Many different legal options are available if you’re considering starting your own business in Maryland.
One of the most popular forms of business structure is an LLC (Limited Liability Company). It’s a good choice for new business owners because it offers limited liability protection to its members. As long as you follow the rules and regulations in Maryland, this business option may be perfect for you! This article will provide a step-by-step guide of what you need to do to start your LLC here in Maryland.
Please note: This article is intended as a helpful resource, and we hope it answers some of your general questions on how to form an LLC in Maryland. However, we’re not accountants or lawyers, so please don’t construe this article as legal advice! We always recommend you check with the appropriate authorities (state agencies, an accountant, or a lawyer) before making official business decisions or commitments and legal advice.
Before we dive in, here’s a really good explanation video on starting a Maryland LLC for those of you who prefer video over text.
Benefits of starting an LLC in Maryland
There are many benefits to starting your LLC in Maryland. As expert start-up guides will advise you, it has the advantage of limited liability protection for its members. It’s more compact than a Corporation or S Corporation.
Limited Liability Protection
One of the most significant benefits of starting your business as an LLC is that it offers limited liability protection, which means that if a lawsuit arises from a customer or client for something you did while operating your business – it won’t follow you home. Rather than the people who own it, the business itself is liable for paying out any damages.
Your personal assets, such as your car or house, are separated from your business assets and aren’t at risk of being taken away if someone sues your business for something you did wrong. Many entrepreneurs start their businesses as LLCs because of this benefit.
Taxation flexibility
An LLC has the choice of being taxed as a Sole Proprietorship, Partnership, or Corporation. It’s a good deal for start-ups since they don’t have to worry about finding an accountant or anything like that just yet.
Note: Single-Member LLCs are treated as Sole Proprietorships by default.
Minutes of meetings not required
Lastly, one of the benefits of starting your LLC in Maryland is that no minutes are required for meetings. People don’t have to travel for monthly meetings or anything like that. They need to follow the operating agreement, which doesn’t take too many hours out of the day.
Maryland LLC Rules & Requirements
If you want to know how to start an LLC in Maryland, you must follow some rules and requirements.
Here are the basics of what you’ll need:
- Choose a name for your LLC
- Appoint a resident agent for your LLC
- File your Articles of Organization
- Create an Operating Agreement (optional)
- Comply with all state and federal tax requirements
- Submit an Annual Report every year
This article will go into more detail on the particulars of these rules and requirements that you’ll need to follow during your LLC formation process.
Best Maryland LLC Formation Services
If you’re thinking about starting your LLC in Maryland, it’s a good idea to use a professional service that can handle the process for you. These services will ensure you get all the necessary paperwork filed correctly and timely so that you don’t have to worry about anything going wrong with your business registration.
Finding the Best LLC Formation Services in Maryland
Choosing the best LLC formation services in Maryland is an essential first step for anyone looking to start their own. Here are some of the most critical factors you’ll want to consider:
- Price
- Effectiveness
- Customer service/communication
- Integration with accounting software (if necessary)
These factors will help you narrow down your list of potential providers to find the one that provides you with the professional service you need at an affordable price. We have reviewed some of Maryland’s best LLC formation services here: Best LLC Formation Services.
As mentioned above, it’s usually recommended that if you’re unfamiliar with this kind of thing, then you should consider allowing LLC formation service providers to help you start your own business here in Maryland. These services will ensure that you comply with state law and all the rules and requirements. If anything goes wrong, they’ll have your back so that you don’t have to worry about it.
However, if you’re looking to do it on your own, then you can continue reading our guide on how to start an LLC in the state of Maryland.
The following is a step-by-step guide of what you can expect when forming an LLC in Maryland:
6 Steps to Starting an LLC in Maryland
- Name Your Maryland LLC
- Appoint a Resident Agent for Your Maryland LLC
- File the Articles of Organization
- Create an Operating Agreement
- Get an EIN for your Maryland LLC
- Annual Report
Step 1: Name Your Maryland LLC
Choosing your name can be one of the most challenging parts of starting your LLC. You’ll have to choose a name that’s not already in use by another LLC or restricted by the state.
The rules for naming your Maryland limited liability company are as follows:
- Your name cannot mislead people into thinking the LLC was set up by the government or is a federal government agency.
- The name can’t be too similar to another company’s
- Your name has to end with an LLC designator (LLC, LTD., etc.)
- You may need to fill out additional paperwork if you want to use certain words in your name, including bank, trust, trustee, incorporated, Inc., corporation.
