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.
Establishing an LLC in the Old Line State requires filing Articles of Organization with the Maryland 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 resource you need to establish your Maryland LLC. Along the way, we’ll also tell you how our ZenBusiness services can make the process easier.
Step 1: Name 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 conduct your Virginia business name search and brainstorm business names, keep these guidelines in mind:
- Maryland requires that every LLC have a unique identifying name. You can’t use the name of an existing LLC. To make sure your desired name is available, refer to our Virginia business name search page. Your LLC’s Articles of Organization won’t be approved without a unique name.
- Your business name must also include some version of “LLC” in it. To be recognized as an LLC, your business must include this label in its formal legal title. You can either use the full phrase “limited liability company” or an accepted abbreviation. Possibilities permitted in Maryland include “L.L.C.,” “LLC,” “L.C.,” or “L C” without periods.
- Some words can’t be used. Your LLC name should not include words that are misleading as to what your business does. You can find more information on what can and can’t be used on the Maryland Business Express website.
Once you’ve thought of the perfect business name, you may want to reserve it. You can do this by using our business name reservation service or by filing the State of Maryland Corporate Name Reservation Application. A filing fee must accompany the paperwork.
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.
When you’re coming up with a business name, remember to consider whether you can secure a matching domain name so that your future website can be easily found online. We have a tool to help you do a preliminary domain name search, and our domain name registration service can help you secure the online name that will best serve your company.
Something else you may want to think about is whether you’ll want a Maryland DBA name. A DBA or “Doing Business As” name 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.
To make sure you’re entirely in the clear with your business name, visit the United States Patent and Trademark Office website to see whether your business name or logo is federally trademarked. Trademarks can also happen at the state level. To find out more and/or apply for a state trademark, go to the Maryland Secretary of State website page for trademarks.
Step 2: Appoint a resident agent in Maryland
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 Maryland resident agent must be available to accept such deliveries during normal business hours 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’s a risky move.
If you are served with some kind of legal paperwork, like a lawsuit, you don’t want this to occur at your place of business when customers or employees are present. Luckily, it’s easy and inexpensive to hire an outside resident agent service like ours. You can trust that you have a reliable person to receive legally sensitive business correspondence. Depending on the type of service you use (like ours), you can also rely on them to securely store this sensitive data.
Some additional benefits of using an outside resident agent service include:
- You can work when you’re most productive. A resident agent service will have someone available during traditional business hours, which means you can focus on growing your business whenever it works best for you.
- You won’t need to update your registered office address when your business moves. If you need to change your business location, you don’t have to update the state about your registered agent’s new address.
Step 3: File Maryland Articles of Organization
With the above steps taken care of, you can finally file your Maryland Articles of Organization. Filing official government documents like this can be intimidating for many people, which is why we’re here. With our business formation plans, our professionals handle the filing for you to make sure it’s done correctly the first time. But, although we can handle this for you, we’ll show you how the process works below.
The Articles of Organization is filed with the state’s Department of Assessments and Taxation to establish your business as a recognized legal entity. You will need to provide the following details:
- The name of your LLC
- A description of the company’s purpose
- The address of the company in Maryland
- The name and contact information of the company’s resident agent (the resident agent must also sign the form)
- Your signature (as the filing party) and a return address
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 21201-2392
To file online, visit the Maryland EGov Business portal.
There’s a base filing fee for filing the Maryland LLC Articles of Organization by mail is. This must be paid when you submit the paperwork. You can also opt to pay an extra fee to file online, which includes an expedited process. If you wish, you can get a certified copy of the document for another fee. 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.
If you have us handle filing your Articles of Organization, once the state approves your LLC, your paperwork will be available from your ZenBusiness dashboard, where you can keep it and other important paperwork digitally organized.
Once you get your physical paperwork back from the state approving your new LLC, you’ll want to keep it in a safe location along with your other important documents, such as your operating agreement, member certificates, contracts, compliance checklists, transfer ledger, etc. We offer a customized business kit to help you keep these important documents organized and looking professional.
By now you’re realizing how often you’ll need to supply an address for your new business. That can be unsettling for some business owners, especially those running their business from home. In instances where you’re not required to give the registered agent address or official principal address for your business, a virtual business address can come in handy.
With our virtual business address service, we supply you with a physical street address where you can have your mail sent without divulging your real address to more people than necessary. Then we can send that mail to the address of your choice.
