Having an LLC in Maryland is a better and cheaper option than having other business structures. A limited liability company (LLC) reduces the owners’ personal liability and protects their personal assets. One can start an LLC in two ways, domestic LLCs or foreign LLCs (LLCs in more than one state). By following some basic steps, you can easily form an LLC in Maryland.
On this page, you’ll learn about the following:
- How to Start an LLC in Maryland
- After Starting your Maryland LLC
- Maryland Foreign LLC
- Why an LLC in Maryland
- Leading Industries in Maryland
- Maryland LLC Formation Review
How to Start an LLC in Maryland
An LLC or a Limited Liability Company is a hybrid business entity combining a corporation’s characteristics with a partnership or sole proprietorship. It separates your personal assets from your business assets, thus giving you personal asset protection. This section gives you a step-by-step guide on how to start an LLC in Maryland.
Step 1: Decide a Name for Your LLC
Deciding on a business name is the first step to start an LLC. In Maryland, before you name your LLC, it is important to note a few things. Firstly, make sure the name is available to use. If the name is available, then check if the name complies with all the Maryland business naming requirements. Once you pass through them, you can successfully name your business.
Why do you need a proper business name?
If you want your LLC to have special identification, your company name is essential. However, many people face many issues by avoiding focus on choosing a business name for their LLC business formation filings.
Here are some of the major benefits of choosing the best LLC names.
- Helps establish a company’s presence in the market;
- Creates a new identity that will resemble your LLC;
- Allows ease in finishing your LLC registration process;
- You can get the EIN once you have your name registration certificate
Requirements when deciding a name for your LLC
LLC Name Search: A business name search is required to check if the desired name is available or not. If the name is available then the business owner has to fill up a name reservation form and send it to the Secretary of State, Maryland. To do the name search, one has to visit the Business Entity Search page on the official Secretary of State website. Send the name reservation form to the below email address to reserve your LLC name in Maryland. The cost of a name reservation is $25.
Important Quick Links:
Office of Secretary of State, firstname.lastname@example.org
By Phone: (410)-767-1802
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Step 2: Assign a Registered Agent Service in Maryland
A registered agent for service is your authorized person or business entity that will act or work on your behalf. This person or business will receive significant tax forms, legal documents, any internal document, a notice of lawsuits, and other official government correspondence in Maryland. Choosing Maryland registered agents for your LLC is required.
Make sure your registered agents are residents of Maryland. It could also be a business. Here are the recommended agents :
Note that availing of the services of professional registered agents would be your best option since you are guaranteed that whoever is handling your legal affairs knows their stuff well. You will enjoy peace of mind and focus only on running your business, as the ‘professionals’ take care of all legal matters.
These LLC formation services are recommended registered agent services as they are authorized to conduct business in Maryland. Compare them to check the best yet cheapest option for you. Besides, they can guarantee you professional service because they have been in the business for years.
Step 3: File Articles of Organization in Maryland
A Certificate of Name Reservation is needed to file Articles of Organization, as other states call it. You need to make reports of this certificate with the Maryland Secretary of State, which costs $100. You may file them online or by mail.
This Maryland Certificate of Formation is a legal document needed to form your business officially. It will indicate details about your LLC in Maryland, like if it is a member-managed or managers-managed. LLCs with employees can check the Maryland state government website to hire employees.
Before you start filing your forms, you must already have your LLC name and registered agents or employees. You will attach a copy of your Name Reservation Certificate along with a list of the services that your Maryland LLC will offer.
How to File Online
Go to the Secretary of State Online Service. Create an account and fill out the form completely. You will need this platform to do other tasks of filing forms as well. To know more about online filing, visit the Maryland Certificate of Formation.
How to File by Mail
If you prefer filing real-life forms for your Maryland LLC registration, then you can download the Maryland Limited Company Certificate of Formation. It will have to fill, among others, your name, city, state, zip code, and signature. You may also file in person by visiting the office on business days.
Mail To: CoState Department of Assessments and Taxation, Charter Division 301 W. Preston Street; 8th Floor
Baltimore, MD 21201-2395
Step 4: Create Your Maryland LLC Operating Agreement
An operating agreement is a document that legally outlines the proprietorship and operating procedures of your LLC This document is vital as it ensures that all business owners are on the same page regarding how they operate, thus reducing future conflicts.
When it comes to an LLC operating agreement Maryland does not require you to have a comprehensive operating agreement, but it is ideal to have one that contains all your details of business operation. This document would be useful if you decide to dissolve Maryland LLC later.
