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Starting a new business requires you to make all kinds of choices, from picking a name to determining a legal structure. If you’re planning to start a limited liability company (LLC) in Maryland, you’ve already made one smart decision. It’s relatively straightforward and cost-efficient to create a Maryland LLC.
That said, you should follow a strict set of steps to ensure the process runs smoothly. Find out more below.
To establish an LLC in Maryland, you must file the Articles of Organization with the State Department of Assessments and Taxation. To complete this paperwork, you first need to establish some basics, such as the name of your LLC, its purpose, and its resident agent.
You may also choose to establish an Operating Agreement when you file your Articles of Organization. This documentation essentially determines who will run the business and how. Once you’ve filed the Articles of Organization, it’s important to determine what legal and financial obligations — for example, in terms of taxes — your new business will have.
Adhering to these step-by-step guidelines helps you avoid hiccups with the legal paperwork that could delay your LLC formation. This guide breaks down each step in even greater detail, providing you with the comprehensive resource you need to establish your Maryland LLC.
Choosing a business name is an important initial step in establishing your Maryland LLC. Don’t rush the process. You want to get it right the first time. Changing a business name later could mean redoing everything from your website to branding materials and legal paperwork.
Maryland has certain requirements when it comes to naming a legally recognized LLC in the state. As you brainstorm business names, keep these guidelines in mind:
Once you’ve thought of the perfect business name, you may want to reserve it. You can do this by filing the State of Maryland Corporate Name Reservation Application. A $25 filing fee must accompany the paperwork. For expedited service, you can pay an extra $20.
By securing your name, you buy yourself more time to complete the other steps needed to file the Articles of Organization. While it’s not required to reserve the name in advance, it can bring peace of mind and spare stress, knowing it’s already secured.
Something else you may want to think about is whether you’ll want a DBA. A DBA or “Doing Business As” is another name that refers to your Maryland business, often used when a company wants to use a different name to introduce a new product line or store.
When choosing your first LLC name or a DBA, it’s also good to visit the United States Patent and Trademark Office website to see whether your company name or logo is trademarked. If not, you can also find information on how to apply for a trademark there. Trademarks also exist at the state level. You can find out more about Maryland trademarks here.
A resident agent (referred to in many other states as a “registered agent”) is an individual who receives legal correspondence on behalf of a business. Every Maryland LLC is required to have a designated resident agent. Your resident agent must have a permanent legal address in Maryland.
You can’t use a P.O. box. This is because legal paperwork like lawsuits must be delivered in person. A resident agent must be available to accept such deliveries and then notify the LLC’s members (owners).
It might seem logical that you designate yourself or another member as the resident agent and use your residential or business address as the point of contact. While this is technically permitted, it is a risky move.
If you are served with some kind of legal paperwork, like a liability claim, you don’t want this to occur at your place of business when customers or employees are present. Additionally, you probably don’t want your home address made public — a resident agent’s contact information is a matter of public record.
Luckily, it’s easy and inexpensive to hire an outside resident agent service. You can trust that you have a reliable person to handle legally sensitive business correspondence, without worrying about your privacy. Depending on the type of service you use, you can also rely on them to securely store this sensitive data and alert you about important deadlines so that you remain in good standing.
Some additional benefits of using an outside resident agent include:
With the above steps taken care of, you can finally file your Maryland Articles of Organization. This document is filed with the state’s Department of Assessments and Taxation to establish your business as a recognized legal entity.
The document doesn’t take long to complete and is only one page. You will need to provide the following details:
The completed Articles of Organization can be filed online, by mail, or in person. Mail and in-person submissions can be made to:
State Department of Assessments and Taxation
301 W. Preston Street, 8th Floor
Baltimore, MD 21201-2395
To file online, visit the Maryland EGov Business portal.
The base filing fee for the Maryland LLC Articles of Organization by mail is $100. This must be paid when you submit the paperwork. You can also opt to pay an extra $50 to file online, which includes an expedited process. If you wish, you can get a certified copy of the document for $20, plus $1 per page, and a Certificate of Status at the time of filing for $20.
For credit card or PayPal payments, you will be charged an additional service fee of 3%, while for eCheck, you will be charged an extra $3. Checks should be made out to the State Department of Assessments and Taxation.
An updated list of fees, which may change over time, is available online.
An Operating Agreement outlines who owns the LLC and how it will be run. Legally, you are not required to submit an Operating Agreement with your Articles of Organization for your Maryland LLC.
That said, it’s considered best practice to put such an agreement in place. This is especially true if the LLC has multiple members. The Operating Agreement reduces the risk of future conflict. It can be kept by the resident agent and referred to in case of internal disagreements.
These are the types of details you may include in the Operating Agreement:
In addition to helping to avoid internal conflict, an Operating Agreement is essential if you want to bring additional investors into your business. Most people want to ensure that a business is being run smoothly and according to set guidelines before they put money into it. When you can present a potential investor with an Operating Agreement, they have this assurance.
An Operating Agreement also helps distinguish you and the other members of the Maryland LLC from the business. It defines you as independent owners of the business — people who are distinct from the business entity. This is important if the business gets into legal trouble. The Operating Agreement can help protect members and their personal assets from liability claims against the business entity.
