Whether you formed a limited liability company (LLC) or a corporation, your first year of business will have a lot of paperwork. You’ve probably written a business plan. Maybe you’ve also penned an operating agreement. You’ve undoubtedly registered your business with the state by filing Articles of Organization or Incorporation. In Maryland, the first year of business comes to a close with one last required filing: the Maryland annual report.
Filing an annual report can be intimidating, especially in a state like Maryland that ties reports to business taxes. At best, the consequences of late filing will lead to a fine. At worst, your business entity can be administratively dissolved and you can lose the right to operate entirely.
It’s for these reasons that it’s important to understand the ins and outs of annual reports. This guide can tell you what you need to know.
Unlike most other states, which require business owners to file annual reports with the secretary of state, Maryland has a different approach. Here, the annual report is tied to the state’s business personal property tax. Business personal property refers to movable items owned by your business. It includes office supplies, furniture, computers, machinery — basically everything except for the building itself. Though all LLCs and corporations have to file an annual report, business entities will also have to file a personal property tax return along with their report if they:
Maryland’s annual report is filed with the Maryland State Department of Assessments and Taxation (SDAT). While most states require online filing (barring a few exceptions), you can file your Maryland annual report through Maryland’s Business Express portal or send it in the mail. Businesses that fail to file a report or miss the due date will face repercussions.
The process for filing annual reports in Maryland is similar for both LLCs and corporations. One of the main differences is the filing fees. Regardless of whether or not a business is profitable or owns or rents property within the state, most LLCs and corporations have to pay a $300 filing fee. Only three entities are exempt:
Additionally, corporations have to fill out a separate section of their annual report. Section II provides the names and mailing addresses of all corporate officers and corporate directors. Some corporations may also have to report the total number of directors vs. the total number of female directors. This is unique to Maryland, and became the law in 2019.
Filing online is the easiest way to submit your annual report. This can be done through Maryland’s Business Express portal. You’ll need to create a username and password to sign in, as well as provide contact information like your primary phone number and email address.
There’s also the option to file your annual report through the mail or in person. This requires business owners to print and fill out Annual Report Form 1. Additionally, some businesses will also have to complete a personal property tax return. That form and its instructions are available on maryland.gov. All documents should be mailed with payment (a check or money order) to the Department of Assessments and Taxation.
You can also bring your forms to Maryland’s Public Services Center at their Baltimore Headquarters, but check before you go. Many public offices are closed or have limited hours due to the COVID-19 pandemic.
All signatures on printed forms must be original (by hand only) or they will not be accepted by the state.
Unlike some states that base annual report deadlines on when a company was legally formed, Maryland has the same due date for all businesses. Reports are due every year on April 15, unless that date falls on a weekend. If that’s the case, it’s due on the following Monday. Mail filings must be postmarked by the close of business on that Monday or else they are considered late.
If you can’t make the April 15 deadline, SDAT allows businesses a 60-day extension at no extra cost. You’ll have to file for an extension online before the original due date, and SDAT recommends that you apply as early as December because their website gets busy. Those who receive an extension must submit their paperwork by June 15 or they will no longer be in good standing.
The fee for filing an annual report varies based on the business type. Most businesses pay a $300 fee. The exceptions are:
Additionally, it doesn’t cost any extra in filing fees to send in amended returns. This would only be done in a case where you previously submitted business personal property tax returns with reporting errors or want to claim a missed exemption. More instructions on amending your returns can be found in the Department of Assessment and Taxation’s instructional PDF.
Maryland accepts a number of payment options, but most businesses opt to pay for online filings via credit card. You can pay for mail filings by check or money order made out to the Maryland Department of Assessment and Taxation.
Before you can file your Maryland annual report, you need to gather specific information about your business. Again, this varies based on the type of business entity, but all businesses will need to know:
Corporations will also have to submit the names and mailing addresses of their corporate officers as well as the names of their directors. Most businesses that have made revenue in Maryland will also need to know the total amount of the gross sales made in the state.
If you’d like to change your business’s principal office address or registered agent, you must also file a separate form. You can either do this online or by filling out the form per the instructions.
Annual reports become public records once they’re filed, meaning anyone can find the information online through Maryland’s business entity search. Personal property tax returns are also subject to audits. If you make an error on your return, the department may ask you to correct it. Amendments are cost-free.
If you miss the deadline to file your report in Maryland, you’re looking at late fees in the best-case scenario. In the worst case, you’re risking your business structure. Late fees are calculated after the personal property tax return is filed, and the department will notify businesses of the total once they assess the full sum.
Late fees are a minimum of $30 and a maximum of $500. Overall, the penalty is 1/10 of 1% of the county assessment or the base penalty, whichever is greater. After 30 days, interest accrues at a rate of 2% of the initial penalty. Businesses that don’t file an annual report at all will lose their right to operate in Maryland as an LLC or corporation altogether. Without that business structure, all of the company’s liability protections would dissolve. However, it’s possible to reinstate a lapsed business by filing for a Certificate of Reinstatement (LLC) or Articles of Revival (corporations). The fee to reinstate a is $100 for either type of business.
If you run into problems while filing your Maryland annual report and need assistance, you can contact the Department of Assessments and Taxation.
Annual reports cost $300 to file for non-exempt entities and $100 to file for SDAT-certified family farms. Additionally, it’s free to amend your annual report.
Late filings are subject to a penalty that’s as low as $30 and as high as $500. The department will assess your personal property tax return and determine your overall fine. This will be either 1/10 of 1% of their assessment or the base penalty, with 2% interest added every 30 days.
If a business fails to file their annual report, Maryland may revoke their ability to operate within the state, which means it loses the rights and protections of the business entity.
Yes. All LLCs and corporations in Maryland must file an annual report, even if they haven’t conducted business in the preceding year. Businesses must formally close with Maryland’s comptroller, which can be done through the Business Express portal.
Some entities are allowed to file online, while some are not. The following must file physical forms with original signatures:
Credit Union, Financial Institution, Bank, Savings Bank, Savings & Loan, and Trust Companies
Rental Property in Worcester County (Unincorporated)
Every other business not named above may file online with an electronic signature.
Typically annual reports are filed by either a corporate officer (if the entity is a corporation) or a principal of the entity like an owner or partner. The report will also have to be signed by the firm or individual who prepared the personal property tax return, as most business owners do not self-prepare their taxes.
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