Types of Industries Allowed to LLC

by Tom Chmielewski
Companies in most industries can form an LLC, with a few exceptions.


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Most businesses are allowed to form a Limited Liability Company, though there are some exceptions. Because the formation of an LLC is governed by state statute rather than federal law, the exact requirements vary from state to state. Generally, an LLC is a simpler business structure than a standard corporation. It allows for passing the taxation on to the owners or members rather than adding a tax on the company as well, and it protects the members from being personally liable for a company's debts.

Professional LLCs

Most states allow licensed professionals to form a Professional LLC (PLLC). The PLLC covers professions in which the state requires a license, such as medical practitioners, lawyers, accountants, engineers or architects. Typical state regulations require all members of a PLLC to be licensed professionals practicing the same profession, and liability protection does not cover personal malpractice claims. LLC.com notes that 35 states and the District of Columbia allow PLLCs. States not allowing PLLCs are Alaska, California, Connecticut, Delaware, Georgia, Hawaii, Illinois, Indiana, Missouri, New Jersey, Ohio, Oregon, Utah, Wisconsin and Wyoming.

Sole Proprietorships

When LLCs were first being formed, back in the late 1970s, state statutes typically required there be two or more members or owners. Single Member Limited Liability Companies were not allowed. The Limited Liability Company Center notes how that gradually changed, but it wasn't always clear that a single-member LLC formed in one state would be recognized by another. There was a flood of new LLC regulations enacted by states in the mid-90s, however, and now recognition is no longer a concern as all states allow single-member LLCs. LLCs have become very popular with sole proprietorships and other small businesses because of the simplified business structure and flexibility.

Industries Excluded From LLCs

While most industries and businesses can form an LLC, states generally do prohibit financial institutions, such as banking, trust and insurance companies, from forming an LLC.

All LLCs Are Not Alike

Because an LLC is covered by state statute, anyone thinking of forming a Limited Liability Company needs to check with the specific regulations of the state in which the company will be formed before before taking that step. Some states, such as California, are more restrictive in the professions they allow to form LLCs. Other regulations, such as who can be members, filing requirements and fees, are not uniform.

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