and CA.
NPI and CAQH credentialing: each physician and the medical practice entity both need National Provider Identifiers (NPIs). The individual physician's Type 1 NPI is tied to their medical license. The practice entity's Type 2 NPI is tied to the PLLC/PC. Both are required for insurance billing (Medicare, Medicaid, commercial payors). The CAQH ProView database is the centralized credentialing system used by most commercial health plans — credentialing a new practice or new physician with insurance panels takes 90–180 days. Do not open a new practice without beginning credentialing before you open — you will not be able to bill most insurance plans until credentialing is complete.
Dental practices: dentists face the same PLLC/professional entity requirements as MDs in most states. Additional dental-specific considerations: (1) dental radiograph (X-ray) equipment requires state radiation control registration in most states; (2) dental practices that administer IV sedation or general anesthesia must hold a separate permit from the state dental board; (3) dental practices that dispense controlled substances (local anesthetics, nitrous oxide) must have DEA registrations; (4) dental supply agreements (equipment leases, supply contracts) should be in the professional entity's name.
Telehealth entity considerations: a medical practice PLLC operating telehealth services across state lines must ensure the physician is licensed in every state where patients are located. The PLLC entity may need to foreign-qualify in states where it has significant telehealth volume. The COVID-era interstate licensure compacts (IMLC for MDs/DOs; APRN Compact for NPs) allow expedited multi-state licensure for qualifying providers. The PLLC structure should be reviewed by a healthcare attorney if telehealth crosses into states with PLLC or CPOM restrictions.

Documents

What you'll need

Articles of Organization or Certificate of Formation (PLLC or LLC) — filed with the state SOS; the entity type must be correct for the profession and state (PLLC where required)
State medical/dental board entity registration — filed with the licensing board after SOS formation; the PLLC cannot legally provide professional services until the board approves the entity
Operating Agreement — for the PLLC; must restrict membership to licensed members of the specific profession; governs buyout provisions when a member loses their license
EIN Confirmation Letter — required to open the practice bank account, set up payroll for staff and the physician owner, and process insurance reimbursements
DEA registration certificate — required for each location where controlled substances are prescribed or dispensed
Malpractice insurance certificate — both the individual physician and the practice entity should be named insured; required by hospital credentialing committees and most payors
NPI Type 1 (physician) and Type 2 (entity) — required for insurance billing; apply at NPPES before opening
CAQH ProView credentialing profile — required by most commercial health plans before the practice can bill; begin 90–180 days before opening
State radiation control registration (dental/radiology practices) — required for X-ray and imaging equipment; issued by the state's radiation control program
Hospital credentialing / privileges application (if applicable) — a physician providing hospital-based services must apply for privileges at each hospital separately

