How to Start your LLC in Maryland

Following this step-by-step guide, you will get to know how to select a compliant LLC name, submit your Articles of Organization, select a resident agent, write an operating agreement, and get an EIN as well as comply with ongoing state requirements so you can start operating your Maryland LLC without fear.

1. Name Your Maryland LLC

The naming of your LLC is one of the steps that you have to make the most important decisions on when making your business. Your business name is the face of your business, it conveys what you are, and creates the first impression to the customer, lender, and partners. A good name must be unique, easy to recall and must also correlate to your business purpose.

It is always good to have a clear definition of the business concept before making a final choice on the name. Knowing what you will actually be selling or what services you will be selling and knowing who your target market is can guide you, as to a name, which will suit your long-term objectives. It is also a common practice of many entrepreneurs to receive a feedback of their close friends, colleagues or mentors, which could reveal some problems or misunderstandings that might escape your eyesight.

After creating a list of names (which is not too long), do a general web search to find out if similar businesses are already in existence and/or domain names can be registered. Branding conflicts in the future can be avoided with this step. You can also get inspiration by online business name generators; however, they do not substitute your creativity and research.

Availability of check names in Maryland

Once you have shortened the list, you should check the availability of names at the Maryland Business Express site. This is so that the name you would like to be registered is not already under another existing business in the state or deceptively near it.

Some words like bank, insurance, or university, must be approved by the state and your name should not suggest that your business is undertaking other activities other than those indicated in your Articles of Organization.

Check Federal Trademarks

Once the state availability is confirmed, it is also a good idea to check the US Patent and Trademark Office (USPTO) database to determine whether the name is not federally trademarked. This is to guard your business in case you move outside Maryland.

Reserve Your Name Maryland LLC

In case you are not ready to register your LLC at the moment, Maryland will allow to reserve a business name. To accomplish this, you will have to download the name reservation form on the Maryland Business express website and send it by mail. Name reservation is not done online.

Formed forms are to be mailed to:

Department of Assessments and Taxation
301 W. Preston St.
Baltimore, MD 21201-2395

Doing Business As (DBA) Maryland

You can use the name that is not your legal name to run your LLC. This is accomplished by the registration of a Doing Business As (DBA) also known as trade name in Maryland.

DBAs are usually applied in the case of businesses that are expanding to a new product line or brand but they do not create a separate legal entity. To illustrate an example, in case your LLC is known as JJ Waffles, and later, you decide to come up with JJ Muffins, you can have a trade name to be registered so that you can sell the new product under a different trade name.

Banking flexibility is another useful DBA advantage. Your registered trade name acts as a registered trade name where you can accept customer payments as well as open bank accounts where transactions are more understandable and professional.

Trade names in Maryland are registered in the Maryland Business Express. You will be required to enter into your account and choose the option of trade name registration and fill in the information that is needed. The filing fee for a DBA is $25.

2. Select a Resident Agent

The state of Maryland stipulates that each LLC should appoint a resident agent (also referred to as a registered agent in the other states). Your LLC has the resident agent whose role is to get formal correspondence on behalf of your LLC, such as legal notices, tax filings, and compliance notices.

Requirements of the resident agents

A resident agent may be a person or a business entity provided that he or she fulfils the requirements of Maryland. The agent must:

• Be at least 18 years old
• Have a brick-and-mortar street address in Maryland
• Be at normal business hours
• In case the agent is a business entity, the business entity must have the right to conduct its operations in the state

Others opt to act as their resident agent, and this implies that the owner will always be present at the address listed at the business hours. The reason why many entrepreneurs will resort to the services of professional resident agents is that they would enjoy privacy, timely handling of their documents and also the chance of missing notice on important matters is minimized.

3. Decide On Your Management Structure

The Maryland LLCs may be formed in either member-managed or manager-managed form and the selection of the appropriate structure would depend on the level of involvement the owners wish to have in the day to day operations.

Member-Managed LLC

With a member-managed LLC, the members are fully engaged in day-to-day operations and decision-making of the business. Such a structure is typical of small LLCs with the owners being able to have direct control.

Manager-Managed LLC

There is also manager-managed LLC, where managers (which need not necessarily be members) run daily operations; other members are passive investors.

A member may become a manager, though Maryland has the requirement that a manager-managed LLC must have one manager not a member. Unless stated to the contrary in your Articles of Organization, Maryland will treat your LLC as default-member-managed.

Another goal of selecting a structure at the beginning stage is to avoid internal disputes and to provide roles and expectations of owners.

4. File Articles of Organization

In order to register your LLC, you have to submit Articles of Organization to the Maryland Department of Assessments and Taxation (SDAT). This may be carried out through the internet or post.

Information Required

The Articles of Organization demand minimal details regarding your LLC such as:

• Legal name
• Principal office address
• Resident agent details
• Resident office address
• Business purpose

SDAT Contact Information

Maryland Department of Assessments and Taxation
301 W. Preston Street, Room 801
Baltimore, MD 21201-2395

Phone: 410-767-1184
Out of Baltimore Metro Area: 1-888-246-5941

5. Prepare an Operating Agreement

An Operating Agreement gives details on how your LLC will be owned and operated and what the rights and responsibilities of each member will be. Though Maryland does not make operating agreement a legal requirement, its presence is highly encouraged, including when the LLC consists of one member only.

An operating agreement that is clear aids in the prevention of disputes, enhances protection on the liability, and offers framework on financial and management decisions. The majority of operating agreements contain information regarding percentages of ownership, voting rights, distribution of profits and losses, how to add or delete members and the resolution of disputes.

Even though templates are offered, hiring an attorney to check or write your operating agreement will offer you even more protection and clarity.

6. Register Your Employer Identification Number (EIN)

The IRS issues an EIN which is used to identify your LLC in the tax reporting. It is mandatory in case your LLC includes more than one member, employs staff, or chooses corporate taxing.

You are eligible to apply to an EIN directly with IRS at no cost. The application should include a listing of a responsible party, the one that will be in control of the finances and the operations of the company.

7. Gather Business License and Permits

Maryland licensing regulations are based on industry and place. Although Maryland is in the single statewide business licensing, several businesses will require state agency or local government licensing or permits.

Licensing OneStop portal in Maryland provides business owners with the opportunity to locate and obtain the necessary licenses and permits. Depending on your operations you might have to have professional licenses or zoning permits or health permits or fire and safety approvals.

The consequences of running without the necessary licenses are fines or other penalties, hence proper research and adherence is crucial.

8. Determine Your Tax Status

Maryland LLCs are subjected to pass taxation by default. This implies that the LLC is not subject to federal income taxation, but rather receives the profits and losses through to the personal tax returns of the members.

Default Tax Treatment

Multi-member LLCs are taxed as partnerships unless an election is made, and the single-member LLCs are taxed as sole proprietorships. In case it is beneficial to some taxation, LLCs have an option of taxing the LLC as either S-Corporations or C-Corporations.

The LLCs in Maryland are also required to submit an Annual Report as well as a Personal Property Tax Return, irrespective of the tax classification.

Annual Reporting in Maryland

The Maryland LLCs are expected to submit an Annual Report and Personal Property Tax Return at least once annually on the fifteenth of April. The filing fee is 300 dollars and failure to do it on time may result in penalties or loss of good standing.

Maryland LLC FAQs