Can an Arizona LLC Become a PLLC & an Arizona PLLC Become an LLC?

Question:  I have an Arizona LLC, but I want to change it to a professional LLC (a PLLC).  Is it possible and how do I make the change?

Answer:  Yes.  An Arizona LLC can be converted to a PLLC and an Arizona PLLC can be converted to an LLC.  You convert one type of LLC to the other type by filing an amendment to the Articles of Organization with the Arizona Corporation Commission and then publishing the name change in an ACC approved newspaper after the ACC approves the amendment.  The Amendment to the Articles of Organization must be signed by a member of a member managed company or a manager of a manager managed company.  The amendment to the Articles of Organization must satisfy the following requirements:

Converting from an LLC to a PLLC:

The Amendment to the Articles of Organization must contain the following provisions:

1.  A statement of the new name of the company with the correct ending.  Arizona Revised Statutes Section 29-4102.B states:

“A limited liability company organized under a law of this state other than this Article may elect professional limited liability company status by amending its Articles of Organization pursuant to Section 29-3202 to comply with subsection A of this Section and with Section 29-4106.

2. Arizona Revised Statutes Section 29-4106 states:

“The name of a professional limited liability company authorized to transact business in this state shall satisfy the requirements of Section 29-3112, except that the name shall contain the words “professional limited liability company” or the abbreviation “p.l.l.c.”, “p.l.c.”, “pllc” or “plc” in uppercase or lowercase letters.”

2. A statement that the company is a professional limited liability company.

3. A description of the professional service or services that the company is organized to provide.

Converting from a PLLC to an LLC:

The Amendment to the Articles of Organization must satisfy each of the following requirements:

1.  It must contain a statement of the new name of the company with the correct ending.

2.  It must remove the statement in the Articles of Organization that the company is a professional limited liability company.

3. It must remove the statement in the Articles of Organization that describes the professional service or services that the PLLC was organized to provide.

Read “What are the Differences Between an Arizona PLLC vs LLC?

What are the Differences Between an Arizona PLLC vs LLC?

Question:  Arizona pllc vs llc: What are the differences between an Arizona professional limited liability company and an Arizona limited liability company and when would somebody form a PLLC instead of an LLC?

Answer:  Only three percent of Arizona LLCs are PLLCs.  Few people are required to form an Arizona PLLC.

Arizona Revised Statutes Section 29-3401.4 states: “‘Professional Limited Liability company’ means a limited liability company organized under this Chapter for purposes that include rendering one or more categories of professional services.”

This means that an Arizona PLLC is an LLC that provides professional services that  may be performed only by a person who is licensed by a limited number of professions in Arizona such as medical doctors, certified public accountants, attorneys and real estate agents.

The following provisions apply only to AZ PLLCs:

1.  The Articles of Organization must state that the company is a professional limited liability company.

2. The Articles of Organization must state the professional service or services that the company is organized to provide.

3. The name of the PLLC shall contain the words “professional limited liability company” or the abbreviations “P.L.L.C.”, “P.L.C.”, “PLLC” or “PLC”, in uppercase or lowercase letters.

4.  A professional limited liability company may issue membership interests only to:

a. Individuals who are licensed by law in Arizona or another state to render a professional service described in the articles of organization of the professional limited liability company.  The following are not violations of this restriction: i) Any community interest of an unlicensed spouse in the membership interest issued to a licensed spouse in which the unlicensed spouse with a community interest in the membership interest does not have the right to vote the membership interest, or (ii) Issuance of a membership interest to a trust established for the benefit of a licensed individual or members of the licensed individual’s immediate family in which the licensed individual has the right to vote the membership interest and the trust and the members of the licensed individual’s immediate family do not have the right to vote the membership interest.

b. General partnerships, registered limited liability partnerships, other partnerships and joint ventures, domestic or foreign, in which all of the partners are licensed persons with respect to the profession to be conducted by the professional limited liability company and in which at least one partner is authorized by law in this state to render a professional service described in the articles of organization of the professional limited liability company.

c. Professional corporations, professional limited liability companies and other persons, domestic or foreign, authorized by law in Arizona to render a professional service described by the articles of organization of the professional limited liability company.

d. Other persons, if after the issuance of voting membership interests, the other persons in the aggregate do not hold more than forty-nine per cent of the membership interests entitled to vote for the election of officers and managers of the professional limited liability company, unless a greater or lesser percentage is prescribed by the board.

Membership interests and rights or options to purchase membership interests of a professional limited liability company that are held by persons described in 4, a, b & c may be transferred or pledged, whether voluntarily, involuntarily, by operation of law, by court judgment or otherwise, only to persons qualified under subsection B to be issued voting membership interests and to the professional limited liability company. Voting membership interests and rights or options to purchase voting membership interests of a professional limited liability company that are held by persons described in subsection B, paragraph 4 may be transferred or pledged, whether voluntarily, involuntarily, by operation of law, by court judgment or otherwise, only to persons who are qualified under subsection B, to be issued voting membership interests and to the professional limited liability company.

To my knowledge, the only profession that requires its licensed professionals to form an Arizona PLLC is the real estate sales agent profession (not real estate brokers).  Arizona realtors do not have to form a professional corporation or a professional LLC unless they want their real estate commission paid by their broker broker to an entity rather than directly to them.  Doctors, lawyers and accountants in the past were required to form Arizona professional corporations or Arizona PLLCs, but not currently.

The Arizona Department of Real Estate requires the following of real estate agent’s PLLCs:

  • The name of the PLLC or PC be the name of the professional as it appears on the real estate agent’s license, and
  • The Professional Corporation or Professional Limited Liability Company Name, through and on behalf of which a salesperson or broker acts, shall consist of only the full or last name(s) of its shareholder(s) or member(s), and contain the words “Professional Corporation,” “Professional Limited Liability Company”, as applicable, or the abbreviations authorized under Arizona Revised Statutes Sections 10-2215 or 29-4106, as applicable, to reflect that it is a Professional Corporation or Professional Limited Liability Company, and shall reflect whether it comprises one or more licensees (single or plural as in John Smith, P.C. or Smith & Smith, P.C.).
  • For a designated broker, PC/PLLC name shall only consist of the broker’s full or last name, and words or abbreviation to indicate it is a PC or PLLC.
  • A PC or PLLC shall not have a fictitious name.
  • The Articles of Organization of a PLLC formed for a real estate agent contain the following statement:  “The sole purpose of the Professional Corporation (or Professional Limited Liability Company) is to render professional real estate services.”

Read “Can an Arizona LLC Become a PLLC & an Arizona PLLC Become an LLC?

2021-01-03T13:52:01-07:00July 12th, 2011|FAQs, PLLCs|27 Comments

Must an Arizona CPA form a PLLC?

QuestionMust an Arizona CPA who desires to practice accounting in Arizona form a professional limited liability company (PLLC) or can the CPA form a standard vanilla limited liability company (LLC)?

Answer:  An Arizona CPA can form either an LLC or a PLLC to practice accounting in Arizona.  The following text is taken from the Arizona State Board of Accountancy’s website:

The use of the professional designation, such as PC (Professional Corporation) or PLLC (Professional Limited Liability Company), means that the service being offered may only lawfully be rendered by a person duly licensed in this state, such as those offered by attorneys and CPAs/PAs. The use of the designation, however, is not required to form a CPA firm; for example, if you are considering forming a limited liability company, you can license the firm as an LLC or as a PLLC, but you are not required to license your firm as a PLLC.

2016-11-16T08:23:57-07:00December 10th, 2009|LLCs & Corporations, PLLCs|0 Comments
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