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Overview
Forming a professional corporation in Maryland comes with numerous benefits. It allows professionals, such as doctors, lawyers, accountants, and engineers, to provide their services in a more structured and organized manner, protecting them against personal liability. This article will guide you through the process of forming a professional corporation in Maryland.
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Step 1: Choose a Name for Your Professional Corporation
The first step in forming a professional corporation in Maryland is to choose a name that complies with the appropriate regulations. The name should include a recognizable identifier, such as "Professional Corporation," "P.A.," or "P.C." Additionally, the name should not be too similar to existing corporations in the state.
Before finalizing your chosen name, conduct a thorough search on the Maryland State Department of Assessments and Taxation (SDAT) website to ensure its availability. Once you have found an available name, you can reserve it for 120 days by filing an Application for Reservation of Name with the SDAT.
Step 2: Draft and File Articles of Incorporation
The next step is preparing and filing the Articles of Incorporation with the SDAT. This document officially establishes your professional corporation in Maryland. The following information must be included in the Articles of Incorporation:
- The name and address of the corporation
- The purpose of the corporation
- The names and addresses of the incorporators
- The type of professional services to be provided
- The number of authorized shares of stock
- The name and address of the resident agent
You will also need to include a cover sheet and pay the necessary filing fee when submitting the Articles of Incorporation.
Step 3: Prepare Bylaws and Initial Directors Meeting
After the Articles of Incorporation are approved by the SDAT, you need to prepare bylaws for your professional corporation. Bylaws serve as the internal rulebook that governs the operations and decision-making processes of your corporation. They outline the roles and responsibilities of the directors, officers, and shareholders.
It is essential to keep your bylaws up to date and in compliance with Maryland laws and regulations. Seek legal advice to create bylaws that best suit your professional corporation.
Additionally, hold the initial directors meeting to appoint officers, authorize stock issuance, and approve other important matters.
Step 4: Obtain the Necessary Licenses and Permits
In order to legally operate your professional corporation, you must obtain the necessary licenses and permits. The requirements can vary depending on your profession. For example, doctors may need to obtain a license from the Maryland Board of Physicians, while lawyers would need to be admitted to the Maryland State Bar.
Research the specific licensing and permitting requirements for your profession and make sure you comply with all regulations before launching your professional corporation.
Step 5: Register with the IRS and Maryland Tax Agencies
Now that your professional corporation is legally formed, you must register for an employer identification number (EIN) with the Internal Revenue Service (IRS). The EIN serves as the unique identifier for your corporation for tax purposes.
Additionally, you must register with the Maryland Comptroller of Maryland for state tax purposes. This includes registering for sales and use tax, employer withholding, and any other applicable tax obligations.
Keeping your tax registrations in good standing is crucial to ensuring compliance with federal and state tax agencies.
Step 6: Maintain Ongoing Compliance
Once your professional corporation is up and running, it's essential to maintain ongoing compliance with state regulations. This includes filing an Annual Report with the SDAT, maintaining proper meeting records, and adhering to all local, state, and federal requirements.
An effective way to ensure ongoing compliance is by seeking guidance from a qualified attorney or business professional to stay updated on any changes in regulations that may affect your professional corporation.
Conclusion
Forming a professional corporation in Maryland can provide many benefits as a professional. By following the steps outlined in this article, you will be well on your way to forming a legal and compliant professional corporation. Remember to seek guidance from professionals who specialize in Maryland law to ensure that your corporation follows all necessary regulations and remains in good standing. Good luck on your professional journey!
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