When do you need a PE license to from an LLC? 4

[bielshound]

We are trying to form an Engineering Consulting/Design Company in New York. We would like to form an LLC. We have read the NY laws and you could interpret the law as defining the profession of engineering as performing any design where someone could get injured. We would like to do basic mechanical and electrical systems work. Our focus is on automation and embedded systems. Does this require us to have a PE license?

 

[zdas04]

Maybe, possibly, probably not. This has been discussed a bunch of times on these pages and it is really tough to get a definitive legal opinion from a bunch of volunteer Engineers.

There have been recent discussions in eng-tips.com (again, legal opinions from Engineers) that would indicate that in some states any company whos in-house engineers would work under the industrial exemption would extend the exemption to consultants (i.e., doing engineering for a company is not "holding yourself out to the public" as an engineer) and doesn't require a PE. Not all states have that clarification in their language, so you should check.

In most states to have the word "Engineer" or "Engineering" as part of your company name requires an officer of the company to be a PE.

TALK TO YOUR STATE BOARD and/or hire an attorney before you go any further. There are ways that an informed individual can navigate all of the rocks and shoals, but without the information you have approximately zero chance of staying out of trouble (the fines can be quite harsh).

Good luck.

David

 

[bielshound]

Thanks David.

This seems to be a pretty standard response. It's not very clear. Even after reading the law here in New York I still can not interpret the law. I guess we will ahve to break down and talk to a lawyer. I'll try to post a response after I talk to him. Obviously, it would not be legal advice. Just information for people to consider before talking to a lawyer to get more clarification.

Thanks again.

 

[zdas04]

I understand, when I was starting my business I would have loved to have had the opportunity to discuss these issues with someone who had been through them before I asked the wrong questions at the board or spent a bunch of money on a lawyer. I didn't know that eng-tips.com existed back then.

I see it as a major problem that every state has their own law. I can give you my layman's opinion of the rules in Colorado and New Mexico for what it would be worth, but while the New York law certainly has many things in common with NM and CO laws, it will not be identical and those differences can have a huge impact on your success.

David

 

[dig1]

blieshound,

I have an engineering firm in NY and I would follow David's advice in talking to the state board.

I looked again at Article 145 and found the following:

§7201. Definition of practice of engineering.
The practice of the profession of engineering is defined as performing professional service such as consultation, investigation, evaluation, planning, design or supervision of construction or operation in connection with any utilities, structures, buildings, machines, equipment, processes, works, or projects wherein the safeguarding of life, health and property is concerned, when such service or work requires the application of engineering principles and data.

My opinion only, is that the law is more than about someone getting hurt as property is also mentioned. Again, my non-legal opinion is that if you design a system (I am not saying manufacturer or build) and there is the possibility of property being damaged then it falls under the practice of engineering.

If you are offering only consulting/design services then the safe way is to set up a PLLC (not an LLC), LLP, or PC. You do have to be a registered engineer to set up a PLLC in NY.

Definitely talk to the state board and have specific questions for them and tell them exactly what you business will be and who the expected end user's are.

Good luck.

Patrick

 

[bielshound]

Hello Patrick,

Thanks for the advice. That is the same section of the New York Statue we read and interpreted it pretty much the same way you did. I sent an email to the state board and I'm waiting for a reply. I also emailed the small business development center here in the Albany area. They appear to be funded by the state and have significant resources. We were hoping they could help us. I know several attorneys and I am working with one on an unrelated law suit. We may have to breakdown and pay for legal advice. It's just difficult to find an attorney who has knowledge in this particular subject. I will post a follow-up to give others some insight into the information we receive.

Thanks again.

 

[enginerding]

I remember the New York State Board website having an FAQ section that described what type of businesses (Inc., LLC, etc.) that could perform engineering services.

Here it is:

http://www.op.nysed.gov/pefaq.htm

I wonder if some of your questions could be answered here.

 

[Twoballcane]

Just my two cents...why not just hire an Engineer with a PE? In my simple mind the additional cost is the liability insureance which you will get anyway. Better to be safe than sorry...:+)

Tobalcane
"If you avoid failure, you also avoid success."

 

[zdas04]

Twoballcane,
In the states where I'm licensed to have the word "Engineer" or "Engineering" in the company name there must be a P.E. either as owner (Sole Proprietorships), Partner (Partnerships), or Corporate Officer (all the various types of corporations). Just hiring a P.E. wouldn't cut it here.

David

 

[bielshound]

enginerding,

I had reviewed the website you mentioned. The term engineering is the real problem. As an electrical engineer most of what I do does not require a PE license. Most products are tested by a 3rd party such as UL.

Twoballcane,

None of us are PEs and we don't want to hire someone else yet. We are trying to setup the legal entity to do engineering/design consulting.

zdas04,

Here in NY some legal entities require every owner to be licensed.

The basic question is...If you are doing work that does not require a PE license but still meets the definition of engineering do you need a PE license with certain legal entities?

 

[zdas04]

I do a lot of work in states and countries where I'm not licensed. I do a lot of work in the states where I am licensed that does not require a stamp. In fact for the first three years I was in business the only reason for the P.E. was my company name.

David

 

[swertel]

I have an LLC. I had to get a license in order to have a business.

The key is that although the work I do does not require a stamp, I am providing an engineering service, and you need a license to do this.

In other words, if I were hired directly by the companies I consult for, I would be industry exempt and not need a license. But, since I consult - thus providing and engineering service - I need a license even though the end item doesn't see my stamp.

--Scott

http://wertel.eng.pro

 

[jay156]

I don't know about New York, but in Texas and in Ohio, if you want to call yourselves "Engineers," there has to be at least one PE in a supervisory role. Otherwise, the state board will be all over you.

 

[rday]

While statutes vary as to where in the business model the PE fits; there is a generality, as to whether a PE is required, that runs through most issues around industrial exemptions.

If the product of the company is engineering, a PE is required.

If the product is a "product", industrial exemption is likely to apply.

bielshound, from every engineering statute I've looked at; if you wish to offer engineering services you need a PE.

 

[DRC1]

Don't fool around in New York They have very particular laws about forming engineering companies and I understand they are serious about them. I would talk (as in visit or phoone) with them. I would also check on wether your competion is licenced. In New York all principals have to be licenced engineers. Firm can only engage in engineering, no construction - not sure if that transfer over to manufacturing.

 

[bielshound]

Again, I would like to thank everyone for their comments. I found the NY website:

http://www.op.nysed.gov/pe.htm

It does a pretty thorough job of explaining the requirements for doing engineering consulting. It appears you do need a PE to call yourself an engineer. There are exceptions for less than 3 people in the organization. I am going to consult a CPA and an attorney soon to get their opinion of possible legal structures and procedures to still provide clients the work they need. For now we are working as independent contractors for other legal entities. In the end, one of us may need to take the exams and become a licensed PE. I'll post another response when I get some legal advice. These are just my opinions and do not represent legal advice so please consult your own attorney.

 

[PEinc]

Getting as NY PE license is just part of the requirement. Your company could also need a Certificate of Authorization. Check that out carefully. Check their definition of Professional Corporation.