How to Form a Maryland LLC
By Bazal Razzaq
Updated: September 01, 2023, 12:30pm
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- Pick a name for your Maryland LLC
- Set up a business plan for your company
- Elect a registered agent
- Prepare and file your Articles of Organization form
- Obtain an E.I.N. with the I.R.S
- Draft an Operating Agreement
- File your Personal Property Return (PPR)
- Final Word
- How To Form An LLC In 50 States
- Frequently Asked Questions (FAQs)
Wondering how you can form an L.L.C. in the old Chesapeake Bay State? Well, you’re at the right place! Our detailed and informative guide is at your aid, helping you every step of the way as we promised!
#1 Pick a name for your Maryland LLC
The very first step in forming an L.L.C. in Maryland is to come up with an exciting, unique, and legally compliant name for your L.L.C …..
Here’s a complete set of guidelines you can follow,
- Your chosen name should be unique and distinguishable from other business entities registered in the State to prevent confusion among consumers and businesses.
- Your L.L.C.’s name must include a proper designator that confirms its limited liability status. You can use variations like “Limited Liability Company,” “Limited Company,” “L.L.C.,” or “L.L.C.”
- Don’t forget that certain words like “bank,” “insurance,” and “university” imply a connection to government authorities or entities that may require additional documentation or approval.
- Words that suggest illegal activities or mislead the public are generally not allowed in L.L.C. names. Similarly, you should avoid using vulgar or obscene words that may land you in a legal mess.
- Before officially registering your L.L.C.’s name, you can use the Maryland Secretary of State’s business name database to check its availability. This will help you ensure that the name you want is not already in use. You can also check the U.S. Patent and Trademark Office’s site for federal trademarks.
- Depending on your business, you may need to include professional designations or other relevant information in your L.L.C.’s name. For example, if your L.L.C. provides legal or medical services, specific requirements might apply.
- It goes without saying at this point, but your chosen name should contain no vulgar, obscene, or forbidden words as per the state regulations.
- Also, if you have plans to use the name of a living person in your business name, you may require their written consent.
If you have a unique and legally compliant name in mind but aren’t ready to register your L.L.C. officially just yet, you can consider reserving your name by filing a Corporate Name Reservation Application. The expected fee is $25, which gives you 30 days of sole ownership over that name. The best part is you can further re-reserve the same name for as many times as you want. You just need to submit an application for re-reservation and pay $25 each time you hold the name.
In case you decide to transfer the name ownership, you need to submit a signed notice to the Department of Assessment and Taxation (SDAT) and the name and entity details of the transferee.
NOTE: For the entrepreneurs who don’t wish to pursue their business operations further with their registered business name(one that’s mentioned in their articles of organization document), we have news for you! You always have the option of using a trade name instead. You need to register a trade name(assumed name/D.B.A.) with the Maryland Department of Assessments and Taxation by filing a Trade Name Application. The filing fee is $25 and an additional $75 for expedited(speedy) processing.
#2 Set up a business plan for your company
While it isn’t a mandatory requirement in Maryland to have a business plan in place as creatures of habit, we’d still recommend drafting one. Why? Because a business plan is like a roadmap for your L.L.C.’s future. It outlines your goals, target market, competition, financial projections, and strategies for growth. Creating one for your company will help you think critically about your business idea, its viability, and how you’ll achieve success.
- Executive Summary
- Company Description
- Market Research
- Products or Services
- Marketing and Sales Strategy
- Management and Team
- Operations Plan
- Financial Projections
- Funding Request
- Include any additional documents, such as resumes, legal agreements, or market research data.
A proper business plan should always be tailored to your specific needs and goals. It should be well-organized, realistic, and honest to your L.L.C.’s perspective. We recommend regularly updating and revising your plan to ensure it remains true to your company’s objectives.
#3 Elect a registered agent
Maryland requires all the L.L.C.s in the State to assign a registered agent responsible for receiving and accepting all the important financial, legal, and official documentation and notices. The paperwork could include everything from lawsuit notices tax notifications, to government correspondence. The appointed agent would sort them out and then send them to the authorized individual/business entity.
You have the following options when it comes to choosing a statutory agent for your Maryland L.L.C.:
- Be your own registered agent.
- Pick another registered business entity.
- Hire a registered agent service.
- Choose an individual within the company(manager/employee/member)
- Hire an Attorney, lawyer, or legal facility.
Not just this, in Maryland, a registered agent for an L.L.C. must meet the following requirements:
- Physical Address: Maintain a physical street address in Maryland where legal documents can be served during regular business hours.
- Availability: Be available during regular business hours to receive legal documents and official notices on behalf of the L.L.C.
- Legal Entity: The registered agent can be an individual or a business entity authorized to conduct business in Maryland.
- Consent: The registered agent must consent to act as such for the L.L.C. and provide written consent if appointed.
- Compliance: Ensure ongoing compliance with Maryland’s registered agent requirements to avoid legal complications.
#4 Prepare and file your Articles of Organization form
Honestly, the easiest way to register your L.L.C. in Maryland is through the Maryland Business Express website. You simply need to follow the step-by-step process and submit relevant information and documents, and voila! Your L.L.C. is officially registered!
