Forming an LLC (Limited Liability Company) in Maryland is a sound operational decision.
The benefits of forming a business as an LLC include liability protection for the members and favorable taxation of personal income. In the event your business is sued, your personal assets will stay off-limits.
Maryland is known as The Free State and has a straightforward, primarily digital company formation process, affordable state fees, and favorable business climate, in terms of taxes.
Here’s a detailed view of how to form your LLC in Maryland, including forms, timelines, and costs:
Table of contents:
- Step 1: Choose a name for your LLC
- Step 2: Pick a registered agent
- Step 3: Submit Maryland Articles of Organization
- Step 4: Get certified copies of your LLC's registration documents
- Step 5: Create an LLC operating agreement
- Step 6: Obtain an EIN (Employer Identification Number) from the IRS
- Costs to form an LLC in Maryland
- Last steps
1. Choose a name for your LLC (must be unique)
Every new business entity needs to have a legal business name. Under Maryland laws, you must select a name that is:
- Distinguishable from other businesses
- Allowed to be used in the state
For example, your business name must include the words “limited liability company” or abbreviations like “LLC” or “LC”. You may also be barred from using words such as “bank” or “trust” in your LLC name unless you operate in this industry.
Use the business name search tool to make sure the business name you want to register is available and not used by an existing company.
If your intended LLC name is available, but you need more time to register it, you can reserve that name for 30 days. The name reservation fee is $25, and the application must be filed with the State Department of Assessments and Taxation (DAT).
You can expedite this request for an additional $20.
2. Pick a registered agent
A registered agent (called the resident agent in Maryland) is a person or professional service provider that receives service of process documents on behalf of your business.
Essentially, their job is to accept and forward important business documents to you.
Registered agents must be available during business hours every day. The registered agent must also have a valid street address (not a P.O. box) in Maryland. This address will be listed with the Secretary of State. If you want to change your registered agent, you'll need to let the state know by filing a form and paying a $25 fee.
Small business owners can hire a resident agent professional service or appoint friends, family members, or themselves to be the LLC's registered agent.
Using a registered agent service in Maryland involves extra costs. However, many prefer to pay those to ensure privacy and timely handling of important correspondence.
3. Submit Maryland Articles of Organization
The Articles of Organization are a baseline legal document, signaling the formation of your LLC. It registers the company’s legal name, owners, management structure, and other essential tidbits with the state.
You can file your articles online via the Business Express Portal. Or in person with the Maryland Department of Assessments and Taxation in Baltimore.
In both cases, the cost of registering an LLC in Maryland is $100.
The good news is that you can pay an extra $50 for expedited service to receive hardcopy filings in 7-10 business days.
4. Get certified copies of your LLC registration documents
You may need copies of your business documents like a Certificate of Status to obtain a loan or business license. Unofficial business documents are available online through Maryland Business Express, but you must pay a fee for certified copies.
Certified document copies start at $20.
5. Create an LLC operating agreement
An LLC operating agreement is an optional but highly recommended document for LLCs.
The operating agreement specifies key business information like ownership structure, voting rights, change management, and how the business will be run.
Having a proper operational agreement in place is especially important for multi-member LLCs to avoid conflicts and misunderstandings.
You can skip this step if you’re a single-member LLC. You can find lawyer-written operating agreement templates online for a modest fee. Or you can have one drafted specifically for you by a corporate attorney. It’s more expensive but will leave you fully covered.
6. Obtain an EIN (Employer Identification Number) from the IRS
An Employer Identification Number (EIN) is a 9-digit number issued by the Internal Revenue Service (IRS) to identify businesses for federal tax purposes.
You’ll need an EIN to file federal and state tax returns, hire employees, or open a business bank account. Getting an EIN for your new LLC is free. Fill in a form on the IRS website and get one issued instantly.
As a single-member LLC that plans to stay with the default tax classification of a sole proprietorship, you can postpone this step for later.
Costs to form an LLC in Maryland
Your costs to form your Maryland LLC will vary depending on its size, complexity, and use of professional help.
Some of the expenses you may incur to start your Maryland LLC are:
- Name reservation: $25
- Professional registered agent service: $50 – $100 / annually
- Articles of Organization filing: $100
- Certified document copies: $20+
- Operating agreement preparation: $0 – $2,000
- GRAND TOTAL: $145 – $2,245
Last steps
You're nearly finished forming your Maryland LLC. Don't forget to complete these last few steps.
Open a business bank account for your LLC
As a new legal entity, your LLC needs a dedicated business bank account. Tracking your business income and performance is easier with a separate business bank account and helps you avoid commingling personal and business finances.
The mixing implies that your business isn't truly a separate business structure, therefore if your business gets sued and you're commingling funds, you lose the personal liability protection an LLC extends over you. Plus the IRS really doesn't like it either.
Most Maryland banks require copies of your approved Articles of Organization, EIN, and business owner personal information to open a bank account.
Secure necessary permits or licenses
Maryland doesn't require LLCs to have a general business license. But if you operate in certain occupations or industries, you may need a specialty license or permit to operate. Check the Maryland Department of Labor's Division of Occupational and Professional Licensing for more information.
You may need to register for a sales tax license if you're selling taxable goods or services in Maryland.
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Last updated: Sep 2023