- If you want to see if a specific LLC name is available, you can run a business name search on the Business Entity Search page of the Maryland website.
☞ Maryland.gov Business Entity Search
After choosing the perfect name for your new business, you can also secure a good domain name. A domain name is also helpful if you want a business email address @yourllc.com.We recommend using Namecheap to register your domain. They have great prices, fast service, and an easy-to-use website.
☞ Check if your domain name is available.
Step 2: Appoint a Resident Agent for Your Maryland LLC
Before you form your LLC in Maryland, you’ll need to appoint a resident agent with a physical street address in the state. This person or resident agent service would be responsible for receiving essential documents on your behalf if anything happened that would require that sort of thing (lawsuits, etc.). You can name yourself as your resident agent, but that isn’t advisable because you would not be able to claim any anonymity.
What is a Resident Agent?
A Resident Agent is an individual or business entity who agrees to accept service of process on behalf of a Limited Liability Company, similar to a registered agent in other states.
When you create a Limited Liability Company in Maryland, the State of Maryland requires that this Resident Agent be appointed for your LLC to become effective. The Secretary of State’s Office will not file Articles of Organization unless you designate a resident agent on your application form.
Who can be a resident agent in Maryland?
For a Resident Agent, you can select a person or an organization. The individual can be a Maryland resident, a Maryland corporation, or a non-Maryland corporation with a business presence in Maryland.
You can also use a Maryland resident agent service (registered agent service) to appoint a resident agent and obtain a business address. Services such as Zenbusiness and Northwest Registered Agent offer this service as a feature of some of their packages when you register a Maryland company with them.
What does a resident agent in Maryland do?
A Resident Agent in Maryland is available during normal business hours to accept important documents and notices on behalf of your LLC. These can be official court papers such as lawsuits or service of process documents that will require the Resident Agent’s signature.
A registered agent is not responsible for the management of your Maryland LLC, nor are they required to do anything with the documents once they are received at their business address except for filing them under Maryland law.
Step 3: File the Articles of Organization
You’ve chosen your name and appointed a resident agent, and now it’s time to create your LLC and become a recognized legal entity.
To start an LLC in Maryland, you’ll need to file articles of organization with the Secretary of State, which can be done through the online filing system called Business Express. The filing fee is $100 (If you submit your paperwork online, you will be charged an expedited filing fee of $50 and a 3% credit card service fee), and a person must file articles with authority to do so on behalf of the LLC.
File your Articles of Organization Online
You’ll need the following documents to submit your papers:
- The official name of your LLC
- A brief description of the purpose of your LLC
- Your LLC’s street address(in Maryland)
- Your resident agent’s name and address
- The signature of your resident agent
- Your LLC’s authorized person signature
- Your return address
You can submit your Articles of Organization through Maryland Business Express, the state’s online business filing system.
☞ Submit your Articles of Organization Online
File your Articles of Organization by Mail
To file your articles of organization by mail, complete and sign the Articles of Organization form.
☞ Download your Articles of Organization Form
Attach a check payable to the Secretary of State for $100 and mail it to:
Department of Assessments and Taxation
301 W. Preston Street
Baltimore, MD 21201
Maryland LLC Certificate of Formation
After your LLC is formed, you will receive a Certificate of Formation in the mail, and the information you provided will permanently exist in the public record. Keep this in a safe place with your other essential papers. This certificate proves that your LLC is a legal business entity, and you will need it when you apply for an EIN or any business licenses and permits.
Step 4: Create an Operating Agreement
An operating agreement is an internal document that outlines the relationships and legal agreements between all of the members of your LLC. It typically includes things like the percentage of ownership, what percentage each member owns of the profits, how voting rights are allocated, whether or not there are any buy-back provisions for shares in the event a member wants to leave. The operating agreement is a legal document that you should carefully draft to avoid future conflicts, but it’s not required by law.
Step 5: Get an EIN for your Maryland LLC
You can create an Employer Identification Number (EIN) in Maryland online through the IRS website. You will get a unique EIN that you may use to identify your business when filing taxes, applying for business licenses, opening a business bank account, or a business credit card.
The easiest way to get an EIN is online, through the IRS website. However, you can also apply for an EIN by mail or fax using Form SS-4.
or
Mail to:
Internal Revenue Service
Attn: EIN Operation
Cincinnati, OH 45999
Fax:
(855) 641-6935
Applying for an EIN for your business is free of charge.
