A Breakdown of Entity Formation Options

The decision between the different types of entity forms for dental practices can involve a consideration of factors, such as the degree of liability protection offered, taxation rules, and the degree of management formality. Some of the key details of the common options of legal entities for dental practices include:

	Limited Liability Company (LLC) / Professional Limited Liability Company (PLLC)	Corporation/Professional Corporation (PC)	Professional Association (PA)
Liability Protection	Offer owners limited liability protection that shields their personal assets from the practice’s debts and other liabilities. However, owner dentists remain personally liable for dental malpractice they commit.	Provide owners with personal liability protection for debts and liabilities incurred by the business, although owners still have personal liability for their acts of malpractice.	Each member bears personal liability for their malpractice but not the malpractice of other members of the association. May protect members’ personal assets from liability for the business’s general debts.
Tax Treatment	By default, treated as a disregarded entity for a solo-owned company or as a partnership for practices with two or more members, both of which provide pass-through taxation. Can elect corporate (double) taxation under Subchapter C of the Internal Revenue Code or (if the business qualifies) pass-through taxation under Subchapter S.	By default, requires corporate double taxation (taxation of business profits and income taxation of dividends issued to shareholders). Some businesses may qualify to elect pass-through taxation under Subchapter S of the Internal Revenue Code.	Typically subject to same taxation rules as corporations/PCs.
Formalities	Allows flexibility in the formality of company governance and management. Owners may manage the company directly or elect managers to handle management.	Has strict management formalities, including requiring a board of directors elected by shareholders and officers elected by the board. Directors and shareholders must act through formal votes and resolutions.	Typically requires more formal management structures like boards and officers, usually restricted to members of the association.
Best For	Solo practitioners or smaller practice groups operating as equal partners	Larger practices with multiple offices or both owner- and non-owner-practitioners

PLLC vs. LLC: Which Is Required for Dentists?

Businesses can formally organize as corporations or limited liability companies (LLCs) in nearly every state. However, most states also have separate types of business entity forms called professional liability limited companies (PLLC) or professional corporations (PC). States limited these entity forms to businesses for which state law restricts ownership to members of a licensed profession, like doctors or lawyers. Some states that offer these types of entities may require businesses that perform a learned, licensed profession, such as dentistry or medicine, to organize as a PLLC or PC if they want to form as a corporation or LLC. As a result, dentists in these states must form a PLLC or PC if they want a legal entity that provides limited liability protection. 

What Do “PC” and “DDS, PA” Mean for Dental Practices??

A dentist or dental group may organize their practice as a professional corporation or PC. A professional corporation works like a standard corporation, except that the term “PC” denotes that the business provides a licensed professional service like dentistry. 

Some dental practices operate under the name of the primary dentist, followed by the title “DDS, PA” or “DMD, PA.” These terms reflect the degree held by the named dentist, with “DDS” referring to the Doctor of Dental Surgery degree and “DMD” referring to the Doctor of Medicine in Dentistry degree. The PA recognizes the fact that the practice operates as a professional association of a group of dentists who work together in a single dental office or practice. Like a PC or a PLLC, only professionals who hold a state license to practice the business’s services may hold ownership interests in a professional association.