How to Form an LLC in Maryland in 7 Steps
Creating a limited liability company (LLC) in Maryland involves many steps including naming the LLC, choosing a registered agent, filing articles of organization, and applying for an EIN and business tax and employment accounts.
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Limited liability companies (LLCs) are a type of legal structure for businesses. Small business owners often choose this structure because of the limited personal liability protection, simplicity, and tax advantages they provide.
If you’re an aspiring entrepreneur and think an LLC is the perfect fit for your new business, check out the step-by-step process below to get your LLC up and running.
Steps to Forming an LLC in Maryland
Name Your LLC
Under Md. Corporations and Associations Code Ann.§1-504, you must choose a unique name for your LLC that is distinguishable from any other registered Maryland business name. Your LLC name should also make it clear that your business is an LLC. Under Md. Corporations and Associations Code Ann.§1-502, the name must contain language that identifies it as an LLC. You can use the full words “limited liability company” if you like. Or you can use the abbreviations “L.L.C.”, “LLC”, “L.C.”, or “LC”.
To find out if your LLC name is available, you should conduct a business entity name search at the Maryland Business Express website. If you have a name in mind but aren’t quite ready to form your LLC, you can reserve your LLC name. Maryland law Md. Corporations and Associations Code Ann.§4A-209 allows you to fill out a name reservation application and submit it to the Department of Assessments and Taxation. There is a $25 fee for this service. This will reserve your name for 30 days.
You might also want to find out whether your domain name is available. Even if you do not launch a website immediately, it can be wise to reserve your domain name. This will make it a lot easier for you to start your website when the time comes.
Get a Resident Agent
Your LLC needs to have a resident agent to operate in the state of Maryland under Md. Corporations and Associations Code Ann.§4A-210. A resident agent is an individual or entity that agrees to accept legal papers for your business. This includes service of process if someone sues your LLC. Your resident agent must be:
- An individual who is over 18 years old and a resident of Maryland
- A Maryland LLC
- A Maryland corporation
The resident agent should sign your articles of organization in the next step. Many LLCs choose one of their members to act as the LLC’s own resident agent. If none of your LLC members are willing and able to take on this task, you should consider using a Maryland registered agent service. With this type of service, you pay a fee to another business to act as your resident agent. You can find many options for Maryland registered agent services by doing a quick search online.
File Your Articles of Organization
To officially start your Maryland LLC, you need to file originally executed articles of organization to the state of Maryland’s Department of Assessments and Taxation (Maryland SDAT). Articles of organization form a legal document containing basic identifying information about your LLC. This document should be easy to complete. In Maryland, there is even a fill-in-the-blank form you can use to create your articles of organization. When you file this document with the state, you formally create your LLC as a legal entity.
Under Md. Corporations and Associations Code Ann.§4A-204 your Maryland articles of organization, must provide:
- Your LLC’s name
- Your LLC’s physical street address (not a P.O. Box)
- The purpose of your LLC
- The resident agent’s name, signature, and address (also not a P.O. Box)
You can file your articles of organization online, by mail, or in person. You will submit this document to the Maryland SDAT. The filing fee is $100. Once your articles of organization are filed and approved, Maryland SDAT will assign an identification number to your LLC.
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Draft an Operating Agreement
Although you are not required by law to have one, you can create an LLC operating agreement to organize your LLC adequately.
An operating agreement is a crucial document for LLCs. You can use it to form rules and contracts among LLC members on issues such as:
- Member rights and responsibilities
- Voting procedures
- Percentage ownership
- Management style
- Other important LLC issues
Even single-member LLCs can benefit from an operating agreement. You will probably need to show this document if you want to hire an attorney, accountant, or open a business bank account. An operating agreement also demonstrates that you treat your LLC as a separate legal entity. This helps maintain the limited liability protection that the LLC structure offers.