Step 6: Annual Report
The Maryland Limited Liability Company Act requires an annual report to be filed each year before April 15 to include information about your business activities and gross sales within Maryland. This annual filing must be submitted by either the organizer or resident agent of the LLC. You don’t have to worry about it at the time of filing.
There is an annual filing fee of $300, on top of any state tax liability of the LLC. If the LLC fails to file its annual report before April 15, a late fee can go up to $500. If the LLC misses this deadline, it risks having its LLC dissolved by the State of Maryland.
Important next step: Beneficial Ownership Information
As of 2024, a significant new law known as the Corporate Transparency Act (CTA) has come into effect. This law requires most LLCs, including those formed in Maryland, to file a Beneficial Ownership Information (BOI) Report with the Financial Crimes Enforcement Network (FinCEN). The goal of this filing is to increase financial transparency and prevent criminals from using shell companies to hide illicit activities like money laundering.
File a Beneficial Ownership Information (BOI) Report
Understand the Requirement: The Corporate Transparency Act (CTA) mandates that most LLCs file a Beneficial Ownership Information report with the Financial Crimes Enforcement Network (FinCEN). This provides transparency regarding the true owners of your company.
Gather Information: You’ll need the following about each beneficial owner and company applicant:
- Full legal name
- Date of birth
- Current residential or business street address
- Unique identifying number from an acceptable ID (e.g., driver’s license number, passport number)
File the Report: The method of filing is determined by FinCEN and may change. Check the most up-to-date instructions on FinCEN’s website.
Important Deadlines:
- LLCs formed before January 1, 2024: Companies in existence before this date have a more extended deadline. They have until January 1, 2025, to file their initial BOI report with FinCEN.
- LLCs formed in 2024: Companies formed during 2024 have 90 calendar days from the date they receive actual or public notice of their creation or registration becoming effective. This means 90 days from when the state officially processes your LLC paperwork or makes information on your company publicly available.
- LLCs formed on or after January 1, 2025: Companies formed from this date onward will have a stricter deadline of 30 calendar days to file their initial BOI reports with FinCEN.
Important Notes:
- Failure to file the BOI Report can carry civil and criminal penalties.
- The information you provide is protected, but accessible to law enforcement agencies.
Maryland LLC Processing Time
Maryland LLC filing times vary depending on the method you choose to file.
The online filing process can take as few as five business days to process. However, paper filings usually take around 4-6 weeks to process. Expedited paper filings are also available for a fee of $59 within 24 hours.
Additional steps
Business Licenses: Depending on your type of business, you may be required to have additional state or county business licenses. The Maryland Comptroller’s Office has a searchable license directory that includes all currently issued licenses.
Sales Tax: Selling goods or services in Maryland is considered business there. You are required to register for a sales tax license with the Maryland Comptroller.
Personal Property Returns (PPR): Many types of businesses in Maryland are required to file a Personal Property Tax Return (PPR) for tangible property. This document includes furniture, office and industrial equipment, tools, supplies, inventory, and others not classified as real property.
Maryland LLC Frequently Asked Questions
How much does it cost to start an LLC in MD?
It costs $100 to start an LLC in MD.
How long does it take to get an LLC in Maryland?
You can get an LLC in Maryland online in 5-7 business days or by mail in 4-6 weeks. If you need it faster, you can expedite it for an additional $59 fee and get it the same day.
Does Maryland have an annual LLC fee?
Yes. The annual LLC fee in Maryland is $300. If you miss the deadline to file your annual report, you will be charged a late fee of up to $500.
Do you have to renew your LLC every year in Maryland?
Yes. In Maryland, you must file an annual report with the Department of Assessments and Taxation to maintain your LLC. The annual report is due April 15 of each year. If you fail to file the annual report on time, the Department may dissolve your LLC. If your LLC fails to pay its taxes or comply with other state requirements, the Department may also dissolve your LLC.
How is an LLC taxed in Maryland?
An LLC taxed as a corporation in Maryland will be subject to an 8.25% tax on the net income allocable to Maryland. This tax is a flat rate, so it doesn’t matter how much or how little income the LLC earns.
How much is the business tax in Maryland?
The corporate tax in Maryland is 8.25% of the net income allocable to Maryland.
What is a certificate of good standing in Maryland?
A Certificate of Good Standing is a certification that the corporation is in good standing with the state and has not been suspended or dissolved. The certificate also verifies that the corporation has filed all required annual reports and taxes.
How much does it cost to file an annual report in Maryland?
$300 is the filing fee for an annual report in Maryland, and it must be filed by April 15 each year. If the report is not filed on time, The state of Maryland may charge a late fee of up to $500.
