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.

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.

If you need help with forming a PLLC or other business structure, you can post your legal need on UpCounsel's marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.