Do I go to the licensing board or the Secretary of State first to form a PLLC in North Carolina?

The licensing board first. The Secretary of State requires the board's original certificate with the articles of a professional corporation or PLLC and will not form the entity without it. The NC Medical Board likewise requires its certification before you file.

Does a PLLC protect me from my own malpractice?

No. North Carolina law keeps shareholders, directors, officers and PLLC members personally liable for their own professional errors and malpractice. The entity protects you from colleagues' malpractice and general entity debts, so malpractice insurance is still essential.

Can a medical PLLC elect S corporation status?

Yes. A PLLC is taxed like any LLC and can elect S status on Form 2553, paying the owner a reasonable salary and distributing the rest. The entity then runs payroll and pays North Carolina franchise tax, at least $200.

Which professions must use a professional entity in North Carolina?

Those listed in G.S. 55B-2(6), including architects, attorneys, CPAs, physicians, dentists, optometrists, chiropractors, registered nurses, veterinarians, psychologists, occupational therapists, speech-language pathologists, engineers and surveyors, landscape architects and licensed clinical social workers, among others.

Can my non-licensed spouse own shares in my dental practice?

Generally not. Professional corporation shares must be held by licensees, and the same principle applies to PLLC members. Any exception depends on Chapter 55B and the board's rules.

NC PLLC & Professional Corporation: Board Approval First

The short answer

In North Carolina, licensed professionals such as physicians, dentists, lawyers, CPAs, engineers and architects who practice through an entity form a professional corporation under Chapter 55B or a professional LLC (PLLC) under G.S. 57D-2-02, which applies Chapter 55B. The order is licensing board first, then the Secretary of State: the board certifies the entity, and you file the formation document with the board's original certificate attached. The Secretary of State will not form the entity without it. The state filing fee is $125, and owners generally must be licensees. For tax, a PLLC is treated like any LLC and can elect S corporation status; a professional corporation is a C corporation unless it elects S status. The entity does not shield you from liability for your own malpractice.

Who this applies to

Physicians and dentists opening a practice. Leaving a hospital group or starting a practice with colleagues.

Lawyers, CPAs, engineers and architects opening a firm. Many engineers in the Research Triangle go independent as consultants and should first confirm whether their work falls under a licensed profession.

Psychologists, occupational therapists, speech-language pathologists and other licensees. Chapter 55B covers more than doctors and lawyers.

Professionals moving to North Carolina with an existing entity. A foreign professional entity needs North Carolina board approval before it registers here.

Which professions need a professional entity

G.S. 55B-2(6) lists the professional services that must be provided through a professional entity.

The list includes architects, attorneys, certified public accountants, physicians, dentists, optometrists, osteopaths, chiropractors, registered nurses, veterinarians, podiatrists, psychologists, marriage and family therapists, occupational therapists, speech-language pathologists and audiologists, licensed clinical mental health counselors, engineers and surveyors, landscape architects, licensed clinical social workers, geologists, foresters and soil scientists.

Licensing boards: Each profession has its own board, such as the NC Medical Board, the Council of the NC State Bar, the NC State Board of CPA Examiners, and the NC Board of Examiners for Engineers and Surveyors.

Professions not on the list generally use an ordinary LLC or corporation, though the industry may still have its own licensing rules.

Formation order: the board, then the Secretary of State

Apply to your licensing board first, then file the formation document with the Secretary of State together with the board's original certificate.

Step one, the board: Submit the board's application, usually with a draft of the formation document. The NC Medical Board requires its certification before you file articles or an application for certificate of authority. Forms, fees and timing vary by board; under G.S. 55B-10, the registration fee is capped at $50 and the certificate generally runs until the next January 1 and must be renewed unless law or board rules set another date.

Step two, the Secretary of State: A professional corporation files Articles of Incorporation, and a PLLC files Articles of Organization (Form PLLC-02). Each costs $125 and must include the board's original certificate; copies are not accepted. A foreign professional corporation or PLLC registers for $250, also with the board certificate.