Get an EIN
Unless you have a single-member LLC with no employees, you will need to apply for a Federal Employer Identification Number (EIN). An EIN is a unique number that the Internal Revenue Service (IRS) issues to businesses. They use the EIN to identify companies for tax purposes. In this sense, it’s like a Social Security Number for businesses. You will use your EIN to open a business bank account, pay employees, or apply for a business credit card. An EIN is free and easy to get by fax, mail, or online at the IRS website.
For more information about your federal tax obligations, you should visit the IRS’s Tax Information for Businesses page.
Set Up Business and Tax Accounts
Your tax and licensing obligations will vary based on the type of business you operate and its location.
If you plan on selling goods or hiring employees, you will need to register your LLC with the comptroller of Maryland. There, you can register for sales taxes, employer withholding taxes, and learn about any other state tax obligations. For certain taxes, such as tobacco and alcohol tax, you will need to file your registrations by mail on Maryland’s Combined Registration Application (CRA). To learn more about your state and local licensing requirements, you should visit the Maryland Onestop Portal.
If you think you need to get a federal license, you should visit the Small Business Administration (the SBA) website. There, you can find a list of business activities that require a federal license. You should also check with the city or county where your LLC is located to confirm whether you need to apply for local licenses or permits.
Check for Additional Federal or State Requirements
Check state and federal websites to determine if there are any specific rules for your business. For example, some LLCs may have to file a Beneficial Ownership Information Report (BOIR) with FinCEN. Under current law, LLCs created in the United States are “domestic reporting companies” and are exempt from the BOIR requirement.
However, laws may change, so stay up to date with state and federal requirements.
Business and Tax Requirements in Maryland
Your LLC will likely be subject to certain state business taxes and licenses depending on the type of business it is.
State Business Tax
An LLC is required to file a pass-through entity income tax return (Maryland Form 510), if the entity is formed or incorporated in Maryland, does business in Maryland, or has Maryland income (or losses). The LLC’s income, adjustments, gains, losses, and other required information are taxed to the members who are required to file the applicable Maryland income tax return and pay any tax due on the member’s distributable or pro-rata share of the LLC for the tax year.
State Employer Tax
If your LLC has employees, you’ll pay Maryland’s employer withholding tax. It’s structured as a “pay-as-you-go” plan that resembles the federal withholding tax. As an employer, you must withhold the appropriate amount of state taxes from employee wages and submit to the state when due.
Sales and Use Taxes
If your LLC provides tangible goods or services, it is subject to Maryland’s sales and use tax. The sales tax applies to purchases made within the state while the use tax applies to purchases made outside of Maryland. Purchases made outside of Maryland are subject to the state’s 6% use tax (9% for alcoholic beverages if used in Maryland).
Business Licenses and Permits
The state of Maryland and local city or county governments may require your LLC to obtain certain permits or licenses to operate. For example, if your LLC is a retailer or wholesaler, it needs a license to conduct business. If your LLC buys and resells goods, a trader’s license is required. If your LLC offers a professional service, you may need individual occupational and professional licenses. It is important to check at the state and local level to determine what licenses and permits you may need.
Maryland’s licensing OneStop portal allows you to register for licenses and permits issued by state agencies. You can also contact the local Clerk of the Court where your LLC is located to find out any local licensing requirements and the local county’s office to inquire about inspections, licenses, or permits.
Annual Filing Requirements in Maryland
Registration in Other States
If you want to do business in another state, you will likely have to apply to do business as a foreign LLC. You may need to prove your LLC’s good standing in your home state.
File Annual Reports in Maryland
To remain in good standing in Maryland, your LLC must submit an annual report and personal property tax return to the Maryland SDAT. You can file it either online or by mail.
In addition to a $300 filing fee, you will provide basic LLC information in your annual report. This includes details like the name, address, EIN, and nature of your business. Most of these details will serve to confirm the information you submitted in your articles of organization. Finally, you will need to report information on your company’s property and purchases and pay applicable taxes. This report is due every year before April 15.
