Professional Limited Liability Company Members Limited to Those Licensed in that Profession
Generally, a limited liability company, or “LLC”, may be formed in the State of Connecticut for the transacting of any business or promotion of any purpose which is lawful. Due to the exposure for liability of a partner in a partnership, many professionals choose to create a limited liability company when joining with other professionals to render professional services. However, Connecticut has placed additional regulations on the formation of an LLC that is to provide professional services.
A limited liability company may only be formed to render professional services if (1) each member of the limited liability company is licensed or otherwise authorized by law to render the professional service involved, (2) the LLC will render only one specific type of professional services and services ancillary to that purpose, but may not engage in any business other than the rendering of the professional service for which it was formed, and (3) the LLC can only render its professional services through members, managers, employees and agents that are licensed or otherwise authorized by law to do so.
What does the State of Connecticut consider to be a “professional service”? A professional service is one that requires a member of that profession that wishes to render those professional services to first obtain a license or legal authorization. Currently this list includes:
- Physicians and Surgeons
- Doctors of Dentistry
- Physical therapists
- Occupational therapists
- Professional engineers
- Landscape architects
- Real estate brokers
- Insurance producers
- Certified public accountants and public accountants
- Land surveyors
- Licensed marital and family therapists
- Licensed professional counselors
- Licenses or certified alcohol and drug counselors and
- Licensed clinical social workers
The law does allow certain professions to form an LLC together if (a) each member of the limited liability company is licensed or otherwise authorized by law to render any of the professional services involved, (b) the limited liability company will only render the types of services involved and those services ancillary to that profession, and (c) the LLC only renders it’s professional services through members, managers, employees and agents who are licensed or otherwise authorized by law to render the professional services involved. Psychology, marital and family therapy, social work, nursing and psychiatry professions can be combined. Medicine, surgery, occupational therapy, social work and alcohol and drug counseling professions can be combined. Medicine, surgery and chiropractic professions can be combined.
If a member of an LLC that renders a professional service loses their license or authorization to render that professional service, they are deemed to be disassociated from the LLC as an operation of law.
It should be noted that a limited liability company rendering professional services is liable up to the full value of its property for any negligent or wrongful acts or misconduct committed by any of its members, managers, agents or employees who are engaged in rendering professional services on behalf of the LLC. Members, managers, agents and employees engaged in rendering professional services on behalf of the LLC are only personally liable for the negligent and wrongful acts or misconduct committed by himself or herself or any person directly under his or her supervision. However, as is the entire point with forming limited liability companies for rendering professional services, individual members are only responsible for the liabilities of the LLC to the extent of their interest in the LLC, unless it is their wrongful conduct that led to the liability.
If you are looking to form an LLC for the purpose of rendering a professional service, you will need the help of an experienced business attorney. Forming an illegal LLC or failing to think through the business organization process can create civil and potentially criminal liabilities for its members, cost the members a lot of money, and eventually lead to the downfall of the organization. The regulations discussed in this article are only some of the regulations imposed on professional services by the State of Connecticut, and every profession will have its own specific regulations. The Law Office of Eugene Glouzgal offers a range of business services including LLC formation. Contact us today for a free consultation by phone at 203-794-6691, by e-mail at Glouzgal@CTAttorney.us or by using our interactive messaging and scheduling assistant.