Process

Step by step

Determine the correct entity type for your state and profession Before filing anything, confirm whether your state requires a PLLC, professional corporation, or professional association for your specific licensed profession (MD, DO, dentist, NP, PA). Check both the state SOS website and the state licensing board: the SOS handles the entity formation; the licensing board handles entity approval for professional practice. California MDs: a professional medical corporation (Inc. or Corp.) is required — not an LLC or PLLC. Texas MDs/DOs: a PLLC is required (TX Bus. Org. Code § 301.003). Florida health professionals: a PLLC or professional service corporation is available (§ 608.406 Fla. Stat.). New York MDs: a PLLC (NY LLC Law Art. 12) or PC. Consult a healthcare attorney if uncertain — an incorrectly formed entity may not be legally permitted to bill insurance or receive reimbursements.
Form the professional entity and register with the licensing board File the formation documents with the state SOS. Use the correct designation (PLLC, PC, or PA) and include the professional service designation in the entity name as required by state law — many states require the professional service designation to appear in the entity name (e.g., 'Smith Family Medicine PLLC'). After SOS approval, register the entity with the state medical or dental board. In Texas, register the PLLC with the Texas Medical Board (online application, $150 fee). In Florida, register with the appropriate DBPR board division. This board registration is a prerequisite to providing professional services through the entity.
Obtain NPI numbers and begin insurance credentialing Apply for a Type 1 NPI (individual physician) and a Type 2 NPI (practice entity) at nppes.cms.hhs.gov — free and immediate. Apply to enroll the practice entity in Medicare and Medicaid using the CMS-855I (individual physician) and CMS-855B (group practice entity) forms. Simultaneously, complete the CAQH ProView profile for the physician and the practice — most commercial health plans require CAQH credentialing before granting billing privileges. Begin CAQH 90–180 days before your planned opening date. Do not open until Medicare enrollment and at least 2–3 major commercial panel credentialing approvals are in hand — without credentialing, the practice cannot bill the majority of patients.
Obtain DEA registration and state controlled substance registration If the practice will prescribe or dispense controlled substances (virtually all primary care, pain management, psychiatry, and dental practices), apply for DEA registration at deadiversion.usdoj.gov. Apply for each physical location separately ($888/3-year registration). Most states also require a separate state controlled substance registration from the state pharmacy board — in Texas (Texas State Board of Pharmacy), in Florida (FL Department of Health), in California (CA State Board of Pharmacy). The state controlled substance license fee varies: TX $25/yr; FL $75/2 yrs; CA $200/yr. Both DEA and state registrations must be in place before any controlled substances are prescribed at the practice address.
Obtain malpractice insurance before seeing the first patient Purchase malpractice insurance for both the individual physician and the practice entity before opening for patient care. Contact a medical malpractice broker (Coverys, ProAssurance, The Doctors Company, CUNA Mutual) to obtain occurrence or claims-made coverage. For claims-made policies: understand the tail coverage requirement and budget for it when comparing policies. Ensure the PLLC/PC is named as a co-insured alongside the individual physician. Most hospital credentialing committees and many commercial payors require a minimum of $1M/$3M malpractice limits — confirm the required limits with each hospital and payor during credentialing. For dental practices: add dental malpractice (professional liability) and property insurance for equipment.
Set up payroll and understand physician owner compensation structure The physician owner of a PLLC/PC must receive a W-2 salary (not just distributions) if an S-Corp election is made. Set up payroll through a medical-practice-familiar payroll provider (Gusto, ADP, Paychex). For a solo physician PLLC with no employees, the physician is both the sole member and sole employee. S-Corp election for a physician PLLC: the IRS requires a 'reasonable compensation' salary — for physicians, the reasonable compensation threshold is high relative to other industries, because physician compensation is driven by clinical production. Work with a medical practice CPA to determine the appropriate salary/distribution split. For a multi-physician PLLC, the Operating Agreement must clearly define physician compensation (productivity-based, equal split, or hybrid) to prevent disputes.
Understand PLLC-required states and plan for license events A PLLC's Operating Agreement must address what happens when a member loses their professional license — this is the most critical provision unique to professional entities. States that require PLLC (TX, NY, FL, and others) also require that all members remain licensed in the profession. If a physician member has their license revoked or suspended, most state statutes require their PLLC interest to be transferred or redeemed within a specified period. Include clear buy-sell provisions triggered by license loss, death, disability, or voluntary departure. Consult a healthcare attorney when drafting the PLLC Operating Agreement — standard LLC operating agreement templates are not sufficient for professional service entities with licensing restrictions. See the forthcoming PLLC guide at /pllc-guide/ for state-by-state PLLC formation requirements.

Costs

What it costs

Item	Amount	Notes
PLLC or professional entity formation (state-specific)	$50–$500 one-time	TX: $300 Certificate of Formation for PLLC (same fee as standard LLC). FL: $125 Articles of Organization for PLLC. CA: professional medical corporations file Articles of Incorporation with CA SOS ($100 one-time); not available as LLC/PLLC for MDs. NY: PLLC formation $200 + $1,000–$2,000 publication requirement. In states requiring PLLC, confirm the designation with the state medical board before filing — the PLLC must be registered with the licensing board, not just the SOS.
DEA registration	$888/year per registered location	DEA registration is required for any practitioner who prescribes, dispenses, or administers controlled substances. Fee is $888 per 3-year registration (renewed every 3 years at the same rate). Each location where controlled substances are handled requires a separate DEA registration. A practice with 3 locations needs 3 DEA registrations = $2,664/yr in DEA fees alone. Dentists who use nitrous oxide or dispense opioid prescriptions need DEA registration.
Medical malpractice insurance	$5,000–$150,000+/year (specialty-dependent)	Premium varies by specialty (OB/GYN and neurosurgery are the most expensive), state (FL and NY have higher premiums than TX due to tort law), and claims history. Occurrence policy: more expensive but covers events regardless of when the claim is filed. Claims-made policy: less expensive annually but requires tail coverage (200%–300% of annual premium) when coverage is discontinued. The PLLC or PC should be named as an additional insured on the policy alongside the individual physician.
State medical board entity registration	$100–$500 one-time	Most states require the professional entity (PLLC or PC) to register with the state medical/dental licensing board separately from the SOS filing. TX: register the PLLC with the Texas Medical Board after SOS formation. FL: professional service entities must register with the applicable licensing board. CA: professional medical corporations register with the Medical Board of California. Verify the specific board registration requirement in your state before opening for patient care.
NPI registration (Type 1 individual + Type 2 entity)	$0	NPI registration through NPPES (National Plan and Provider Enumeration System) is free. Type 1 NPI for the individual physician; Type 2 NPI for the practice entity. Both are required for Medicare/Medicaid and commercial insurance billing. Apply at nppes.cms.hhs.gov. NPI issuance is typically immediate (same day). Begin CAQH credentialing with commercial payors using the NPIs — allow 90–180 days for panel credentialing.

