Forming A Professional Entity in Maryland
Q: I am looking to form a PLLC in the state of Maryland. Is this something Northwest is able to assist with?
Thank you to Sarah in Maryland for the great question! While forming a PLLC (professional limited liability company) is required in some states, Maryland doesn’t actually recognize PLLCs. Licensed professionals in the state can, however, form a regular LLC or a Professional Corporation. Here’s what you need to know:
How do I form an LLC as a professional in Maryland?
Licensed professionals in Maryland can form a Maryland LLC just like any other business owner in the state (see: MD. Corporations and Associations Code Ann. § 4A-203.1). In some states, those who render professional services are required to form a PLLC instead of a regular LLC. But Maryland’s LLC Act states that it does not “restrict or limit in any manner” those who render professional services or practice their profession through an LLC.
What is a professional service?
A professional service is one that can only be provided by a licensed individual, or someone authorized by a state licensing unit. In the world of business registration, the term “professional” typically refers to someone with a state-issued license. According to MD. Corporations and Associations Code Ann. § 5-101, such professionals include:
- Architects
- Attorneys
- CPAs
- Chiropractors
- Dentists
- Engineers
- Osteopaths
- Podiatrists
- Physicians
- Psychologists
- Physical therapists
- Real estate brokers and salespeople
- Veterinarians
This is not an exhaustive list. For more professional services, see: MD Business Occupations & Professions Code.
Can I form a professional corporation in Maryland?
Yes. In fact, most corporations that are eligible to file as professional corporations must do so. However, this requirement does not apply to:
- Architects
- Professional engineers
- Real estate brokers and salespeople
- Veterinarians
See: MD. Corporations and Associations Code Ann. § 5-102
What’s the difference between a “corporation” and a “professional corporation”?
First and foremost, a professional corporation can only be formed by a licensed professional (or professionals). Beyond that, professional corporations are structured to protect the individual business owners from any potential liability caused by their business partners.
As with any corporation or LLC, a professional corporation protects owners’ personal assets from the debts and liability of the business. But with high-risk professions like law and medicine, professional corporations ensure that a doctor, for example, won’t be held liable for a malpractice lawsuit brought against another doctor—even if that doctor is her fellow business owner.
Are there naming requirements for professional corporations in Maryland?
Yes. Since a professional corporation (PC) is a different business entity than a Maryland Corporation, a PC doesn’t necessarily need to abide by the same naming standards as corporations. But the name of a Maryland PC must include one of the following terms:
- Chartered
- Chtd.
- Professional association
- P.A.
- Professional corporation
- P.C.
How do I form a Professional Corporation?
Forming a professional corporation in Maryland isn’t that different from forming a regular corporation in Maryland. The main difference is that when you file your Maryland Articles of Incorporation ($120), you’ll need to include a statement specifying that you’re forming a professional entity, and that the purpose of your corporation (item #3) is to render the professional services allowed by your license.
What do I need to do to maintain my “professional” business status in Maryland?
As in most states, you’ll need to make sure your professional license is current in the state of Maryland. Whether you form an LLC or a Professional Corporation, you’ll need a valid license to render professional services in the state. You will also need to maintain your business filing with the state by filing your Maryland Annual Report.