FAQs About Maryland LLC Formation
There are various state fees associated with LLC formation. It costs $100 to file your articles of organization and an additional service fee of $50 if you would like expedited processing. To change the contact information of your registered agent or principal office, it will cost $25 for standard processing. You can view a complete list of LLC fees at the Department of Assessments and Taxation’s fee schedule.
With expedited processing, you will receive a response to filings within seven business days. Standard processing could take between four to six weeks to receive your confirmation.
The annual report is a required filing for all business entities, regardless of whether the business owns property, generates income or has conducted business activity in Maryland during the preceding year. The filing fee is $300. You also need to pay required taxes and fees associated with maintaining required licenses and permits.
In Maryland, there are different kinds of LLCs that can be formed.
- Single-member LLC: A single-member LLC has only one owner or member and is treated like a sole-proprietorship for tax purposes. Maryland follows the IRS rules for a single-member LLC electing to be disregarded as a separate entity. The owner/member reports the LLC’s profits and losses on their personal tax return.
- Multi-member LLC: A multi-member LLC is made up of two or more members who share control of the business. Most Maryland multi-member LLCs are treated like partnerships by the IRS and profits are reported and allocated to each of the members according to the LLC’s operating agreement. The members report and pay their share on their tax returns.
- Professional LLC: Professional LLCs can be formed in Maryland to provide a professional service while maintaining personal asset protection for liabilities of the business. A few examples of professional services in Maryland include architect, attorney, certified public accountant, and real estate broker. More information about professional licensing can be found on the Maryland Department of Labor’s website.
A certificate of organization verifies your LLC is legally registered with the state and considered a valid business entity. A certificate of organization is essentially the same as the articles of organization once filed to form your LLC in Maryland.
The fee for a Maryland certificate of organization is $100 (an additional $20 plus $1 per page for a certified copy). A certificate of organization is often used to open bank or merchant accounts and obtaining financing or loans for your LLC. You can find this document by accessing the online filing of your initial articles of organization or by requesting it from SDAT.
You will likely need a certificate of status (good standing certificate) to obtain or renew a business license, apply for loans, or register your business as a foreign LLC in another state or jurisdiction. This certificate verifies your LLC has submitted all documents and fees required by law to SDAT and is current on tax payments. You can request the certificate online at the Maryland Express Business website or by mailing a letter request and the $20 fee to:
SDAT – Corporate Charter Division
301 W. Preston Street, Room 801
Baltimore, MD 21201
To form an LLC in Maryland, you need to do the following:
- Choose a legally valid business name and make sure it is available
- Select a resident agent with a physical Maryland address who is over the age of 18 or a Maryland corporation or LLC
- File articles of organization with SDAT and get your identification number
- Draft an operating agreement (not required, but recommended)
- Obtain a FEIN from the IRS
- Apply for Maryland tax accounts and insurance with the Maryland Comptroller’s Office if applicable
- Obtain state and local licenses and permits if required
LLCs provide the advantages of limited personal liability and pass-through taxation. This makes them a good choice for many small business owners. With personal liability limitation, your personal assets are protected from your company’s liabilities. In other words, if someone sues your LLC or collects on LLC debts, they cannot seize your car, personal bank accounts, home, or other possessions. This is not the case with all business structures. For example, if you have a sole proprietorship, your personal property could be at risk for your business’s debts and lawsuits.
With pass-through taxation, LLCs file taxes on their profits through their members’ individual income tax returns. This is similar to partnership taxation. It can be preferable to corporate taxation, resulting in so-called double taxation. Double taxation occurs when a corporation pays taxes on its profits, and the individual stockholders pay taxes on their dividends.
You maintain your LLC in Maryland and remain in good standing by complying with federal, state, and local requirements for businesses. You must:
- File annual reports/business personal property tax returns and pay the filing fee by April 15
- Renew applicable state or local permits and licenses and pay the fees
- File tax returns and pay taxes
- Comply with requirements of the Maryland Office of the Comptroller and the Maryland Department of Labor
No, an operating agreement shouldn’t be confused with articles of organization. Articles of organization are filed with the state and required to create your LLC. An operating agreement is an optional document that forms essential agreements among members.