FAQ

Common questions

Do I need a PLLC instead of a standard LLC for my medical practice?

It depends on your state. Texas requires MDs and DOs to organize as a PLLC (TX Bus. Org. Code § 301.003) — a standard LLC is not permitted for medical practices in Texas. Florida allows health professionals to use a PLLC or professional service corporation. California does not have a PLLC designation for MDs — physicians in California must use a professional medical corporation (a professional corporation, not an LLC). New York requires licensed professionals to use a PLLC (NY LLC Law Art. 12) rather than a standard LLC. The consequences of forming the wrong entity type are severe: insurance contracts, Medicare enrollment, and state licensing may be void or voidable if the entity does not meet the state's professional entity requirement. Always confirm the correct entity type with both the state SOS and the state medical or dental licensing board before filing. See the forthcoming PLLC guide at /pllc-guide/ for comprehensive state-by-state PLLC requirements.

What is the corporate practice of medicine doctrine and how does it affect my practice LLC?

The corporate practice of medicine (CPOM) doctrine holds that only licensed physicians may practice medicine and make clinical decisions — an unlicensed corporation or non-physician investor cannot own or control a medical practice. California enforces CPOM most strictly — the Medical Board actively investigates management agreements that give non-physician entities effective control over physician practices. Texas has a statutory CPOM prohibition (TX Occ. Code § 165.156). The PLLC/PC structure for medical practices satisfies CPOM by limiting ownership to licensed physicians. Private equity investment in medical practices navigates CPOM through a 'friendly PC' structure: a physician-owned PLLC provides the licensed entity for patient care, while a management services organization (MSO) — which can be non-physician-owned — provides administrative services under a management services agreement. The MSO cannot control clinical decisions. Healthcare attorneys structure these arrangements carefully to avoid CPOM violations.

How is a physician PLLC taxed, and should I elect S-Corp status?

A single-physician PLLC is a disregarded entity by default — all practice income goes on Schedule C. Self-employment tax (15.3% on the first $168,600 in 2024; 2.9% above) applies to all net profit. An S-Corp election (Form 2553) allows the physician to split practice income between a W-2 salary (subject to FICA) and distributions (not subject to SE tax). The IRS requires a 'reasonable compensation' salary — for physicians, the reasonable salary is typically $150,000–$300,000+ depending on specialty, because physician compensation is well-documented and IRS auditors are familiar with physician income levels. S-Corp election for physicians saves $15,000–$35,000/yr in SE taxes at typical net income levels, but adds payroll complexity and cost ($1,000–$3,000/yr for payroll processing). Additionally, note that IRC § 199A (20% QBI deduction) classifies physician services as a 'specified service trade or business' — the QBI deduction phases out for physicians with income above the threshold (~$364,200 for married filing jointly in 2024). Work with a CPA who specializes in medical practice taxation.

How long does insurance credentialing take for a new medical practice?

Credentialing with commercial health plans typically takes 90–180 days. Medicare enrollment (CMS-855B for the group entity + CMS-855I for the physician) takes 60–90 days. Medicaid enrollment varies by state: Texas Medicaid (TMHP) typically takes 60–90 days; Florida Medicaid (AHCA) 90–120 days; California Medi-Cal 90–180 days. CAQH ProView profile completion is the starting point — most commercial payors will not begin credentialing until the CAQH profile is verified and attestation is complete. Practical advice: complete the CAQH profile 3–6 months before you plan to open. Begin Medicare and Medicaid enrollment as soon as the PLLC's NPI Type 2 is issued. Apply to 3–5 major commercial plans simultaneously (Blue Cross, United, Aetna, Cigna). A credentialing service ($200–$500/physician) can manage the application portfolio and follow up with payors — many new practices find this service worth the cost given the complexity.

