Key Takeaways

  • Maryland does not recognize PLLCs as a business entity. Licensed professionals must form a Professional Corporation (PC) or a standard LLC.
  • A Professional Corporation is required for licensed professions like medicine, law, accounting, and engineering in Maryland.
  • To form a PC, professionals must file Articles of Incorporation with the Maryland Department of Assessments and Taxation (SDAT) and confirm approval from the relevant licensing board.
  • Maryland LLCs are easier to form but cannot be used for professional services that require state licensing under PC rules.
  • Professionals should evaluate tax treatment, liability protection, and ownership restrictions when choosing between a PC and an LLC.
  • Licensed professionals can find assistance drafting formation documents or determining the right structure by consulting an attorney on UpCounsel.

The MD PLLC meaning refers to professional limited liability companies in Maryland. Business owners in certain professional sectors choose this business structure in order to protect their personal assets in case their practices are sued.

Professional Limited Liability Companies and Professional Corporations

Business owners in the following fields can form either a Professional Limited Liability Company (PLLC) or Professional Corporation (PC): 

  • Engineering 
  • Accounting 
  • Medicine 
  • Law 
  • Architecture 
  • Related fields 

PLLCs and PCs typically have the following characteristics, although laws vary state to state: 

  • The owner must hold a license in the same profession as the business.
  • The state requires proof of licensing before approving the business.
  • Business owners may have to adhere to industry-specific naming regulations.
  • Owners may have to use entity-specific designators at the end of their business names, i.e. PLLC or PC.

A business owner isn't free of personal liability due to malpractice or other suits just because he or she operates a PC or PLLC. However, owners are protected from the malpractice of other company owners. Not every state recognizes PLLCs as valid entities.

PLLCs and PCs pay taxes differently. PLLCs are taxed like limited liability companies, which generally enjoy pass-through taxation for their members. PCs, on the other hand, are taxed similar to C-corps and pay taxes at the corporate rate; this can result in double taxation.

To form either of these business structures may require business owners to take additional steps. They'll need state approval, and in many cases, approval from the professional licensing body in their state for their formation documents. Shareholders and members of a PLLC or PC must be licensed professionals in the practice of that business.

Most business owners form a PC or PLLC in the state where they'll primarily operate. Some of the advantages of starting this type of business in their home state include: 

  • Lower cost
  • Annual reports and franchise taxes are for one state only
  • Fewer complications when operating the business in one state

If a business owner operates a PC or PLLC in more than one state, he or she can incorporate the business in one state, and then register or qualify to do business in multiple states. The business must register, file annual reports, and pay yearly fees in all states where it provides services.

PC or PLLC owners must delegate a registered agent, also called a statutory or resident agent. This person or company receives legal paperwork, including service of process, and official state notices on behalf of the business.

Understanding Maryland’s Rules on PLLCs

Unlike some states, Maryland does not recognize the Professional Limited Liability Company (PLLC) as a separate legal entity

1. Instead, Maryland professionals must typically form a Professional Corporation (PC) when their work requires a state-issued license. This means that while a “PLLC Maryland” search might suggest a professional LLC structure, the state only authorizes Professional Corporations to deliver regulated services.

Common professions that fall under this rule include:

  • Attorneys
  • Physicians and surgeons
  • Certified public accountants
  • Engineers and architects
  • Psychologists and other licensed specialists

When forming a PC in Maryland, all owners must be licensed in the same profession, and the business name must reflect the professional service (e.g., “Smith Dental, P.C.”). Additionally, the licensing board must approve the formation before filing with the State Department of Assessments and Taxation (SDAT).

Definition of PLLC

A PLLC is only able to offer services related to the profession, and it's owned and operated by members in the same profession. It's designed for licensed professionals, such as the following: 

  • Chiropractors 
  • Doctors 
  • Lawyers 
  • Architects 
  • Accountants 
  • Engineers

It has the same legal structure as a limited liability company. The state licensing board has to approve its formation and verify all of the owners' licenses.

Many business owners elect to form LLCs due to benefits related to tax and limited liability, but some states require licensed professionals to form PLLCs instead of LLCs. California, however, allows licensed professionals to form PCs or RLLPs (registered limited liability partnerships), but doesn't allow them to form PLLCs or LLCs.

A big reason to create a PLLC is that it separates the individual from the business entity. Under a PLLC, the individual owner isn't personally liable for business debts or lawsuits brought against the business. In some cases, the PLLC won't protect business owners, such as in malpractice claims related to their own malpractice. It's recommended that professionals have malpractice insurance on top of operating a PLLC.

