Are you a doctor, lawyer, accountant, or architect who wishes to establish a limited liability company in Maryland? If so, you need to set up a professional limited liability company or PLLC in Maryland. This will allow you to receive tax benefits and reduce your personal liability.
If someone sues you, they can’t come after your home or car. The lawsuit, instead, will be directed toward the business. Anyone who works as a professional should strongly consider setting themself up this way, as it offers the following noted advantages:
- Members of a PLLC are not personally liable for the malpractice of another PLLC member – something which you don’t have as a sole proprietor or general partner.
- You are not personally liable for business debts or lawsuits. If you get behind on your office rent or you’re sued for negligence, your personal assets are not affected.
- You can avoid double taxation as an LLC or PLLC unless you structure your PLLC as a corporation for tax reasons.
- You can deduct legitimate business expenses, including the cost of establishing the PLLC on your individual tax return.
Choose a Name for Your PLLC in Maryland
To get your PLLC in Maryland launched, you need to assign it a name. It has to be a unique name – not taken by anyone else in the state. When choosing a name, you must include the words “limited liability company,” or the abbreviation of “L.L.C.,” “LC,” “LLC,” or “L.C.”
The name should explain what your practice or business does. For instance, if you’re a physician, you should include the initials, “MD,” or “physician” in the PLLC name.
You can see the availability of a PLLC name by checking Maryland’s business entity search tool. You can also find out name availability by calling 410-767-1330. You can also reserve the name, if available, for 30 days by submitting an application to Maryland’s Department of Assessments and Taxation and paying a small fee.
Register Your Domain Name
After you get a business name, you can register a domain name for your website.
Assign a Resident Agent
You’ll need to retain the services of a registered agent for your personal limited liability company in Maryland. A registered agent is a person or company that receives governmental correspondence on behalf of your PLLC.
In Maryland, the term “resident agent” is used for the general term of “registered agent.” If you have someone handle the paperwork, they must be a resident of Maryland and at least 18 years old. A resident agent’s address must be a physical address, not a post office box.
It’s imperative you get a registered agent, or you could lose your professional standing with the state. The state may also dissolve your PLLC if you don’t have someone or a company serve as your representative.
File Your PLLC Formation Documents with the State
To form your PLLC, you need to submit Articles of Organization. You’ll need to include the following information on the document:
- The PLLC’s name
- The purpose of the PLLC
- The address of your company in Maryland
- The resident agent’s name and address
- The signature of the resident agent
- The signature(s) or the PLLC’s organizers
- The return address of the filing party
Once you’ve completed the Articles of Organization, you can submit the paperwork online or by mail, including the filing fee of $100. The express process is offered for an extra $50.
The time to process the formation is about four to six weeks. If you expedite processing, it takes seven business days to form your PLLC. If you elect to file in person at the Department of Assessment and Taxation, you can receive same-day express service, if you file by 4:15 p.m.
Draft an Operating Agreement
After you submit the Articles of Organization, you’ll need to draft an operating agreement. The operating agreement does not need to be filed with the state. However, you should create the document to resolve future internal disputes.
When you open a business bank account, you may need to show this document. Also, if future managing members or partners are interested in working with you, you should have this form on file to give them for review.
What to Include in Your Operating Report
You’ll need to include the following details in the operating agreement:
- Each percentage of the member’s ownership.
- Responsibilities and rights
- Voting powers of members
- Profit and loss allocations
- Guidelines for meetings
- Management rules for your professional limited liability company
- The provision for buying a member or owner out and the transfer of shares upon illness or death
Managing the Taxes
To form a PLLC, you need a federal tax ID known as an EIN. The EIN represents a company’s version of a Social Security Number.
An EIN is necessary if you wish to hire employees or open a bank account. You’ll also need to use the number when you fill out your taxes.
State and Local Taxing
You’ll need to refer to the Maryland Comptroller’s office for state taxes for your business. Visiting the Comptroller’s website will give an overview of how your business is taxed and what you need to do when filing your tax return.
Whether you pay local taxes depends on your location. Resources for local businesses cover four of Baltimore’s major cities and are found in Baltimore, Montgomery, and Howard counties.
Getting Licenses and Permits
You may need to obtain a license or permit at the state or local level for your business. To figure out the license requirements, contact the local court clerk or phone the State License Bureau at 410-260-6240.