Understanding Nebraska’s New Professional Services Requirements

In a significant regulatory update, the state of Nebraska recently announced that they will no longer consider architecture and engineering to be professional services for the sake of forming or qualifying a professional corporation or professional LLC. This has significant impacts on both new and existing firms operating in the state, so let’s unpack things a bit.

Key Changes and Implications

The update from Nebraska changes what types of companies are considered professional corporations or professional LLCs. Nebraska legislature bill 628 was passed in February of 2024 and took effect on July 19, 2024. The bill, which focuses on changing provisions relating to limited liability companies and professional corporations, eliminates some important language that has significant implications for certain industries.

The previous statute stated: “Professional service means any type of personal service to the public which requires as a condition precedent to the rendering of such service the obtaining of a license or other legal authorization and which includes, but is not limited to…”. This was largely interpreted to mean a wide variety of industries.

The updated language removes “but is not limited to” and gives a list of professions that does not include architecture and engineering. Instead, the list mainly focuses on legal, medical, accounting, and real estate professions. As a result, architecture and engineering firms are no longer considered professional services.
Due to the change, these types of organizations are no longer required to register as professional organizations. Instead, architecture and engineering firms can form business corporations or standard LLCs, just like any other type of business. Not that this is not a choice; they are specifically excluded from registering as PCs or PLLCs.

I’m already registered as a PLLC. What happens now?

Firms already registered with the state can choose to continue doing business under their existing entity type, but they will be required to continue filing the annual PC and PLLC reports.

Firms also have the option of filing an amendment to change their entity type to a standard business entity (business corporation or LLC), in which case they would no longer be required to file the annual reports required of PC and PLLCs.

Regardless, companies will still be responsible for filing their Biennial Occupation Tax Report if they are a:

• Domestic and or Business Corporation
• Professional Corporation
• Domestic or Foreign Limited Liability Company
• Professional Limited Liability Companies
• Domestic and Foreign Nonprofit Corporation

How do I proceed?

In short, Nebraska-registered architecture and engineering firms should evaluate their registration type and determine whether they will continue on as a professional corporation (PC or PLLC), or file an amendment to change their entity status (corporation or LLC).

Each has its own benefits, and the decision ultimately lies with the individual business. However, all newly registered architecture and engineering firms in Nebraska will have to register as a corporation or LLC, not a PC or PLLC.