Alternatively, you can also file your Articles of Organization document with the Department of Assessments and Taxation. You can apply online or download the form and then send it to the address mentioned below:
Department of Assessments and Taxation
301 W. Preston St.
Baltimore, MD 21201
The filing cost is $100, which is completely nonrefundable and payable to the Secretary of State.
Here’s a list of what you may need to mention in your form,
- The name, address, and contact details of your L.L.C.
- The name, address, and contact information of the L.L.C.’s registered agent
- The main purpose of your company.
- The number of shares authorized
- The management structure of your company: whether it’s member-managed or manager-managed?
- Management information
- Filing charges
- Will the members/owners be liable for debts
- Check the boxes to indicate whether your business is a nonprofit, series, or professional L.L.C.
- The signature of the organizer(person forming the L.L.C.)
- Effective date
- The total duration of your L.L.C.
- Any additional information specific to your L.L.C., like ownership percentages or voting rights.
- Signature of L.L.C.’s organizer.
Online applications can take up to seven business days, while paper filings take four to six weeks. You can speed up your offline filings for up to seven days for an additional fee of $50. Getting a certified copy of your document costs $20, plus an additional dollar for each page
Additionally, you can also pay a fee of $20 for a Certificate of Status at the time of filing.
#5 Obtain an E.I.N. with the I.R.S
The next step in this L.L.C. formation process is to apply for a federal employer identification number with the Internal Revenue Service(IRS). Its main purpose is to identify a business entity for tax and legal purposes. An E.I.N. is like a social security number for businesses and is used for tax reporting, hiring employees, opening bank accounts, and more.
Also known as Federal Tax Identification Number (FTIN) or Tax ID, the main purpose of an E.I.N. is to help with the following purposes:
- Hire employees
- Apply for business licenses and permits
- Conduct daily business operations
- Meeting federal and State tax obligations
- Opening professional business bank accounts
Internal Revenue Service
Attn: E.I.N. Operation
Cincinnati, OH 45999
Fax: (855) 641-6935
There is no filing fee for either method.
#6 Draft an Operating Agreement
An operating agreement is an internal document, which means that it isn’t registered with the State. However, it is crucial for maintaining the L.L.C.’s limited liability status, ensuring proper governance, and resolving conflicts among members. So, we always recommend L.L.C.s draft one in case of future fights, confusion, and disagreements with the members/owners of the LLC.
A well-drafted operating agreement should include the basic details mentioned below,
- Name and main address of the L.L.C.
- How long the L.L.C. will exist
- Name and address of the registered agent
- Details about the Articles of Organization
- The main purpose of your L.L.C.
- Members/owners and their shares/contribution
- Allocation of profits and losses.
- The whole process outlines how new members will join, and old members will leave
- Meetings and Voting Rights
- How the L.L.C. is run
- Dissolution and Winding Up
- Indemnification and liability clauses
- Dissolution and winding up
While not all states require an operating agreement for an L.L.C., it is a crucial internal document that provides clarity and sets the rules for how the L.L.C. will be run.
#7 File your Personal Property Return (PPR)
All the L.L.C.s in Maryland need to file Personal Property Returns(PPR) along with the regular Annual reports. These PPRs are documents that individuals or businesses are often required to file with the Department of Assessments and Taxation to report and provide information about their tangible personal property like equipment, machinery, furniture, vehicles, and inventory that are all used for business purposes.
Generally, you’re required to file the following forms:
- Annual Report/Personal Property Return (Form 1)
- Balance Sheet (Form 4A)
- Depreciation Schedule (Form 4B)
- Disposal and Transfer Reconciliation (Form 4C), if applicable
After forming your Maryland L.L.C., don’t relax just yet but focus on maintaining your business and properly complying with the state authorities.
Once your L.L.C. is officially registered, you’re free to focus on the formalities mentioned below,
- Get necessary permits and licenses, like health or zoning permits and pro licenses.
- Register with the State’s tax agency.
- Open a professional business bank account.
- Get a company credit card.
- Buy business insurance.
- Protect your name and logo with a trademark.
Additionally, if you’re looking to hire workers for your Maryland L.L.C., make sure to stay within the legal guidelines by taking these actions:
- Confirm eligibility of new employees, whether or not they can work in the U.S.
- Report newly hired employees to the State as required.
- Offer workers’ compensation insurance.
- Deduct and manage employee taxes appropriately.
- Display workplace compliance posters visibly in your workspace.
And that’s it! That was all you needed to know before forming an L.L.C. in the Free State!
Frequently Asked Questions
An L.L.C., or Limited Liability Company, is a business structure that combines the liability protection of a corporation with the flexibility and simplicity of a partnership. Forming an L.L.C. in Maryland can help protect your personal assets, provide tax advantages, and offer a straightforward way to manage your business.
The steps to form an L.L.C. in Maryland include:
- Choose a unique name for your L.L.C.
- Appoint a registered agent with a Maryland address.
- File Articles of Organization with the Maryland Department of Assessments and Taxation (SDAT).
- Create an Operating Agreement outlining how your L.L.C. will be managed.
- Obtain an E.I.N. (Employer Identification Number) from the IRS for tax purposes.
Yes, you can typically change the name or structure of your L.L.C. by amending your Articles of Organization or Operating Agreement. However, this process may involve additional filings and fees.