Step 5: Filing a Maryland LLC EIN
The Employer Identification Number or, simply, the E.I.N. is a nine-digit number given by the Internal Revenue Service (IRS) to make it easier to identify types of business for tax purposes and taxes in general. It is like a Social Security number dedicated to a business’ taxes. The EIN is necessary for any active business or any form of business for that matter.
EIN is needed when the LLC hires employees. Hiring employees in Maryland LLC requires specific rules and regulations. One should know about them before hiring employees. EIN for Maryland foreign LLC should be obtained if your LLC is based in other states.
To obtain EIN (aka FEIN) one has to fill up a form (Online or by mail) and submit it to the IRS. Before sending the form, ask for EIN Assistant. Enter details of your LLC, and finally complete the form and send it to the address given.
Mail to: Internal Revenue Service, Attn: EIN Operation, Cincinnati, OH 45999
Fax: (855) 641-6935 | Fee: Free
Note: You don’t need a Social Security number when getting an EIN. You can proceed to fill out I.R.S. Form SS-4 and leave section 7b blank. You must then call the IRS at (267) 941-1099 to complete your application. Agents or employees will help you with that.
And that’s all! Congratulation, you are now done with all the necessary steps to form your Maryland LLC. If you still haven’t used a professional service from here, I strongly recommend having one to handle the remaining tasks.
After Starting your Maryland LLC
After forming your LLC, there are still some things that you will need. Take note of the following:
- Get a company business bank account
- File Maryland business permits & licenses
- Get liability for business and professional liability insurance with coverage for employees
- File a Maryland LLC annual report or biennial report
- Already existing LLCs that wish to operate in Maryland must register as Maryland foreign LLC.
This page has provided you with steps to LLC formation and filing processes. You now have to remember upcoming filing deadlines and filing fees or filing costs, including fees for late filings to make sure your LLC is up-to-date.
Maryland Foreign LLC
To register a Maryland foreign LLC, one has to file the foreign LLC formation certificate with the Secretary of State, Maryland. Forming a foreign LLC allows you to operate your business in more than one state in the USA as a single business entity. Check Maryland Foreign LLC to know more about having a foreign LLC.
Cost of Maryland LLC
The LLC cost in Maryland includes the basic filing fee ($100) and the name reservation fee ($25). Apart from these two costs, there is a registered agent service fee and an annual filing fee for the yearly reports. If you want an expedited service then an additional fee will be charged for expedited filings. Registered agents charge their usual service fees along with state fees for government filings.
Other than the state fees, there are some federal taxes LLCs need to pay. Generally, no LLCs have to pay any taxes on their business income. All the individual members have to pay their share of income taxes. The list of taxes LLCs has to pay is included in the LLC cost in Maryland.
Why an LLC in Maryland
Maryland reaches the 2nd position in the United States for having women-owned businesses. The share of such companies is around 39% of total companies. The state is growing faster and making its way to global charts for having a woman-owned business. With many incentive and business funding options like loan programs, reductions in tax liability, and other benefits, Maryland has become one of the leading business states in the USA. Read more on Maryland’s classification of tax.
Incentive Business Programs
- Job Creation Tax Credit – Maryland government offers $3000 to $5000 tax credit for each job. LLCs that open up employment opportunities manage to save huge amounts as the tax burden is much lower in Maryland.
- Enterprise Zones Incentive – Like other states, Maryland provides an incentive to operate in special enterprise zones. Up to $3000 is provided as incentives to the LLCs for operating in Enterprise Zone.
- RISE Zone Incentive – Regional Institutional Strategic Enterprise or RISE zones such as Baltimore City, Prince George’s, Baltimore, and some others. Starting your LLC here or operating them in these areas brings tac credits and other incentives.
Losing limited liability is not an easy task
There is a rule in many states that if the member of an LLC actively participates in the LLC’s managing tasks, they can lose their limited liability. This is a major reason many people have to think before choosing an LLC. But for LLC in Maryland, this rule vanishes away. In this state, no matter that the member is making decisions or not, the limited liability is safe.
Leverage real estate investment
The real estate investments for the LLC have many advantages. They can save money through major real estate taxes that the partnership and corporate have to pay. This leverages the LLC in Maryland over other states and is becoming an attraction for businesspeople. They can also think of investing in personal property with a minimal amount of tax.