Step 4: Create an operating agreement
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 referred to in case of internal disagreements.
These are the types of details you may include in the operating agreement:
- A list of the LLC members (owners)
- Details regarding the rights and obligations of each member
- A step-by-step process for how business profits are to be distributed
- Guidance regarding changes to the LLC, such as bringing in a new member or what happens if a member wants to leave
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 your Virginia operating agreement, they have this assurance.
An operating agreement also further distinguishes you and the other members of the Maryland LLC from the business. It helps 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.
If you’re unsure as to how to compose an operating agreement for your LLC, we offer a customizable template to help get you started.
Step 5: Apply for an EIN
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 or if you have multiple members. On top of that, there are practical benefits. For example, you can use your EIN to obtain a business bank account.
You can get your Maryland LLC’s EIN through the IRS website, by mail, or by fax, but if you’d prefer not to deal with that particular government agency, we can get it for you. Our FEIN service is quick and eliminates the hassle.
Once you’ve secured an EIN, you’ll be able to open a business bank account. Having separate accounts for your business and your personal banking is critical for sorting out your finances at tax time and helps you avoid commingling funds. Commingling funds can not only make your taxes more difficult, but it could also be used against you if someone takes you to court to challenge whether you and your LLC are truly separate entities (i.e., they want to sue you for not just your business assets, but also your personal assets).
We have partnered with LendingClub to offer a discounted bank account for your new business. This allows for unlimited transactions, online banking, a debit card, and more. When you want to authorize others in your business to use the account, we offer a banking resolution template to simplify the process.
For further help managing your new business’s finances, try the ZenBusiness Money App. It can help you create invoices, receive payments, transfer money, and manage clients all in one place.
Maryland LLC FAQs
How much does it cost to start an LLC in Maryland?
The overall cost of starting a Maryland LLC is relatively low. The fees for forming an LLC range from about $100 to $170, depending on factors such as your method of filing and whether you choose to reserve your business name. Note that fees change over time, so check the Maryland Department of Assessments and Taxation website for the most recent fee schedule.
Note this does not include ongoing fees like filing your Maryland 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.
What are the benefits of an LLC in Maryland?
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:
- Enjoy a fast, affordable, and simple business foundation. An LLC is quicker and easier to create than, say, a corporation. You can also streamline management through a comprehensive operating agreement.
- Gain protection by distinguishing between your business entity and yourself. Your LLC debts and liabilities will be distinct from your person, helping safeguard you and your assets in case of a lawsuit.
- Simplify your taxes. By default, your LLC is set up so that individual owners are taxed on any profits they make from the company. This is simpler than corporate taxes, where both the business and the individual owners are taxed.
Learn more about the LLC business structure and why it’s worth investing in.
How is an LLC taxed in Maryland?
Every Maryland LLC must file an annual report, which updates the state about the business’s contact information. The annual report requires a substantial filing fee, plus a service fee for credit card, PayPal, or 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.
Those who purchase any of our plans get a free accounting consultation and tax assessment from our specialists to receive helpful resources and no-obligation recommendations around your bookkeeping, accounting, and tax needs.
What is the processing time to form my Maryland LLC?
The standard processing time for filing the Articles of Organization is four to six weeks. Expedited requests cost an extra fee (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.
Do I need to file my operating agreement with the state of Maryland?
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.
What tax structure should I choose for my Maryland LLC?
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. This is unlike most corporations, in which profits are taxed twice, first at the business level and again at the individual shareholder level. 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.
Does Maryland allow a Series LLC?
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.
Which licenses and permits are required for an LLC in Maryland?
You’ll need to make sure your LLC has all the licenses and permits it’s required to have by law. Unfortunately, because licensing varies by industry and location and can occur on the federal, state, and local levels, there’s no one-stop shop to check to see if you have all the licenses and permits you need. You’ll have to do some research.
If you don’t have the time or inclination to do all this research, or if you just want the peace of mind to know that your business has all the licenses and permits it’s legally required to have, our business license report service can do the work for you.
How do I dissolve my LLC in Maryland?
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 filing fee must be paid, along with the usual service charges.
Can I change my LLC name in Maryland?
Yes, you have to file an amendment to your original Articles of Organization. A filing fee will be due, along with the usual service fees. 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.