Business Law 101 / Professional Service Businesses

By Albert L. Kelley

 

What is meant by a Professional Service business? Professional Services are defined as certified public accountants, public accountants, chiropractic physicians, dentists, osteopathic physicians, physicians and surgeons, doctors of medicine, doctors of dentistry, podiatric physicians, chiropodists, architects, veterinarians, attorneys at law, and life insurance agents.

Professional service businesses are very similar to general service businesses, however the law governing their formation is different than non-professional businesses. While a general service business is governed by standard corporation statutes (Florida Statute 607) or limited liability company statutes (Florida Statute 605), professional service companies are governed by those two statutes plus Florida Statute 621. Pursuant to statute 621, a professional service business can exist in a number of different formats: sole proprietorship, partnership, corporation or LLC. However, there are certain phrases and abbreviations that are solely available for professional businesses. If the professional business is incorporated, they may use the phrase “Professional Association” or the initials “P.A.”. They may also use the word “Chartered”. However, unlike a general services company, professional service corporations are prohibited from using the phrases “company,” “corporation,” or “incorporated” or any other word, abbreviation, affix, or prefix indicating that it is a corporation. If it is a limited liability company founded before January 1, 2014, the business may use the words “professional limited company” or “professional limited liability company,” the abbreviation “P.L.” or “P.L.L.C.” or the designation “PL” or “PLLC,”; if formed after January 1, 2014, the words “professional limited liability company,” the abbreviation “P.L.L.C.” or the designation “PLLC. While professional businesses are not required to use the owners name in the business name, they are allowed to use the names of current members, retired members and deceased members. They may not use the names of people who are not or were not members of the company.

There is also a restriction on who may be an owner of a professional service business. Only those persons who hold an appropriate license may be an owner of a professional service business. In other words in a law firm, the only people that may be owners are lawyers; in an architectural firm, the owners must all be architects. While many business owners want their spouses to join them in the business, if the spouse does not hold the appropriate license, they cannot be an owner of the business.

In addition, there cannot be cross-profession ownership. In other words, a lawyer and accountant cannot team up to open a business services company that provides both legal and accounting services. While they may refer business to each other, they must keep their companies separate. However, two law firms can join to forma third law firm, or two physicians may each have their own professional corporation which join to form another professional corporation, each while keeping their own identity.

While the company may have employees that are not appropriately licensed, the professional service must only be rendered by those licensed to practice their field. Secretaries, receptionists and other employees cannot give professional advice or treatment without being licensed (Nurses and para-professionals are entitled to provide services within their given professional license field).

Al Kelley is a Florida business law attorney located in Key West and previously taught business law, personnel law and labor law at St. Leo University. He is also the author of four law books: (“Basics of Business Law” “Basics of Florida’s Small Claims Court”, “Basics of Florida’s Landlord/Tenant Law” and “Basics of Starting a Florida Business” (Absolutely Amazing e-Books)). This article is being offered as a public service and is not intended to provide specific legal advice. If you have any questions about legal issues, you should confer with a licensed Florida attorney.

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