Leading Industries in Maryland
Before you form an LLC in Maryland, you need to brush up on your knowledge. You should know in detail about the industries that have flourished in Maryland and their contribution to the State’s economy.
The employees that are working in the construction business of Maine have increased to more than 155,000. The main reason behind this is the booming business in the state. More than 90% of the companies are continuously earning huge profits and land huge clients. All this is helping them to contribute 14.64% to the overall GDP of Maryland.
With 35 research parks and more than 400 companies, Maryland has become the best cybersecurity giant in the country. The Defense Information Systems Agency and NIST are now depending on the cybersecurity services provided by the companies of Maryland. The completion of the port Covington Research Park in Baltimore has changed the whole face of Maryland’s IT security.
After 1820 in Maryland, the manufacturing industries have started becoming a pillar of Maryland’s economy. The state is very well known for its steel production but is not just limited to that. There are many rising manufacturing businesses of men’s clothing, electronic items, surveillance and communication products, etc.
The country is a significant reason behind driving the economy by exporting around $9.74 billion of products and giving jobs to 13.2% of the state’s people.
If you look at the USA’s life-saving innovative industries, then most of them are in Maryland. According to the census, more than 2800 companies in the Pharma field are emerging in the state. These companies have formulated many life-saving drugs and have earned around $17 billion for the Maryland state.
Some small and innovative businesses that are establishing in Maryland are:-
- Pet sitting business
- Vending machines
- Quilt services
Maryland LLC Formation Review
Time needed: 5 minutes.
To recap, here are the easy steps again when forming an LLC in Maryland. Click on the steps in this list to read the full detail.
- Name your Maryland LLC
The first thing you must do is to choose a company name, which should be unique, easy to find, and available in the state.
- Choose a registered agent
- File a formation certificate
Filing a formation certificate is necessary when forming an LLC. Depending on the state, it could be called any of the following: Certificate of Formation, Articles of Organization, or Certificate of Organization.
- Create operating agreement
An operating agreement is not a strict requirement but something encouraged when you start an LLC.
- Get an EIN
The Employer Identification Number (EIN), also called Federal Tax Identification Number, serves to identify a business entity like a social security number but for a company.
How Fast Can I Form an LLC in Maryland
How Fast Can I Form an LLC in Maryland? If you have been wondering how to start a business, the answer to this question is very simple. You can form an LLC in Maryland without spending a lot of money. Limited liability companies are a great option for new businesses because they are easy to set up and have a low cost of operation. They also have several benefits, including ‘pass-through taxation’, which means that certain taxes are excluded from the profits made by the business. Limited liability companies are also easy to establish, as they are not subject to as many legal processes and documents as other types of businesses.
Once you’ve decided on your name and business purpose, you’ll need to designate a resident agent. This individual or professional service will act as the point of contact for your LLC. While you can use someone who lives in your area to serve as resident agent, the downside is that your contact information will be publicly available. This could lead to unwanted mail, solicitations, or even visitors at your home. In the end, hiring a resident agent is the best way to avoid these issues.
You’ll need to fill out several parts of the Articles of Organization, including your initial principal office address. Your primary office address should include a street address, city, state, county, and zip code. Make sure you give the correct address; it’s important that you don’t use a PO Box. This is your primary address for filing business records and mail. You can also use this address for your business website.
If you are a resident of Maryland, then you can file your LLC by yourself. However, it is always worth having a professional than doing it yourself to handle legal complexities, paperwork, and other documentation.
Apart from the formation fee of $100 (domestic LLC) and $100 (foreign LLC), LLC costs in Maryland include $300 for Annual Reports every year. LLCs are liable to pay sales tax of 6% every year
It takes 5 to 7 business days to get an LLC in Maryland if you file it online. For the mail filing, it takes 4 to 6 weeks to get an LLC.
Every year all the LLC have to submit an Annual Report and pay $300 to the Maryland Secretary of State and renew the LLC. It is mandatory to renew your LLC every year.
Generally, for the LLCs, it is a default tax structure. Once you will obtain the EIN, you will get the various tax structure options to select. Sometimes LLCs choose S Corp to reduce federal tax burdens.
LLCs are easier to establish than other business structures. Small businesses, especially start-ups can easily start their LLC in Maryland at a bare minimum cost. LLCs have a ‘pass-through taxation’ advantage for which they are excluded from certain taxes. The formation of limited liability companies requires much lesser documents and legal processes. Share your queries with us, leave a comment below.