An LLC has recently gained popularity as an optimal business form for many types of businesses. Both smaller business owners and owners of bigger and growing ventures choose an LLC legal structure for easy management and flexible tax options it brings, not to mention a fairly simple LLC formation process. Speaking of which, while corporate law is common nationwide, LLCs are state-specific entities formed under the state statutes. Hence, each state has some LLC formation peculiarities and special aspects. Besides, some US states appear to be more business-focused than others thanks to business advantages ensured by the state and local laws. Maryland is one of those more business-friendly states with specific state programs for businesses owned by women and minority groups, a variety of tax credits, and the absence of franchise tax being the major welcoming business incentives. If you want to make use of these business benefits and plan to start an LLC, in our article, you’ll find a stage-by-stage guide for Maryland LLC formation along with helpful regulatory resources and our recommendations on cheap LLC services that might come in handy when launching an LLC.
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Basically, to form an LLC in Maryland, it’s enough to file the formation documents with the state and get them back approved by the state body. However, the whole procedure is a bit more than that, and to establish a lawful and functional entity, there are more aspects you need to take into account.
Any business entity starts with a name, the more so if it’s a limited liability company. You won’t be able to get Maryland LLC registration without giving your company a business name that will be not only memorable and distinguishable but also unique, i.e. not similar to the names of other LLCs eligibly operating in Maryland. Note, though, that LLCs in other states will be allowed to use the same name, so if you want to get a really unique name, think of trademarking. Besides, while Maryland LLC registration requires a single business name, which is a legal or registered company name, after the LLC formation, you can choose as many DBA (do business as) names as you need to market and promote different product lines or services.
Though inventing a name for your limited liability company mostly engages your creativity and imagination, to get a permissible moniker, you still need to stick to some rules:
Before you use the chosen business name for your LLC, you need to check if it is available in the state, and no other existing company already owns it. It’s important since unless the Maryland LLC name is unique, the state authority will reject your formation documents. To check the name availability, you can use the Maryland Business Entity Search tool accessible for free from the governmental website. It’s worth mentioning that if you hire an LLC service to be your assistant in the business formation process, they’ll have your desired name checked for you. And if you have some difficulties or lack business name ideas, there are multiple business name generators available online that can help you with name versions.
If an invented business name appears to be unique, you can put it on hold until you finish the document preparation and will be ready to file the documents with the state. It’s a really great service available in nearly all US states allowing you to protect the name version you like from possible takeover. Since it’s an optional service, it is a payable one. In Maryland, you’ll have to pay $25 to reserve your business name for a 30-day period. To do that in this state, you need to deliver a Corporate Name Reservation Application by mail or in-person to the following address:
State Department of Assessments and Taxation /UCC
301 W Preston Street
Baltimore, MD 21201
The application processing might take from 4 to 6 weeks, which is quite a long term. Yet, you can cut down the processing time to seven days by paying $20 in extra. More than that, if you bring the application form to the State Department in person, you’ll get it registered the same day.
Maryland LLC requirements don’t call for an Operating Agreement, yet, having it in hand will bring quite a number of benefits for your business, namely for its day-to-day running. As the document name suggests, it relates to the company’s operation. As such, it outlines LLC operational rules and procedures serving as guidelines for the company managers and members. On top of that, the document strictly describes the voting rights of the LLC members, profit distribution, and the company dissolution along with the share transfer. Having a priority over the state default laws, which are generic by nature, an Operating Agreement gives you an opportunity to set up your own business operation rules when opening an LLC in Maryland.
Since the document is optional, there is no fixed legal form for it, and you can draft it by yourself if you have enough practice and knowledge for that, using one of the multiple templates available online. On the other hand, though, taking into account its importance, most likely than not, you’d like it to be made up in a professional manner and cover all the peculiarities of your individual business situation. So, you can either hire an attorney for that (which is a more expensive option) or delegate the task to one of the incorporation services that can do the rest of the formation job for you too. Our recommendation here is Inc Authority that will be a welcoming surprise in terms of price.
Under Maryland Statutes §4A–210, to register an LLC in Maryland, you’ll need someone who will receive your legal correspondence in the state and keep you informed of any important notifications and messages received from regulatory and government authorities. It’s a so-called registered or resident agent, which is not only convenient for your business but also a must-have element for an MD LLC filing. The resident agent’s name and a signature will be specified in your formation docs and made available to the public.
When it comes to the resident agent requirements, the main rule is that the entity should be a Maryland resident physically located in the state to be able to receive your business documents during business hours on weekdays. We say “entity” because the Maryland LLC registered agent could be both a physical person and a legal one.
Since the law sets no specific rules for a person to act as a resident agent, any adult above 18 years of age can fulfill this function. You can appoint yourself or choose your neighbor, friend, or relative, it doesn’t matter. However, despite being quite a formal one, this role is pretty important since it is the resident agent your business communication with the state will depend on. So, it’s better to assign it to someone with an appropriate background. A business consultant, accountant, tax expert, attorney, or lawyer will make a perfect choice for that.
As the business grows, the resident agent workload will also increase, which might become a problem for a physical person. So, it might be reasonable to appoint a legal entity as your resident agent from the start and choose a special resident agent service for that. Normally, this service is provided by business incorporation companies making it either a part of their formation bundles or delivering it as an option. Thus, with Incfile, for example, you’ll get a whole year of resident agent service for free if you choose to file your LLC with them.
