How to Start an LLC in Maryland
A Maryland LLC (limited liability company) is a legal entity that offers a flexible management structure, pass-through taxation (by default), and liability protection for business owners and their personal assets. Sounds like a dream, but before you can run your business, you’ll need to first give your LLC a name, designate a registered agent, and file Articles of Organization with the Maryland Department of Assessments & Taxation (SDAT). The Articles of Organization cost $100 if filed by mail or in person and $155 for expedited online filing (when you hire Northwest, we'll file your articles online). SDAT will take around a week to process your filing if you file online and up to six weeks if you file by mail. LLC formation can be tricky, but our step-by-step guide will see you through.
Ready to Start an LLC in Maryland?Get Started
Name Your LLC
Designate a Registered Agent
Submit LLC Articles of Organization
Write an LLC Operating Agreement
Get an EIN
Open a Bank Account
Fund the LLC
File reports + taxes
1. Name Your LLC
Choosing a name for your LLC is a crucial decision because it will set the tone for the way customers view your business. However, you can’t just choose any name for your LLC. You’ll need to follow MD Corp & Assn Code § 1-502. Your LLC name must:
- Be unique among business names in Maryland.
- Include either “limited liability company,” “L.L.C.,” or “LLC.”, “L.C.” or “LC.”
- Not have identifiers that suggest your business is another type of entity, like “corp” or “corporation.”
Already have a business name? Check to see if it’s available.
Can I reserve a business name in Maryland?
Yes. Maryland allows LLCs to reserve a business name for 30 days. Simply fill out and file a Corporate Name Reservation application and pay the $25 fee (add $20 for expedited service).
What’s the difference between my LLC’s name and a trade name?
When you start an LLC, you’ll need to list your company’s name when you file paperwork with the Maryland’s SDAT. This name will become your business’s official legal name. However, your LLC’s legal business name doesn’t necessarily have to be the customer-facing name that you use. This is how Jeni Moto, LLC becomes “Jeni’s Motorcycle Repair.” The LLC name is what Maryland knows your business as, but the DBA, or trade name, is Jeni’s Motorcycle Repair.
To operate your LLC under a trade name, you’ll need to file a Trade Name Application with Maryland’s Department of Assessments & Taxation. The application fee costs $25 and you’ll get confirmation in about four weeks. If waiting around isn’t your thing, you can also submit the application in person at the Charter Division office in Baltimore for an additional $50.00 fee for immediate service.
Find out more about How to get a DBA Name for Your Business.
2. Designate a Registered Agent
The next step is to designate a registered agent. Maryland calls them “resident agents,” but the terms are interchangeable. Your registered agent could be you, another Maryland resident, or a professional service like us. All Maryland LLCs are required to have a registered agent to list on the Articles of Organization.
Learn why the pros use a registered agent service.
What does a registered agent do?
The requirements for a registered agent in Maryland are outlined in MD Corp & Assn Code § 7–205. At a minimum, your registered agent must:
- Have a physical address (no PO boxes or virtual offices) in the state of Maryland.
- Keep regular business hours at that address.
- Accept legal mail and correspondence from the Maryland SDAT on behalf of your business and get them to you fast.
Can you be your own registered agent in Maryland?
Yes, but should you? Privacy is important, and when you act as your LLC’s registered agent, your private information goes on public record. Hiring a professional registered agent means that their information gets registered with the state, shielding you from spammers and hackers.
Also, if you ever plan to take a vacation, you could miss time-sensitive legal mail. Hiring a registered agent means you never have to worry when you leave town or the office, because your registered agent will receive all your LLC’s important legal mail, and keep your LLC in compliance with the state.
Can I change my registered agent after I start an LLC?
You can change your registered agent anytime by filing the Resolution to Change Principal Office or Resident Agent form with SDAT. The application costs $25 to file and you can submit it by mail or in person.
3. Submit LLC Articles of Organization
To officially form your LLC, you’ll need to complete and file the Articles of Organization with SDAT. It costs $100 to file by mail or in person and $155 for expedited online filing.
Note: All of the information on this form will become part of the public record.
To fill out the form, you’ll need to provide the following information about your LLC:
- Company name. Must include “Limited Liability Company” or an abbreviation like “LLC” or “L.L.C.”
- Purpose. Most businesses keep this section general with a statement like “the purpose of this LLC is to engage in any lawful activity in the state of Maryland.”
- LLC address. List a street address in Maryland.
- Registered agent and address. The name and address of your registered agent.
- Maryland LLC authorized person. The person authorized to sign and submit your LLC’s Articles of Organization.
How can I keep my personal information off the public record?
Your LLC’s state paperwork can give scammers and hackers a little too much of a view into your life. The best way to protect your private information is to hire a registered agent who will allow you to list their information on this form instead of your own.
What’s the difference between a member-managed and manager-managed LLC?
LLCs can be managed by their members (owners), or they can be managed by one or more managers. Member-managed LLCs are run by the members of the LLC, who attend to daily operations—things like hiring and firing employees, handling payroll, signing a lease, and more. If the members choose, they can act more like passive investors and hire a manager to run the business. This would make the LLC a manager-managed LLC.
For help with deciding which management structure will work for you, see our page on LLC Member Vs Manager.
How long does it take to form a Maryland LLC?
Mailed filings are processed up to six weeks after the state receives them. You can also pay $50 for expedited mail filing, which will cut filing time to seven business days after receipt. Online filings are processed within about a week of being received. Documents hand-delivered will receive same-day service between 8:30 am and 4:30 pm. You must be in line no later than 4:15 PM in order to receive same-day LLC approval.
