Licensed professionals cannot form an ordinary LLC and split it with anyone they like

By David J.S. Madgett

Minnesota attorney, license no. 390494 · Published August 7, 2026

If you are licensed — medicine, dentistry, law, accounting, architecture, engineering, and others — Minnesota’s professional firms act, chapter 319B, changes the formation questions you get to ask. Most significantly, it takes away a decision most founders assume is theirs: who can own the business.

The articles have to say so

The Secretary of State’s own LLC instructions put the requirement plainly. If you are forming an LLC that will be a professional firm, additional language is required in your articles: the firm must state that it elects to operate under and is subject to §§ 319B.01 to 319B.12, or that it elects to operate under and is subject to the Minnesota Professional Firms Act. The firm must also list the professional services it is authorized to provide.

This is not boilerplate you can add later without consequence. It goes in at formation, and it is the reason a professional firm cannot simply use the standard articles template.

Chapter 319B also interacts with the naming rule: § 322C.0108 requires an LLC name to contain “limited liability company” or “LLC” — with an exception for professional firms under chapter 319B. Professional firms have their own naming conventions, which is why you see “P.A.” and similar designations on Minnesota practices.

Who may own it

Minn. Stat. § 319B.07, subd. 1 sets a closed list. Ownership interests may be held only by:

1. licensed professionals who are not disqualified in the relevant field;
2. general partnerships (not LLPs) authorized to provide the firm’s services;
3. other professional firms authorized to provide those services;
4. voting trusts whose trustees and beneficiaries are licensed professionals;
5. employee stock ownership plans with licensed professional voting trustees; and
6. the surviving spouse of a deceased sole owner — limited to one year after the death.

It is not that professionals must hold some percentage. It is that every owner must fall into one of these categories. And an improper transfer is void.

Void, not voidable. The transfer does not happen. Someone who paid for it did not acquire anything.

What this rules out

Ordinary things that are perfectly normal in other businesses:

Outside investors. Your cousin who wants to put $50,000 into your dental practice for a piece of it cannot own that piece. Neither can a venture fund. This is the constraint that most often surprises people, and it does not have a workaround dressed up as a consulting agreement.

Equity for a non-licensed key employee. The practice administrator who built your operations and whom you would like to make a partner cannot hold an ownership interest unless they are licensed in the field.

A non-licensed spouse as co-owner for tax or estate planning. Note the narrow exception: a surviving spouse of a deceased sole owner may hold for one year after death. That is a wind-down window to sell the practice, not a succession plan.

That one-year clock is the provision to plan around. If you are a sole practitioner, your family has twelve months to transfer the practice to someone eligible. A buy-sell agreement funded by life insurance, with a pre-identified licensed buyer, is the standard answer — and it has to exist before it is needed.

What it does not change

Chapter 319B governs ownership and the professional relationship. It does not exempt you from anything else on this site. A professional firm still:

• files annual renewals;
• maintains a registered office and agent;
• must keep the entity’s separateness intact to preserve liability protection; and
• needs an operating agreement, because the chapter 322C defaults apply to a professional LLC exactly as they do to any other — including the equal-shares distribution rule, which is rarely what a multi-professional practice intends.

And it does not shield a professional from liability for their own malpractice. The entity protects against the business’s ordinary debts; it has never protected a licensed professional from the consequences of their own professional conduct.

Before you file

• Confirm whether your field is covered. Chapter 319B applies to enumerated professional services; not every licensed occupation is on the list. Check § 319B.02 for the definition before assuming either way.
• Get the articles right the first time. The election language and the list of authorized services belong in the original filing.
• Map your intended ownership against the six permitted categories before you promise anyone equity.
• Build the succession plan now if you are a sole owner. One year is not long, and it starts on the worst possible day.