Fact checked for accuracy by Billie Anne Grigg, a bookkeeper and Mastery Level Certified Profit First Professional.
When looking to register or form a business, the first thing on your mind might be how to start the registration process. Maryland may not be a popular destination like its counterpart Delaware. However, it offers various benefits to businesses, making it an upcoming hotspot in registration numbers.
Registering a business is not a complicated affair. Understanding the Maryland Department of Assets and Taxation requirements will help you fill out any information required concerning your business.
The steps below will aid you in making your registration a seamless process and understanding the fundamental aspects of forming an LLC company in Maryland.
Step 1: Choose an Appropriate Name
Choosing an appropriate name is one of the most straightforward tasks if you have the correct information on how to go about it. First and foremost, ensure that the name of your LLC is not among any of the business entities registered under the Maryland business name database.
After the search, you can save your business name for 30 days after filling out a Corporate Name Reservation form. After this, you must make a small fee to the state authority for the name reservation. LLC, LC, or L.C should follow the business name. This can either be written as an abbreviation or spelled out in words.
The business name should not indicate a corporation or a government agency. Certain prohibited words may cause a conflict of interest while naming. Several naming rules are available that will guide you on the appropriate wording to use.
Step 2: Choose a Registered Agent
Maryland requires you to have a registered agent who can either be a Maryland LLC or a Maryland Corporation. The registered agent must be over 18 years and have a physical address in Maryland. The agent must also be able to receive legal information on behalf of the company and represent the business in court if need be.
As an LLC company, you can choose to be a registered agent. However, keep in mind that your private records will become public, making you susceptible to hackers and spammers. Therefore, it is advisable to get a registered agent to represent you, especially when you’re not available to represent yourself.
The state allows you the provision to change your registered agent any time you might be willing to. If you feel like your agent is not representing the business as it should be, you can fill out the Change of Resident Agent form found at the Maryland Department of Assets and Taxation (SDAT).
Step 3: Complete and Fill Out Your LLC Articles of Organization
The articles of organization in an LLC serve the primary purpose of laying out information about your business and submitting it to the Department of Assets and Taxation (SDAT).
In this step, you must complete and fill out the articles of organization and submit them to the State Department of Assets and Taxation (SDAT). These forms can be filled out manually or emailed to the state department. There are a couple of things that you might need before filling out the articles of organization forms:
- The official name and address of the LLC business. Along with the purpose of the LLC business. This comprises a general statement that highlights the main agenda of the business.
- The identity of the registered agent, as well as their local address
- The local address of the LLC where the company will be based
- The identity of the individual forming the LLC
- The signature of the registered agent handling the LLC
- A registered authority under the Department of Maryland
Step 4: Receiving a Certificate From the State
After you have successfully filed your articles of organization to the State Department of Assets and Taxation, you will receive an LLC certificate once your documents have been filed and approved. The certificate will have information on how to get vital information, such as the Bank accounts, licenses, or even the employee identification number.
Cost to Start an LLC in Maryland
You need to have a budget of around $100 to file an LLC in Maryland. Due to the costs required, it is best to have a higher budget to cover any eventualities at the beginning of the filing. For instance, the articles of the organization require $100 for registration. An extra $50 is needed if you want your case expedited. There’s also an annual report filed every year, as the state requires. This will cost roughly $300.
However, you can cut the annual tax return costs by filing it yourself. By doing this, you should be aware of the various terms and conditions to avoid making a mistake. Tax filing companies are available online and offer discounts to LLC companies making their work much more manageable.
When hiring a professional resident agent company, you might want to do your research first before settling on one. A resident agent Company may cost you $50 to $200 per year.
If you choose to be your registered agent, have your LLC documentation made public record. Therefore, choosing a registered professional agent who will represent you is advised, keeping the LLC business information private.
You might also want to consider a budget of around $300 due to filing the annual report (farms are $100). As this is mandatory for LLC businesses, it is best to ensure they are tackled as soon as possible.
What to Do After Forming Your LLC in Maryland
After receiving a certificate from the state confirming the filing and approval of your LLC in Maryland, there are a few recommended things you must do to comply with the state’s requirements. Below are some actions you might want to consider:
Write Out an LLC Operating Agreement
An LLC operating agreement is essential as it explains how your LLC will operate in the State. As Maryland does not require an LLC operating agreement, you might still want to have an agreement as the state will insist that you have one. This is vital, especially when establishing a proper line of duty among the members.
