Does limited liability company formation work for all types of businesses?

You can conduct just about any business as a limited liability company. And you can almost always own investments inside a limited liability company.

The one thing you need to be aware of is that some professions can't be operated as limited liability companies. When this is the case, states usually allow professionals in that state (doctors, lawyers, dentists, accountants and so on) to operate as professional limited liability companies--sometimes known by the acronyms "pllc" or "PLLC."

You can usually easily tell whether people in particular profession in your state need to operate as a professional limited liability company. If most of the large professional practices use the acronym "pllc" or "PLLC" in their names, that probably means that people in that profession can't use a regular limited liability company but must instead use a professional limited liability company.

Two final quick notes:

1. You will sometimes see professional practices that appear to have selected the LLC option even though most professional practices in the state selected the PLLC option. In Washington state, for example, certified public accountants should form a professional limited liability company and not a regular limited liability company. But you'll still see some CPAs that have setup their practices as LLCs. What this means, often, is that the person who setup the LLC didn't know he or she was really supposed to setup a PLLC. And that the Secretary of State's office personnel who processed the articles of formation for the limited liability company simply missed the fact that the person should have used a pllc.

2. Some states don't allow professionals to form limited liability companies at all. In such a state, professionals must form a professional corporation. You can tell if this is the case in your state by calling the Secretary of State's office. Also, if you're observant, you'll notice that professional practices in your state in the category in question won't use the acronyms LLC or PLLC in their names but rather acronyms PC or PS.

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