Professional LLC Ownership with a Non-Licensed Spouse as Tenants by the Entirety

Licensed professionals in Florida face a specific asset protection problem. A single-member LLC provides no charging order protection under Florida law because a creditor can foreclose on a sole member’s interest and take control of the company entirely. The standard solution for married business owners is to have both spouses own the LLC membership interest as tenants by the entirety, which shields the interest from creditors of either spouse individually. But professionals who hold state licenses often assume they cannot add a non-licensed spouse to their business entity because professional licensing rules restrict who may own a professional practice.

This assumption is mostly wrong. For most licensed professions in Florida, a married professional can structure a regular LLC owned jointly with a non-licensed spouse as tenants by the entirety. The key is understanding the difference between a professional limited liability company formed under Chapter 621 of the Florida Statutes and a standard LLC formed under Chapter 605.

The Chapter 621 Restriction on Professional Limited Liability Companies

Florida Statutes Section 621.051 governs the formation of professional limited liability companies. The statute provides that members of a professional LLC must be “duly licensed or otherwise legally authorized to render the same professional services.” This language means every member of a PLLC must hold the same professional license. A physician cannot add her non-physician husband as a member of a PLLC. A CPA cannot include his non-CPA wife. The restriction exists because the PLLC structure is designed to ensure that only licensed individuals maintain ownership and control over the delivery of professional services.

A PLLC must also include specific naming conventions under Section 621.12, using designations like “Professional Limited Liability Company,” “PLLC,” “P.L.,” or “L.C., Chartered.” If a business entity uses one of these designations, it is governed by Chapter 621 and subject to the member-licensing requirement.

The Chapter 605 Alternative: Using a Standard LLC

Nothing in Chapter 605, which governs standard LLCs, restricts who may be a member. A regular Florida LLC can have any individual, trust, corporation, or other entity as a member regardless of professional licensing status. This means a licensed professional can form a standard LLC under Chapter 605 and include a non-licensed spouse as a co-member.

The professional still operates under their own individual license issued by the Department of Business and Professional Regulation or the relevant licensing board. The LLC is simply the business entity through which the professional conducts operations. The professional’s license attaches to the individual, not to the business entity. The LLC does not need to hold a professional license itself when it is structured as a standard LLC rather than a PLLC.

This distinction allows the married couple to own the LLC membership interest as tenants by the entirety. Because the membership interest is held jointly by both spouses, a creditor holding a judgment against only the licensed professional spouse cannot attach the LLC interest. The interest remains protected under the same entireties doctrine that protects the couple’s bank accounts, real estate, and other jointly held assets. The Tenants by the Entirety article explains how this protection works across all property types in Florida.

Professions Where This Structure Works

The general experience of practitioners in this area is that Florida permits licensed businesspeople in most regulated professions to own a standard LLC jointly with a non-licensed spouse. This includes physicians and medical practice owners, dentists, accountants and CPAs, financial advisors and registered representatives, real estate brokers and agents, architects, engineers, and licensed contractors.

For each of these professions, the individual practitioner maintains their own professional license. The Department of Business and Professional Regulation regulates the individual licensee, not the business entity’s ownership structure, when the entity is a standard LLC rather than a PLLC.

The practical experience with this approach has been confirmed through direct inquiries to the DBPR and various licensing boards. However, because different divisions within the DBPR sometimes provide inconsistent guidance, practitioners should confirm the current rules with their specific licensing board before implementing this structure. Regulatory interpretations can shift, and a professional who relies on informal guidance without written confirmation takes on some risk.

The Attorney Exception

Attorneys are the significant exception. The Florida Bar Rules of Professional Conduct impose ownership restrictions on law firms that go beyond what Chapter 621 requires. Rule 4-5.4 prohibits attorneys from sharing legal fees with non-lawyers and from forming partnerships or other business arrangements with non-lawyers if any of the activities of the arrangement constitute the practice of law. These rules effectively prevent a Florida attorney from adding a non-attorney spouse as a member of a law firm LLC, whether structured as a PLLC or a standard LLC.

Married attorneys who want to achieve charging order protection for their practice must explore alternative structures. One approach involves forming a separate holding LLC owned as tenants by the entirety that leases office space, equipment, or intellectual property to the law firm entity. The law firm itself remains solely owned by the licensed attorney, but the valuable business assets sit in the jointly owned holding company beyond the reach of the attorney’s individual creditors.

Structuring the Operating Agreement for Entireties Protection

Simply adding a non-licensed spouse as a member of the LLC is not sufficient to ensure tenancy by the entirety protection. The operating agreement must be drafted to satisfy the six unities that Florida law requires for valid entireties ownership. The agreement should expressly state that the membership interest is owned by both spouses as tenants by the entirety. Both spouses must have equal economic and voting interests in the LLC. Both spouses must have equal management rights, meaning neither spouse alone can make unilateral decisions about the LLC’s operations. Upon the death of either spouse, the surviving spouse must automatically inherit the entireties interest without the need for probate or additional transfers.

If the operating agreement gives one spouse greater control or a larger economic interest than the other, a court may conclude that the unities of interest and possession are not satisfied and deny entireties protection. The Common Mistakes That Destroy Tenancy by the Entirety Protection article discusses the most frequent errors that undermine this ownership structure.

Member-managed LLCs tend to work better for entireties purposes than manager-managed LLCs because both spouses automatically share control as members. If the couple prefers a manager-managed structure for privacy reasons, both spouses should be appointed as co-managers with equal authority. Neither spouse should be able to act without the other’s approval on material business decisions.

The Single-Member LLC Tax Question

An important tax wrinkle arises when a married couple owns an LLC as tenants by the entirety. The IRS has stated in Revenue Procedure 2002-69 that an entity owned solely by a married couple as community property can be treated as a disregarded entity for federal tax purposes. Florida is not a community property state, and the IRS has not issued definitive guidance on whether a membership interest owned as tenants by the entirety qualifies for the same treatment.

In practice, most tax practitioners treat an LLC owned by spouses as tenants by the entirety as a disregarded entity (single-member LLC for tax purposes) and report the business income on Schedule C of the couple’s joint return. This avoids the expense and complexity of filing a separate Form 1065 partnership return. The safer position from a tax compliance standpoint may be to file as a partnership, but this comes with additional administrative burden. Professionals implementing this structure should consult their CPA about which approach is appropriate for their specific situation.

When This Strategy Falls Short

Tenancy by the entirety protection for a professional LLC interest has the same limitations that apply to all entireties property. The protection disappears immediately upon divorce because the tenancy converts to a tenancy in common. The protection also terminates when one spouse dies, vesting the entire interest in the surviving spouse who may have their own creditor exposure.

Joint creditors present another vulnerability. If a creditor obtains a judgment against both spouses, entireties protection does not apply. Sophisticated creditors are aware of this and may attempt to name both spouses in a lawsuit even when only one spouse was directly involved in the underlying transaction.

Finally, federal creditors including the IRS can reach entireties property under the Supreme Court’s holding in United States v. Craft, 535 U.S. 274 (2002). The How IRS Liens and Federal Creditors Affect Tenancy by the Entirety article explains how this works in practice.

For professionals with significant liability exposure, entireties ownership of the business LLC may not provide sufficient protection on its own. Additional strategies such as separating valuable business assets into holding entities, maintaining adequate professional liability insurance, and considering offshore trust planning for liquid assets may be warranted depending on the professional’s risk profile and net worth.