Failure to have the operating agreement will see the LLC business placed under Maryland’s default statutes. This will ultimately put your business at risk of closure.
An operating agreement will benefit your business in handling litigation issues and ensuring that disputes or wrangles are adequately settled. This also ensures that the members and the LLC are protected in case of anything. In the absence of this agreement, the state LLC law will be able to govern the operation of the business.
Open a Bank Account
It is essential to keep separate bank accounts for the LLC and personal accounts. This helps protect the business and ensures the LLC business equities are protected. A dedicated business bank account allows you to keep a record of payments and file your annual tax returns, saving you money on taxes.
File Reports Annually
It is a requirement for LLC businesses in Maryland to file annual reports to the State Department of Assets and Taxation (SDAT). This ensures that the LLC business operates smoothly and continuously in a manner known to the state. All property owned by the LLC also needs to be filed.
Fund the LLC Business
After opening the LLC Company, having proper funds ensures that the business runs smoothly. Whichever way you’ll use, always have enough funds to run the company. At this point, you can also protect the business’ company name and logo further by securing them with a trademark. This prevents any other company from emulating the business’s identity.
Get an Employee Identification Number
The employee identification number serves as a social security number for businesses. It mainly serves as an identification process for businesses. It is important to have this number, as failure to have it will lead to a sermon by the IRS.
If you value your privacy, you can choose to go for this instead of your social security number. Acquiring an Employee Identification Number requires a visit to the IRS website. It is free of charge.
How to Keep Your LLC Compliant in Maryland
It is important to always keep abreast with information regarding LLC businesses. This can be done by constantly familiarizing yourself with the legal obligations and reports of the State of Maryland. It helps prevent instances where the LLC Company is unaware of the change in policies and procedures and remains reliant on outdated ones.
For instance, personal property returns in Maryland should be filed before April 15th of every year. Knowing important dates will save your LLC business from being shut down. Several documents must be filed and accounted for by the organization. The balance sheet, depreciation schedule, and transfer reconciliation are essential documents worth considering.
It is also important to purchase insurance for your business. Check out available insurance companies with the right premiums suited for the business around Maryland.
Maintaining a good standing report with the Department of Assets and Taxation of Maryland will ensure that your business does not lose its license or limited liability status. Several good standing requirements must be met annually to ensure that the business functions operate at total capacity.
Tax Filing Requirements for LLCs in Maryland
It is best to ensure that the LLC business meets all the necessary criteria for tax filing. There are a couple of action items under tax filing:
Business Licenses and Permits
These go a long way in protecting your business and ensuring that you are up to date. Operating without a license can make the company face severe repercussions.
Employee Identification Number
This is necessary, especially if the business has more than one member and is a registered corporation.
The company needs to register with the Maryland Comptroller if its employees will be viable to collect sales tax after selling goods. This can be done online or through forms collected at the Comptroller’s office.
Frequently Asked Questions
Starting your LLC may feel intimidating at first. Here are a few frequently asked questions others have asked when starting their LLC for the first time.
How long does it take to register an LLC in Maryland?
The filing of documentation for an LLC in Maryland takes approximately six to eight weeks if you file them by mail. However, if you need it sooner than that, be prepared to pay a small fee for it to be expedited.
Hand-delivered LLC documents are filed on the same day only if you get in line early enough. Online LLC documents take about a week to be filed. Therefore, consider how fast you would like your documents before sending them to Maryland’s Department of Assets and taxation (SDAT).
What tax structure should I choose for an LLC in Maryland?
The tax structure you can choose for the LLC in Maryland depends on whether the business is a single member or multi-member.
Single-member tax structures are for sole proprietorships, while multi-member LLCs use the partnerships tax structure. All these forms of tax structures require profit returns to pass through the members. However, the LLC can file a complaint to the IRS if they want to change their tax status.
Should you hire an LLC formation service in Maryland?
You can form an LLC in Maryland by following the above steps. However, there are several online formation services you can hire if you are too busy or overwhelmed with the process and wouldn’t mind spending for convenience. Be sure to check out the company’s credibility and conduct sufficient research before settling on a formation service.
Before registering an LLC in Maryland, you must choose a business name to feature in your articles. Proprietors are notified by mail seven days after filing the Articles of Organization. In addition, every business owner must file an Annual Report every year. Online business registration should be filed online via the Government Business portal.
All in all, forming and registering an LLC fully in Maryland is easy if you have the proper documentation.
Filed under: Maryland Business Guides