Many banks require a personal guarantee before granting a loan to a PLLC, so when business owners agree to the loan, they're personally liable for the debts they guaranteed.

A PLLC generally protects business owners from the actions of their employees, but if the owners fulfill a supervisory role, they could be held liable for the employees they supervise.

PLLCs offer many of the benefits of LLCs, and depending on your business, you may be required to form a professional company requiring additional approval. Licensed professionals can enjoy the advantages that come from operating this business structure, especially the legal protections.

How to Form a Professional Corporation in Maryland

Because Maryland doesn’t permit PLLCs, professionals who would otherwise form one in other states must establish a Professional Corporation (PC) instead. The general steps include:

  1. Choose a Business Name:
    The name must include “Professional Corporation,” “P.C.,” or “P.A.” (Professional Association) and comply with naming rules established by SDAT.
  2. Obtain Licensing Board Approval:
    Before filing, professionals must obtain verification from the relevant licensing board confirming all shareholders hold valid licenses.
  3. File Articles of Incorporation:
    Submit formation documents to the Maryland SDAT, including the name, address, registered agent, and statement of professional purpose.
  4. Appoint a Registered Agent:
    The registered agent accepts service of process and legal correspondence for the corporation.
  5. Create Corporate Bylaws and Hold an Organizational Meeting:
    After approval, members should adopt bylaws, elect officers, and issue shares to licensed shareholders only.
  6. Comply With Tax and Reporting Obligations:
    Maryland PCs are taxed as corporations unless they elect S corporation status. Annual reports and personal property returns must be filed with SDAT each year.

These requirements ensure professional accountability while providing limited liability protection against business debts and other shareholders’ malpractice.

LLCs for Non-Professional Services in Maryland

For entrepreneurs and business owners in Maryland who do not provide professional services, forming a Limited Liability Company (LLC) remains the most flexible and popular option. Maryland LLCs provide pass-through taxation, limited liability, and fewer compliance obligations compared to PCs.

However, LLCs cannot be used for professions that require state licensure under the Maryland Corporations and Associations Code. For example, while a marketing consultant may form an LLC, a licensed architect or physician must form a PC.

The LLC formation process involves:

  • Selecting a unique business name through the Maryland Business Express portal
  • Filing Articles of Organization with SDAT
  • Appointing a registered agent
  • Drafting an Operating Agreement to outline management and ownership structure
  • Paying the $100 filing fee and submitting an annual report to maintain good standing

Tax Considerations for Maryland Professional Entities

A Professional Corporation in Maryland is generally taxed like a C corporation unless it elects to be treated as an S corporation. This means income is first taxed at the corporate level, then again when distributed to shareholders.

By contrast, an LLC or a PLLC in other states enjoys pass-through taxation, meaning profits and losses flow directly to the members’ personal returns. Since PLLCs aren’t recognized in Maryland, professionals seeking tax flexibility should discuss S corporation election with a tax professional to minimize double taxation.

Legal and Liability Protections for Maryland Professionals

A key benefit of forming a PC in Maryland is liability protection. Shareholders are not personally responsible for business debts or for malpractice committed by other shareholders. However, each professional remains personally liable for their own negligence or malpractice.

To strengthen protection, professionals should also carry malpractice or professional liability insurance, even when operating under a PC. Maryland law requires that the business’s operations remain compliant with both corporate governance requirements and licensing board regulations.

Getting Help Forming a Professional Entity

Navigating Maryland’s formation requirements can be complex, especially for professionals balancing state licensing rules and corporate obligations. An experienced business attorney can:

  • Review your professional licensing requirements
  • Draft or review your Articles of Incorporation or bylaws
  • Help elect S corporation tax status if appropriate
  • Ensure compliance with Maryland’s annual reporting and licensing laws

If you need assistance forming a professional entity in Maryland, you can connect with a qualified attorney on UpCounsel, where only the top 5% of lawyers are accepted.

Frequently Asked Questions

  1. Does Maryland allow PLLCs?
    No. Maryland does not recognize PLLCs. Licensed professionals must form a Professional Corporation (PC) instead.
  2. What professions require a Professional Corporation in Maryland?
    Professions such as medicine, law, accounting, and engineering must form PCs to offer services legally.
  3. Can I form a regular LLC for professional services in Maryland?
    No. Licensed professions that require state oversight cannot operate as standard LLCs; they must form PCs.
  4. How are Professional Corporations taxed in Maryland?
    PCs are taxed like C corporations unless they elect S corporation status for pass-through taxation.
  5. What’s the main advantage of forming a PC over an LLC?
    A PC provides professional liability protection, ensuring shareholders aren’t responsible for other owners’ malpractice, while still offering limited liability for business debts.

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