After you have completed your operating agreement, you should store it in a safe place with other company records. You will want to have convenient access to this document. Professionals might ask to see a copy before doing business with your LLC. You may also need to show your operating agreement for banking and other financial services.
Yes. If your LLC is doing business as (DBA) under a different trade name, you can submit a trade name application with the Maryland SDAT. The filing fee is $25 with an additional $50 fee for expedited service. The name filing is effective for five years once accepted by SDAT.
The business licenses and permits required for an LLC in Maryland depend on the type of business and location of your LLC. A business license is usually required for most businesses in Maryland. If your LLC buys or sells good, it likely requires a trader’s license. If your LLC offers a professional service, you probably need specific occupational and professional licenses.
You can register for licenses and permits issued by state agencies, such as mechanic licenses, real estate and home inspection registrations, and insurance licenses on the state’s OneStop portal. You can check with the local Clerk of Court to confirm local licensing requirements. You should also check with the county where your LLC is located to find out if your LLC is subject to any other inspections, licenses, or permits.
Yes. The Maryland Business Express online filing portal accepts filing to form an LLC. You can also use a business formation service company to ensure the registration of your LLC in Maryland is simple and convenient.
The Maryland Department of Assessments & Taxation oversees LLCs in the state. The mailing address is:
Maryland Department of Assessments & Taxation
P.O. BOX 17052
Baltimore, Maryland 21297-1052
Business hours are from Monday through Friday from 8:30 a.m. to 4:30 p.m. The physical address is:
301 W. Preston Street
Baltimore, Maryland 21201-2395
Yes. Using a registered agent service as your LLC’s Maryland resident agent offers privacy protection for its members, keeps your LLC compliant, and ensures receipt of service of process for important notices and legal documents.
A domestic LLC in Maryland is an LLC established by an owner/member within the state of Maryland with the intent to do business in Maryland.
To register your LLC in another state, you should check with the government agency that oversees businesses to find out what’s required to register a foreign LLC in that jurisdiction. You will likely need to obtain a certificate of status (also known as a good standing certificate) from the Maryland SDAT, either online or by mail with a letter requesting the certificate for a $20 fee. The certificate of status is used to verify your LLC is in good standing and certificates purchased online can be authenticated by choosing the verify certificate(s) of status link on the SDAT website.
An LLC created in another state or country can still operate in Maryland if properly registered as a foreign LLC. You need to find a Maryland resident agent and file a limited liability company registration. When submitting this form, you need to include a $100 state filing fee and written proof of existence from the home state equivalent to a certificate of good standing that is no more than 60 days old. You will submit your form, certificate of good standing (or written proof of existence), and fee to the Maryland SDAT at the address on the form. If you prefer, you can file online.
To dissolve your LLC in Maryland, submit articles of cancellation to:
Department of Assessments and Taxation
Charter Legal Department
301 W. Preston Street, Room 801
Baltimore, Maryland 21201
There is not a filing fee for non-expedited processing of four to six weeks. For expedited processing (within ten business days of receipt), the fee is $50 and payable by check or money order.
Make sure to include the complete name of the LLC and the current complete address of its principal office. Insert the SDAT ID number and the name and address of the LLC’s resident agent. Be sure to include the name and address of each member designated to wind up the company’s affairs or all members of the LLC. You also must indicate whether there are no known creditors of the LLC or the date a notice was sent to creditors. The articles must be signed by an adult authorized by the LLC members and the resident agent.
An anonymous LLC does not disclose LLC members’ names in the Articles of Organization. Only Delaware, Nevada, New Mexico, and Wyoming offer true anonymous LLC formation. Maryland business owners with privacy concerns often use professional registered agent services for their resident agent office address.
Disclaimer: The information presented here does not constitute legal advice or representation. It is general and educational in nature, may not reflect all recent legal developments, and may not apply to your unique facts and circumstances. Consider consulting with a qualified business attorney if you have legal questions.
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