How to Form a Professional Entity in Maryland

Key Takeaways

• Maryland does not recognize the PLLC, so licensed professionals form either an ordinary LLC or a professional corporation.

• A Maryland professional corporation’s name must include Chartered, Chtd., Professional Association, P.A., Professional Corporation, or P.C.

• If you are eligible to be a professional corporation and choose a corporate form, you generally must use the PC form, with limited exceptions.

• Filing an LLC’s Articles of Organization costs $100; a corporation’s Articles of Incorporation start at $120.

• Only licensed individuals may deliver the professional service, and the relevant licensing board may need to approve the entity.

Many states require licensed professionals to form a PLLC, a professional limited liability company. Maryland does not. The state has no PLLC at all, which surprises a lot of doctors, lawyers, accountants, engineers, and architects when they start setting up a practice. In Maryland, licensed professionals form either an ordinary limited liability company or a professional corporation, and that choice carries real consequences for taxes, paperwork, and how you bring partners in and out.

This guide explains what counts as a professional entity in Maryland, how to form each type, what the law requires in a name, and how the two structures compare. Our Maryland business attorney helps licensed professionals pick the structure that fits their practice and avoid the filing mistakes that stall approval.

“Maryland is one of the few states with no PLLC. Licensed professionals here form either an ordinary LLC or a professional corporation, and the choice shapes taxes, paperwork, and ownership.”

What Is a Professional Entity in Maryland?

A professional entity is a business formed by one or more licensed professionals to provide services that, under state law, only a licensed individual may legally provide and that an ordinary corporation may not offer. The recognized professions include:

• Architects

• Attorneys

• Certified public accountants

• Chiropractors

• Dentists

• Osteopaths

• Podiatrists

• Physicians

• Professional engineers

• Licensed real estate brokers, associate real estate brokers, and salespersons

• Veterinarians

• Psychologists

• Physical therapists

The list is not exhaustive, and other state-licensed professions can qualify.

Every owner who renders the professional service must hold a current Maryland license in that profession. The entity provides the service only through licensed people, whether they are owners, officers, or employees.

Does Maryland Recognize a PLLC?

No. Unlike many states or jurisdictions like Virginia and D.C., Maryland has no professional limited liability company. The state’s naming law has no PLLC designation, and the LLC Act gives any LLC the power to render professional services. A licensed professional who wants the flexibility of an LLC simply forms a standard Maryland LLC.

Forming the company does not change your professional duties. The licensing board that regulates your profession keeps full authority over the individuals practicing through the LLC, exactly as it would if you practiced on your own.

How Do You Form an LLC for a Professional Practice in Maryland?

Forming an LLC used for a professional practice follows the same path as any Maryland LLC, with a licensing check added at the front.

• Confirm that every owner who will provide the service holds a current Maryland license in that profession.

• Check with your state licensing board to see whether it must approve the entity before you file.

• Choose a name that includes one of the required endings: Limited Liability Company, L.L.C., LLC, L.C., or LC.

• Appoint a resident agent authorized to accept legal documents in Maryland.

• File the Articles of Organization with the State Department of Assessments and Taxation (SDAT) and pay the $100 filing fee.

Maryland law does not require an operating agreement, but a written one is well worth having. It sets out how members share profits and losses, how the company is managed, and how owners join or leave. Once signed, it binds every member.

How Do You Form a Professional Corporation in Maryland?

A professional corporation, sometimes called a professional service corporation, is the other option. The steps mirror forming a regular corporation, with professional requirements layered on.

• Confirm licensing for every owner, and check whether the licensing board must sign off first.

• Choose a compliant name. It must include the word Chartered, the abbreviation Chtd., the words Professional Association, the abbreviation P.A., the words Professional Corporation, or the abbreviation P.C. Many filers miss that Chartered and Chtd. are valid Maryland options.

• Reserve an available name if you are not ready to file. The state holds it for your exclusive use for 30 days.

• Appoint a resident agent for service of process.

• File the Articles of Incorporation with SDAT, then adopt bylaws and a board of directors. The filing starts at $120, which is a $100 base fee plus a $20 organization and capitalization fee.

One Maryland rule catches people off guard. If you are eligible to form a professional corporation and you choose a corporate structure, you generally cannot use an ordinary business corporation instead. The exceptions are architects, professional engineers, licensed real estate brokers, salespersons, and associate brokers, and veterinarians, who may use a standard corporation. A professional corporation can also be formed to provide two or more related professional services.

Professional LLC or Professional Corporation: Which Should You Choose?

The differences track the differences between any LLC and corporation, and they fall into three buckets.

Taxes

An LLC is a pass-through entity by default, so members report their share of profits on their personal returns. A professional corporation is taxed as a C corporation by default, meaning the company pays tax on its earnings and shareholders pay tax again on dividends. A professional corporation can elect S corporation status to be taxed as a pass-through instead. Maryland adds its own layer, including an annual Personal Property Return and a nonresident pass-through entity tax that applies to income allocated to owners who live outside Maryland, so the tax picture deserves close attention.

Liability

Both structures protect owners the same way on the point that matters most. Neither shields a professional from liability for their own malpractice. Both can protect an owner from personal responsibility for a co-owner’s malpractice and for the general debts of the business. The real differences are taxes, formalities, and ownership transfer, not the size of the liability shield.

Formalities

A corporation must keep bylaws, a board, and corporate records. An LLC carries fewer required formalities, which many small practices prefer.

Common Questions About Maryland Professional Entities

Can one professional corporation cover more than one profession?

Yes. A Maryland professional corporation can be formed to render two or more professional services that are the same, similar, or related.

Can a professional licensed in another state work through a Maryland professional corporation?

Often, yes. Maryland law does not automatically bar a person licensed in another state from rendering services for a Maryland professional corporation, as long as the Maryland licensing board with jurisdiction over that service does not prohibit it.

What ongoing filings does a Maryland professional entity have?

Maryland businesses generally file an Annual Report, and most file a Business Personal Property Return, by April 15 each year. Keeping these current is what preserves your good standing and your liability protection.

Get Help Forming Your Maryland Professional Entity

Steve Thienel advises Maryland professionals on business formation, tax, and entity structure across the state. Choosing between a professional LLC and a professional corporation affects your taxes, your paperwork, and how you protect what you build. Schedule a consultation to talk through which structure fits your practice and to file it correctly the first time.