At this stage, you should already have a unique business name version at hand and a resident agent appointed since this info is to be included in the Articles of Organization before filing. Speaking of which, it’s your major formation document that is registered with the state and makes your company a lawful business entity in Maryland. The Articles of Organization or Certificate of Formation is quite a common form covering basic company information such as:
Filing MD Articles of Organization is subject to a state fee, which is $100. It’s payable before you submit your formation documents to the Secretary of State and you’ll have to attach the state fee payment confirmation to your document package when filing.
To deliver your Articles of Organization, you can choose one of the following methods:
Sign up with the Maryland Business Express website and complete a digital application form there. Online filings in Maryland are prioritized and your application will be automatically expedited. This way, you’ll get your formation documents processed within 7 workdays.
To send a hard copy of your docs by mail or hand it in to the state department, you need first to download an application form and fill it in. Then send it along with a state fee payment cheque to
State Department of Assessments and Taxation, Charter Division
301 W. Preston Street; 8th Floor
Baltimore, MD 21201-2395
Note, though, that this filing method is quite a lengthy one, and you’ll get your papers back in about 4-6 weeks. Besides, expediting is not free of charge. It will cost you $50 to cut down the turnaround time to 7 days.
The biggest plus about an LLC is that it runs separately from its owners as an independent legal entity. To further maintain this status and create a proper business model from the very beginning, it’s advisable that you split your business and personal assets when forming an LLC in Maryland. Once the formation process is complete and you already have your formation documents approved, consider opening a business bank account for your newly-established company. It will help you avoid mingling individual and company funds and easily account for business finances, cash flows, and expenses.
To open a business account when doing business in Maryland, you’ll need not only formation docs but also an Operating Agreement and an EIN number, hence, a bit more on this below.
To settle taxes, hire employees, open bank accounts for your business, or sell goods, you’ll need an EIN or an Employer Identification Number. It’s a sort of an ID number for LLCs similar to a social security number for physical persons to make your company visible for the IRS service. And it’s the IRS that issues LLC EINs. You can acquire it when getting an LLC in Maryland or any time afterward by applying to the IRS in one of three ways:
Filing a digital form online is the quickest method. You can do it from 7 am to 10 pm on weekdays and get your LLC EIN immediately after you fill in and submit the form.
To mail a paper form, you first need to download the application Form SS-4, print it out, and fill it in. Then, send it by post to the following address:
Internal Revenue Service Operation
Attn: EIN Operation
Cincinnati, OH 45999
Yet another way to deliver the Form SS-4 to the IRS is sending it by fax to
(855) 641-6935
However, by mailing or faxing the application, get ready to wait for 4 business days and 4 weeks accordingly before you get your Maryland EIN back.
When you have your LLC legally formed in Maryland, your business gets a form of a separate legal entity with its own rights, commitments, and obligations. Speaking of the latter, there are a few regulatory requirements any Maryland LLC should match to stay compliant with the state and lawfully operate on its territory.
Business taxes are an integral part of any business and the strictest requirement to meet if you want to keep your company in good standing and avoid any penalties or fines. Similar to other states, LLC tax filing in Maryland should be done in three levels, including federal, state, and local taxes.
You will only have to file federal tax reports for your business if you choose to be taxed as a C-Corp. In all other cases, LLCs qualify as pass-through entities with incomes and losses to be reported on personal tax returns of the company owners. In case LLC members are individuals, those taxes are paid under their individual tax rates. And if they are legal entities, the payments are made at their valid tax rates.
State LLC tax filing requirements in Maryland are the same as those for federal taxes, i.e. state taxes again pass to the tax returns of the company owners. However, some states have special taxes and local fees imposed on certain types of business activities or payable on a regular basis that are to be settled no matter the type of business entity. So, you’d better check with the state tax authorities not to miss any essential tax payments you might be not aware of.
Some added taxes any Maryland LLC can be exposed to include Sales and Use tax if you run a commercial venture and sell goods or products, Unemployment and Withholding Taxes if you have hired employees, etc. To register for those, you can file a Maryland Combined Registration Online Application via the tax page on the governmental website.
Having formation documents at hand and paying taxes are often not enough to run a business in Maryland. If your LLC deals with certain groups of products or services or is engaged in certain types of activities, you might need to get some sort of an LLC license to operate in Maryland. Thus, nearly any type of business entity should obtain a Maryland business license while commercial activities call for a trader license, not to mention professional licenses some of your LLC employees should have. You can find out what business licenses and permits you need to get for your business in Maryland by navigating through the Department of Labor, Licensing, and Regulation website.
All LLCs in Maryland are to deliver a Personal Property Report, which is an annual LLC report, to the Department of Assessments and Taxation to keep company records updated. The due date for filing this report is April 15 annually and the MD LLC annual fee is $300, which is quite high. You can submit your LLC report using one of the following methods:
Online reporting is quick and easy via the Maryland Business Express portal. It will take you only a few minutes to fill in a digital form from wherever you are.
If you prefer mailing the docs, download an application form, print it, and send it along with the filing fee payment cheque to:
Maryland Department of Assessments and Taxation
Annual Report
PO Box 17052
Baltimore, MD 21297-1052
Those who reside in Baltimore could personally bring the printed annual report form to the state office at:
The State Center at 301 W. Preston Street, Room 801,
Baltimore, MD 21201
In our guide, we did our best to provide every sort of instructions and info you need to set up an LLC in Maryland on your own. However, if you prefer to avoid formalities while being sure you don’t miss anything, you can let one of the online LLC services handle this process for you. Saving your peace of mind, those companies will do everything quickly and in a due manner, not to mention many of them also offer a whole lot of maintenance services you’ll eventually need to keep your business up and running.
