Forming a Limited Liability Company (LLC) in Maryland offers entrepreneurs a structure that combines liability protection with operational flexibility. This balance of simplicity and legal safeguards makes the LLC a common choice for new and existing businesses.
Maryland has specific rules for establishing an LLC. Understanding these requirements can help prevent delays and compliance issues. This guide outlines the steps to form your Maryland LLC.
Name Selection Requirements
Selecting a unique and compliant name is an early step in establishing your Maryland LLC. Your chosen name serves as a primary identifier, and Maryland law has criteria to prevent public confusion. The name must be distinguishable on the records of the Maryland State Department of Assessments and Taxation (SDAT) from any existing Maryland business entity name and from any reserved or registered name.1Maryland General Assembly. Maryland Corporations and Associations Code § 4A-208 – Name of Limited Liability Company
A Maryland LLC’s name must also include words or abbreviations signifying its legal structure, such as “limited liability company,” or “L.L.C.,” “LLC,” “L.C.,” or “LC.” This informs the public of the company’s limited liability status.
Restrictions apply to words that could imply a misleading purpose or falsely suggest affiliation with governmental agencies or unheld professional statuses. The SDAT can reject non-compliant names. A preliminary search on the SDAT’s online business entity database can help assess name availability, though this search does not guarantee final approval.
Filing Articles of Organization
After selecting a compliant name, the next step to legally form your Maryland LLC is filing Articles of Organization with the SDAT. This document officially establishes the LLC and outlines information about the company.
Required information for the Articles includes the LLC’s approved name, the address of its principal office in Maryland, and the name and address of its resident agent.2Maryland General Assembly. Maryland Corporations and Associations Code § 4A-204 – Articles of Organization The Articles must also state the LLC’s purpose. Maryland permits a general purpose clause, allowing the LLC to engage in any lawful activity, which offers flexibility for future business evolution. An authorized organizer, who need not be a member, must sign the Articles.
Articles of Organization can be submitted to the SDAT online via the Maryland Business Express portal or by mail; online filing is faster. A $100 filing fee is due upon submission.3Maryland Department of Assessments and Taxation. 2024.05 SDAT Corporate Charter Fee Schedule Once the SDAT accepts and records the Articles, the LLC is officially formed. This filing establishes the limited liability protection that separates owners’ personal assets from company debts.
Resident Agent Designation
Designating a resident agent is a requirement for maintaining an LLC in good standing in Maryland. This agent acts as the official point of contact within the state for receiving legal documents, tax notices, and other communications from government agencies.
A resident agent can be a Maryland resident individual (at least 18 years old) or a Maryland business entity authorized to act as such. The agent must have a physical street address in Maryland, not just a P.O. box, where documents can be delivered.
The resident agent must promptly forward received legal notices and official correspondence to the LLC. An LLC member or owner meeting state requirements can serve as the agent. However, many businesses use professional registered agent services for reliable document handling. This is helpful for owners who travel, lack a Maryland office, or prefer privacy.
Choosing a resident agent requires considering their responsibilities and consistent availability. Failure to maintain a resident agent can lead to the LLC forfeiting its right to do business in Maryland.
Operating Agreement
While Articles of Organization establish the LLC publicly, an Operating Agreement internally dictates its function and governance. Maryland law does not require a written Operating Agreement, but creating one is strongly recommended for all LLCs, including those with a single member.4Maryland General Assembly. Maryland Corporations and Associations Code § 4A-402 – Operating Agreement This internal, unfiled document is a contract among members that customizes rules, overriding Maryland’s default LLC provisions if desired.
An Operating Agreement can be tailored to the LLC’s needs. Common provisions address:
- Members’ percentage interests
- Capital contributions
- Profit and loss allocation and distribution
- Management structure (member-managed or manager-managed)
- Voting rights and decision-making processes
Without an agreement, these areas are governed by Maryland’s default statutes, which may not suit the business.
A thorough Operating Agreement also covers procedures for admitting new members, member withdrawal or interest transfer, agreement amendments, dispute resolution, and LLC dissolution. The initial agreement requires consent from all current members. While an Operating Agreement can be oral unless the Articles specify otherwise, a written one offers clarity and helps prevent disputes.
For single-member LLCs, an Operating Agreement helps affirm the LLC’s separate legal identity, which is relevant for liability protection and may be requested by banks.
Required Annual Filings
After formation, Maryland LLCs have ongoing obligations, including annual filings with the SDAT. These filings help the state maintain current records and ensure business compliance. For LLCs, this primarily means submitting an Annual Report.5Maryland General Assembly. Maryland Tax – Property Code § 11-101 – Annual Report Required
The Annual Report confirms the LLC’s existence and updates information like its principal office and resident agent details. Many LLCs must also file a Personal Property Tax Return if they own, lease, or use personal property in Maryland, or hold a trader’s license. This return assesses personal property taxes.
Both the Annual Report and Personal Property Tax Return are filed together via the Maryland Business Express portal by April 15th each year.6Maryland Department of Assessments and Taxation. Annual Business Filings and Extension Requests Due by April 15
A $300 filing fee for the Annual Report is due to the SDAT upon filing.7Maryland Department of Assessments and Taxation. Business Personal Property Timely and accurate completion of these annual requirements is necessary for maintaining an LLC’s good standing. Failure to file the Annual Report and pay the fee by April 15th can cause the LLC to lose good standing. Prolonged non-compliance may lead the SDAT to forfeit the LLC’s right to conduct business in Maryland.
State and Local Licenses
Operating a Maryland LLC lawfully also involves obtaining necessary state and local licenses. Required licenses and permits vary based on business activities, location, and professional qualifications. Maryland does not have a single state-level general business license; businesses need a combination of state occupational or industry-specific licenses and local county or municipal permits.
The Maryland Business Express portal, with its OneStop licensing feature, can help identify state-level license needs. Common state requirements include a Sales and Use Tax License from the Comptroller of Maryland for businesses selling tangible goods.8Comptroller of Maryland. Types of Business Licenses LLCs with employees must set up employer withholding tax and unemployment insurance accounts.
Many professions, like home improvement contractors, real estate brokers, and electricians, are regulated by specific state boards under the Maryland Department of Labor’s Division of Occupational and Professional Licensing.9Maryland Department of Labor. Division of Occupational and Professional Licensing Each board has distinct licensing criteria and fees.
LLCs must also research local licensing. The Clerk of the Circuit Court in the LLC’s county is a contact for local licenses, such as trader’s licenses (for buying and reselling goods), and licenses for restaurants or construction.10Maryland Judiciary. Maryland Judiciary Business Licenses Online Requirements vary by county. A trader’s license requires a state Sales and Use Tax number, with fees often based on inventory value.
Municipalities may have their own licensing, zoning, and permit rules for signage, health, and occupancy. Contacting city or town governments is necessary to understand these local ordinances. Before choosing a location, verify with local planning and zoning that the intended business use is permitted. Failing to secure all licenses can lead to operational hindrances and penalties.