How do I file the Maryland Articles of Organization?
You can submit your articles online, by mail, or in person.
Mail and in person:
State Department of Assessments and Taxation
Corporate Charter Division
301 W. Preston St. Room 801
Baltimore, MD 21201
Maryland Business Express
4. Write an LLC Operating Agreement
The operating agreement is one of the most important documents for your LLC. At its most basic, your operating agreement will act as the foundation for how your LLC will operate. Operating agreements can address things like the roles of members, revenue contribution obligations, and procedures for dissolving the LLC. In the event of a disagreement among LLC members, the operating agreement will act as the road map for resolving it.
Check out our attorney-drafted Maryland LLC Operating Agreement.
Does Maryland require an LLC to have an operating agreement?
Maryland doesn’t legally require an operating agreement, but don’t let that give you the impression that your LLC doesn’t need one. Operating agreements are important because they establish and define the distinction(s) between the LLC and the members themselves. Failure to maintain this distinction could compromise your LLC’s liability protection. Without an operating agreement, your LLC will be required to operate according to Maryland’s default LLC statutes.
What should be included in an operating agreement?
Generally you want to address big ticket issues, but you’re free to include pretty much anything in your operating agreement as long as it doesn’t violate Maryland law. You’ll want to focus on things like:
- initial investments
- profits, losses, and distributions
- voting rights, decision-making powers, and management
- transfer of membership interest
- dissolving the business
Does a single-member LLC need an operating agreement?
Yes. You’ll need an operating agreement to open a bank account. Having a separate business bank account helps to maintain your LLC’s limited liability by creating a barrier between your personal assets and business assets.
5. Get an EIN
In order for your LLC to open a bank account or conduct business as a separate entity, you must register with the IRS and obtain an Employer Identification Number (EIN). EINs are nine-digit codes you’ll use when filing taxes and other IRS-related forms. You can apply for an EIN online with the IRS.
Do I need an EIN for my Maryland LLC?
The answer is undoubtedly yes. You need an EIN for your Maryland LLC. Banks generally require an EIN to open a business bank account. Opening a bank account for your business is an important step to show that your LLC and you are separate entities. If your LLC plans to hire employees it will also need an EIN. Getting an EIN also means that you don’t have to fill out business forms with your personal Social Security Number and open yourself up to identity theft.
What To Do After Forming Your Maryland LLC
6. Open a Bank Account
LLCs are separate entities from their members, which means they need separate bank accounts. From a legal perspective, keeping different bank accounts for your personal and business finances strengthens your LLC’s liability protections. Having a business bank account means that when a client pays you, their money will go directly to your business account instead of your personal account. As an added benefit, having a dedicated business account makes it easier to track tax-deductible expenses that can save you money come tax season.
To open a bank account for your Maryland LLC, you’ll need to bring the following to the bank:
- Maryland LLC Articles of Organization (a copy is fine)
- the LLC’s operating agreement
- the LLC’s EIN
- an LLC Resolution to Open a Bank Account (if your LLC has more than one member).
If your LLC has more than one member, use our free LLC Resolution to Open a Bank Account.
7. Fund the LLC
Your LLC will need money to do business. In a typical LLC, members will fund the business through financial contributions. They usually do this in the form of a check or bank transfer. Members can also fund the LLC by contributing services or property, though that may trigger a tax event with the IRS. Initial contributions pay for membership interest.
What is LLC membership interest?
Membership interest is the percentage of ownership a member holds in the LLC.
When the LLC is funded, each member (owner) receives membership interest in proportion to the amount of money they paid into the LLC. If each member puts in $20,000 to fund the LLC, each member will have an equal membership interest. When profits are divided, each member will receive an equal share. If one person puts in less money, they will receive a lower percentage of membership interest, and they will receive profits in accordance with their membership interest.
Membership interest also defines voting rights. Members with more skin in the game generally hold a stronger position with regards to voting. However, LLCs can make the decision in the operating agreement to allow each member, regardless of ownership percentage, to have an equally powerful vote.
8. File State Reports & Taxes
Maryland LLCs must file an annual report with the SDAT each year. Your LLC’s annual report basically serves to ensure the state has updated information on who owns your LLC and how to get in touch with your business. The Maryland annual report costs $300 to file, which is kind of a wallet buster. Maryland also requires businesses with personal property in the state to file a Personal Property Return (PPR) along with the annual report. Awesome, more paperwork!
Your Maryland LLC must file a PPR if your LLC owns, uses, or leases personal property located in Maryland, or if your LLC has a state issued trader’s license (buying and/or re-selling goods). The tax owed on your PPR will be determined by the assessed value of your business’s property multiplied by the tax rate for the county in which the property is located. Annual reports and PPRs are filed together.
Tired of paperwork? Let us file your Maryland annual report for you.
When is the Maryland Annual Report due?
In Maryland, annual reports are due April 15th every year. Late fees will be assessed on any LLC that files their annual report after the due date. Penalties start at $30 and go up depending on how late the report is filed. Failure to file your annual report could result in the dissolution of your Maryland LLC. Both the annual report and the PPR can be filed online, by mail, or in person.
How are Maryland LLCs taxed?
Single-member LLCs are automatically taxed like sole proprietorships. Multi-member LLCs are taxed like partnerships. In either case, business profits pass through to the members, and the members pay income and the federal self-employment taxes (15.3%) on their personal tax returns. LLCs can also file paperwork with the IRS to change their tax status to an S-corp or C-corp.
Learn more about S-Corp Vs LLC tax designation.