What is tail coverage for medical malpractice and when do I need it?

Tail coverage (also called an extended reporting endorsement) is supplemental malpractice insurance that covers claims filed after a claims-made policy is discontinued. A claims-made policy only covers claims reported while the policy is active — if a patient files a claim 2 years after the treatment occurred, and the physician has since switched carriers or retired, the claims-made policy will not respond unless tail coverage is in place. Tail coverage typically costs 200%–300% of the annual claims-made premium — a physician paying $15,000/yr in malpractice premium will pay $30,000–$45,000 for tail coverage at retirement or carrier change. Occurrence policies do not require tail coverage (they cover events regardless of when the claim is filed) but are significantly more expensive annually. When comparing policies: calculate the total cost of a 30-year career under each option including projected tail coverage to make an informed decision. Key tail coverage scenarios: practice closure, retirement, career change, joining a hospital system that provides its own occurrence-based coverage.

What happens to my medical PLLC if my license is suspended or revoked?

This is the most legally significant risk unique to professional entities. Most state PLLC statutes require that all members of a medical PLLC remain actively licensed in the profession. If a member's license is suspended or revoked: (1) Texas: the PLLC must cure the violation within 90 days — typically by redeeming the unlicensed member's interest; failure to cure may result in administrative dissolution. (2) New York: similar cure period; the unlicensed member must transfer their interest to a licensed physician. (3) Florida: the professional entity statute requires all members to be licensed — loss of license triggers mandatory interest transfer. The PLLC Operating Agreement should contain a mandatory buy-sell provision triggered by license loss, with a valuation formula for the departing member's interest. Without a pre-agreed buy-sell, a forced redemption can result in litigation over valuation. Consult a healthcare attorney to draft the PLLC Operating Agreement — generic LLC templates do not include this critical provision.

Provenance

Legal basis & official sources

Last verified 2026-05-07.

Texas: TX Bus. Org. Code §§ 301.001–301.016 (professional entities); TX Occ. Code § 165.156 (CPOM prohibition); TX Occ. Code Ch. 153 (medical license). Florida: §§ 621.011–621.13 Fla. Stat. (professional service corporations); § 608.406 Fla. Stat. (PLLC for professionals); § 458.320 Fla. Stat. (medical malpractice insurance). California: Cal. Corp. Code §§ 13401–13410 (professional medical corporations); Cal. Bus. & Prof. Code § 2052 (CPOM prohibition); Cal. Bus. & Prof. Code §§ 2000 et seq. (Medical Practice Act). New York: NY LLC Law Art. 12 (PLLC requirements); NY Education Law Art. 131 (medical licensing). Federal: 21 U.S.C. § 823 (DEA registration); 42 U.S.C. § 1395cc (Medicare enrollment); 45 C.F.R. Part 164 (HIPAA Privacy and Security Rules); IRC § 199A (QBI deduction for PLLC income — may apply to physician PLLCs depending on 'specified service trade or business' classification).

Direct filing portal: https://sos.state.tx.us/

If you skip this

Operating a medical practice through an incorrectly formed entity (standard LLC in a state requiring PLLC) can invalidate insurance contracts, Medicare enrollment, and state licensing — the practice may be required to refund all payments received through an unauthorized entity
A physician owner without malpractice insurance faces unlimited personal liability for any adverse patient outcome — one malpractice judgment can exceed $1M in most specialties; California's MICRA cap ($350,000 for non-economic damages as of 2023) and Texas's Prop 12 cap ($250,000 per defendant) provide some protection but do not eliminate the risk
Operating without a DEA registration while prescribing controlled substances is a federal crime — DEA investigations can result in license revocation, criminal prosecution, and civil penalties; the PLLC's professional liability and status are severely compromised
Failure to credential with insurance panels before opening means patients cannot use their insurance at the practice — uncredentialed practices are invisible to most insured patients; delayed credentialing is the #1 reason new practices generate insufficient revenue in the first year
A PLLC whose operating agreement does not address license revocation may face a forced dissolution if a member's license is suspended — some states automatically dissolve a PLLC if a member becomes unlicensed and the situation is not remedied within the statutory cure period

Official sources

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Disclaimer: Informational only, not legal or tax advice. Rules change, so confirm with a business attorney or CPA before you act.