Forming an LLC (Limited Liability Company) in Maryland can ignite your entrepreneurial journey. And this easy-to-follow guide is here to lead the way.
The major benefits of Maryland LLC formation are an excellent tax structure and liability protection. This means that if your LLC owes money or gets sued, your personal assets are off-limits.
Starting an LLC in Maryland is as painless as it could be. There’s a straightforward digital process with minimal fees.
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, an LLC name must:
- Be unique and distinguishable from other businesses
- Include Limited Liability Company or an abbreviation like LLC or LC
- Avoid using words such as bank or trust, unless you operate in the industry
Use the business name search tool to make sure the business name you want to register is available.
If it’s used by an existing company, you’ll need to select something else. It’s best to avoid names that might cause confusion too.
Maryland trade names
Many business owners choose to operate under a name that’s different from the Maryland LLC’s legal name. This is known as using a doing-business-as (DBA) or trade name.
This can be a great solution for companies that want to sell different product lines. You can use more descriptive names for the marketing materials. While keeping everything under one LLC ownership structure.
To use a trade name in Maryland, use the Trade Name Application form. A $25 fee applies. It remains effective for five years.
Name reservation
If you need time to prepare other documents, you can reserve an LLC name for 30 days. File the application with the State Department of Assessments and Taxation (DAT).
The name reservation fee is $25. You can expedite this request for an extra $20.
2. Pick a registered agent
A registered agent is a contact that receives important documents on behalf of your LLC. This can include legal service of process and other critical notices. For Maryland LLCs, this is the resident agent.
Registered agents must:
- Be available during business hours every day
- Have a street address (not a P.O. Box) in Maryland
This address will be listed in a public database 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.
You can serve as your own registered agent. Or appoint a trusted friend, family member, accountant, or lawyer.
Some savvy LLC owners choose to hire a resident agent service instead. This allows you to avoid many problems, ensure compliance with registered agent duties, and focus on other business needs.
Using a registered agent service in Maryland involves extra costs. However, many prefer to pay those to ensure privacy and timely handling of important documents.
3. Submit Maryland Articles of Organization
This is one of the most exciting and important steps of starting an LLC in Maryland. The Articles of Organization is the legal document that forms your LLC.
This step can seem intimidating. But it’s much easier than you probably imagine.
To complete your Maryland LLC’s Articles of Organization, you’ll need:
- LLC’s name, purpose, and address
- Resident agent’s name, address, and signature
- Signature of an authorized person
That’s it! This giant step to forming an LLC in Maryland is surprisingly easy.
You can file your articles online via the Business Express Portal. Or in person with the Maryland Department of Assessments and Taxation in Baltimore.
The cost of registering an LLC in Maryland is $100.
The good news is that you can pay an extra $50 for expedited service. This drops the hardcopy processing time to 7-10 business days.
4. Get certified copies of your LLC registration documents
Once Maryland has processed your Articles of Organization, you’ll want to get proof for your records.
Some banks and lenders might require this before you open an account or accept a loan. It’s also important to have it with your company records.
You can request a Certificate of Status through the Maryland Business Express portal. You can get unofficial documents or request certified copies from there.
Certified documents start at $20.
5. Create an LLC operating agreement
An LLC operating agreement is an optional but highly recommended document for LLCs. It specifies key business information and details how the business will run.
It is a contract between LLC members and managers. It lays out all sorts of details and provides ways to deal with disputes. A good operating agreement keeps everyone on the same page.
Having a proper operating agreement in place is especially important for multi-member LLCs. But it’s also a good thing to have for single-member LLCs. It helps to prove the legitimacy of your LLC.
An operating agreement covers things like:
- Ownership structure
- Voting rights
- Management changes
- Distribution methods and timing
- How to add and remove members
- Process to dissolve the LLC
You can find LLC 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 used to track tax information. The Internal Revenue Service (IRS) issues them. They’re like Social Security numbers for businesses.
LLCs need an EIN to file federal and state tax returns, hire employees, or open a business bank account. All multi-member LLCs must get an EIN.
Getting an EIN for your new Maryland LLC is free. Fill in a form on the IRS website and get one issued instantly.
Some single-member LLCs using the default tax classification of a sole proprietorship don’t have to get one. But it’s best practice to get one anyway. And you must if the LLC hires employees or engages in other certain actions.
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. At a minimum, the cost to form an LLC in Maryland is $100 to file the Articles of Organization.
Some of the expenses you may incur to start your Maryland LLC are:
- Name reservation: $25
- Professional registered agent service: $50 – $200 / annually
- Articles of Organization filing: $100
- Expedited processing: $50
- Certified document copies: $20+
- Operating agreement preparation: $0 – $2,000
- GRAND TOTAL: $100 – $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 Maryland LLC needs a dedicated business bank account.
Tracking your business income and performance is easier with a separate business bank account. It also helps to avoid combining personal and business finances.
Mixing finances implies that your business isn't truly a separate entity. If your business gets sued, you may lose the personal liability protection an LLC offers. Plus, the IRS doesn't like it either.
Most Maryland banks require copies of your LLC’s approved Articles of Organization and EIN. The business owner’s personal information is usually needed too.
Secure necessary permits or licenses
Maryland doesn't require LLCs to have a general business license. But if your LLC does certain activities, you may need a specialty license or permit to operate. Check the Maryland Division of Occupational and Professional Licensing for more information.
Your LLC may need to register for a sales tax license if you're selling taxable goods or services in Maryland.
And don’t forget local authorities too. Cities and counties may require business licenses or permits. For example, the City of Baltimore and Montgomery County require approval for specific activities. These include things like alcohol sales, food service, and special events.
Make sure to get what your LLC needs before operating.
Other considerations
New businesses face many unforeseen obstacles. You can quickly blast through these hurdles by learning from others. Use these organizations to find the secrets to success:
- Maryland Small Business Development Center: No-cost counseling
- Maryland Entrepreneur Hub: Offers resources and connections
- Maryland Chamber of Commerce: Voice of the business community
Another wise step is getting the right insurance to protect you and your new Maryland LLC. Things like workers’ compensation and general liability insurance can step in if a rainy day comes.
Are you ready to start a Maryland LLC? Keep the ball rolling by checking the Maryland database to see if your name idea is available. Then keep plowing through the items on this list.
Before you know it, you’ll have your Maryland LLC formed and can greet your first customers.
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Last updated: Apr 2024