Drafting an LLC Operating Agreement might be daunting if you’ve never done it before. You have to know what details to include and ensure that the language laying out those details is legally appropriate. The right partner can create the document for you.
An Employer Identification Number (EIN) is a nine-digit code, sort of like a Social Security number but for a company. The Internal Revenue Service (IRS) uses EINs to identify businesses. You may also see an EIN referred to as a FEIN (Federal Employer Identification Number) or FTIN (Federal Tax Identification Number).
Once your Articles of Organization and Operating Agreement are in place, it’s best to get an EIN for your Maryland LLC proactively. Among other things, It’s necessary if you hire employees. On top of that, there are practical benefits. For example, you can use your EIN to obtain a business bank account.
Getting an EIN is free. All you have to do is request one from the IRS. You can apply by mail or fax by completing Form SS-4. Allow at least four to five weeks of processing time. Refer to the SS-4 filing instructions on the IRS website for details on where to send the completed paperwork.
Alternatively, you can request your EIN online. Visit the IRS online portal. Make sure you leave time to complete the application in a single sitting, as you can’t save parts of it to come back to later. This is the faster option, as you will get your EIN immediately after completion and can download, save, and print the confirmation.
The overall cost of starting a Maryland LLC is relatively low. You need to pay the following:
If you want to expedite the filing of the Articles of Organization by using the online process instead of mail, expect to pay an extra $50. Additionally, if you choose to reserve your business name before filing the Articles of Organization, you must pay a $25 fee when filing the State of Maryland Corporate Name Reservation Application. For expedited service, an extra $20 is due.
Note this does not include ongoing fees like filing your annual report. And depending on the type of business you plan to open, other business licenses might be required. For example, if you open a restaurant, you need a food service license and, if you plan to sell alcohol, a liquor license. This will mean added fees.
A reputable partner can take care of many of these startup tasks for a reasonable cost. For instance, you can have one trusted provider handle your Articles of Organization filing, serve as your resident agent, and even provide a template for your Operating Agreement. The ZenBusiness starter plan covers all of this and starts at just $49 annually.
We’ve already alluded to some of the advantages of a Maryland LLC above. Are you still weighing the pros and cons?
Here’s an overview of the benefits to refresh your memory:
Learn more about the LLC business structure and why it’s worth investing in.
Every Maryland LLC must file an Annual Report, which updates the state about the business’s contact information. The Annual Report requires a filing fee of $300, plus a service fee of 3% for credit card or PayPal or $3 for eCheck.
If your Maryland LLC owns, utilizes, or leases personal property in the state or has a trade license with a local government unit in the state, you must also file the Personal Property Tax Return. This is used by the state of Maryland to tax any personal property owned by your company, such as machinery or inventory — basically anything except real estate or land.
Depending on your business’s nature, you may also have to pay other state taxes, like sales tax or employer taxes such as Unemployment Insurance Tax and Employee Withholding Tax. There are also federal taxes to consider.
The standard processing time for filing the Articles of Organization is four to six weeks. Expedited requests cost an extra $50 (on top of the other filing fees and service charges due upon filing). An expedited request will be handled within seven business days.
Hand-delivered documents may receive expedited same-day service during set hours from Monday through Friday. Online filings are also considered expedited and will be handled within seven business days.
You are not legally required to file an Operating Agreement with the state of Maryland. However, it’s smart to create this document, as it can help secure investors and avoid business conflicts. In the eyes of the courts, this document also helps to further differentiate you as a member of the LLC from the business entity itself, thereby decreasing the risk of personal liability in case of a business lawsuit.
Maryland LLCs are generally taxed as “pass-through entities.” This means that the LLC doesn’t pay federal income taxes, but each member must pay their own income taxes on profits. In some instances, it might be preferable to opt to have an LLC taxed as a corporation so that more money stays “in” the business. This is a more complicated tax filing and should be discussed with a tax expert beforehand.
In a Series LLC organization, multiple LLCs operate under one larger LLC. Each company has its own rights, obligations, and assets under the umbrella company. Maryland law does not currently allow for a Series LLC structure.
Different industries and locations have different policies regarding licenses, permits, and insurance. To find out if you need to acquire any special permits or licenses, consult the Maryland Business Express page on licenses and permits.
In any case, we recommend hiring a professional service like ZenBusiness, who will provide you with a comprehensive package of all the licenses, permits, and insurance required for your Maryland LLC.
To dissolve a Maryland LLC, first, check your company’s Operating Agreement. This paperwork likely includes details on dissolution, such as which members need to approve it. Next, you must wind up your LLC business, which includes satisfying any liabilities, distributing assets, and paying final taxes. Finally, you must file the Articles of Cancellation with the State Department of Assessments and Taxation. A $100 filing fee must be paid, along with the usual service charges.
Yes, you have to file an amendment to your original Articles of Organization. A filing fee of $100 will be due, along with the usual service fees (3% for credit card or PayPal or $3 for eCheck). The same requirements apply as when you originally chose an LLC name. The business name must be original and include some accepted version of “LLC” at the end.
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