Ownership: Shares of a professional corporation generally must be held by licensees, with at least one licensed incorporator, director and officer (G.S. 55B-4). A PLLC applies the same principles to its members.

Name: A PLLC's name must include "Professional Limited Liability Company," "P.L.L.C." or "PLLC."

Later changes: Ownership transfers and any board suspension or revocation affect the entity's status, so check board rules before changing owners.

Taxes work like any LLC or corporation

There is no separate professional entity tax; the usual LLC and corporate rules apply.

PLLC: A single-member PLLC is disregarded by default and reports on Schedule C; a multi-member PLLC files Form 1065. It can elect to be taxed as a corporation, most often as an S corporation (Form 2553), paying a reasonable salary and taking the rest as distributions not subject to self-employment tax.

Professional corporation: A C corporation by default, filing Form 1120 at the 21% federal rate, unless it elects S status.

NC franchise tax: C corporations, S corporations and PLLCs taxed as corporations pay North Carolina franchise tax, at least $200. PLLCs taxed as partnerships or disregarded entities do not.

Qualified business income deduction (Section 199A): Health, law, accounting and consulting are specified service trades or businesses. For 2026, the limit starts at $403,500 of taxable income for joint filers and the deduction for this income is gone above $553,500 (Rev. Proc. 2025-32). The 2025 law (OBBBA) made Section 199A permanent.

The limits of liability protection

A professional entity protects you from colleagues' malpractice and general entity debts, not from your own professional errors.

North Carolina law is explicit: Shareholders, directors, officers and PLLC members remain personally liable for their own errors, negligence, malpractice or misconduct in rendering professional services (G.S. 55B-9 and 57D-2-02).

In practice: Keep professional liability insurance, and sign leases, contracts and bank accounts in the entity's name so ordinary business debts stay with the entity.

A simple example

This is simplified and ignores state tax, retirement plans and other deductions.

Dr. Zhao opens a dental practice in Cary. In January 2026 she applies to the NC State Board of Dental Examiners, receives the original certificate in February, and files the PLLC articles with the Secretary of State for $125. The practice nets $300,000 a year.

Without an election, all $300,000 goes on Schedule C and is subject to self-employment tax. With an S election, she might pay herself a reasonable salary of $150,000, based on industry norms, and take $150,000 as distributions that are not subject to self-employment tax, while adding payroll filings and NC franchise tax (at least $200). If her joint taxable income exceeds $403,500, her QBI deduction begins to phase down.

Common mistakes

"I'll register with the state first and handle the board later." The Secretary of State requires the board's original certificate with the filing.

"The PLLC will cover my malpractice." Your own professional errors remain your personal liability.

"Professional entities have their own tax rate." They follow ordinary LLC and corporate rules; the real difference is the 199A limit for specified services.

"My spouse can hold the shares." Professional corporation shares generally must be held by licensees.

"My out-of-state professional entity can just practice here." It needs North Carolina board certification and then foreign registration.

What to do and when

Two to three months before opening: Choose a professional corporation or PLLC and apply to the licensing board.

After receiving the original certificate: File with the Secretary of State ($125), then get an EIN and open a bank account.

Within 2 months and 15 days after the tax year begins: Decide on an S election and file Form 2553.

Around January 1 each year: Renew the board registration as required.

April 15 each year: PLLC annual report ($200); corporate-taxed entities also prepare franchise tax.

How YCL can help

We help licensed professionals choose an entity, prepare Secretary of State filings in the right order with the licensing board, and obtain an EIN. See our professional entity formation service.

We model the S election, reasonable salary and QBI deduction for practices and firms, and handle payroll, annual reports and returns afterward.

YCL Accounting & Consulting is a multi-state CPA firm serving clients across the U.S. in English and Chinese, led by co-founder Gloria (Chenchen) Liu, CPA. You can start with a free 15-minute consultation.