If you’re an entrepreneur wanting to learn how to form an LLC in Maryland, you have come to the right place.
Forming an LLC in Maryland is a cost-effective and straightforward process. You only need to follow a few steps, including choosing an LLC name, hiring a registered agent, filing an Article of Organization, and creating an Operating Agreement.
This article discusses these steps in detail. It also has information on hiring an LLC formation company to speed up the process. If you’re ready to get your business off the ground, then keep reading to learn more!
Choose a Name for Your Maryland LLC
Choosing a name for your business is often the first and most crucial step in forming your Maryland LLC. You want to pick a name that your customers will remember, that explains what you do and that you’re happy to use for years to come.
Your business name should also comply with Maryland’s naming requirements and guidelines, which include the following rules:
- Your chosen LLC name must be unique and distinguishable from other Maryland LLCs, corporations, or businesses.
- The chosen name should not include words and phrases that confuse your Maryland LLC with government agencies, such as Treasury, FBI, State Department, etc.
- Restricted names, such as Attorneys, universities, or banks, may need extra paperwork or a certified professional like a lawyer or doctor to be part of your Maryland LLC.
Run a Maryland LLC name search
Once you have a name in mind, it is important to ensure no one else in Maryland already has that name. That is why we recommend doing an LLC name search via the Maryland Business Express website.
Secure your name
If you do not plan to register your business now but wish to reserve your chosen LLC name, you can file an LLC name reservation application with the Maryland Secretary of State and pay a reservation fee of $20.
You will also be required to trademark your chosen LLC name by submitting a Trade Name Application and a filing fee of $25 to the Maryland Secretary of State.
Hire a Registered Agent
Every LLC in Maryland must hire or appoint a registered agent to receive and forward business and legal compliance documents on your behalf. It is vital that the registered agent has a local street address in Maryland.
They can be a business entity or a person (either you, a friend, or any person within your company). Either way, they must be available during regular business hours to receive legal notices and business correspondence.
While you can act as a registered agent yourself, it is not always the best idea. You don’t want a lot of mail coming to your business premises when it could be received by a third party. That is why we recommend hiring one of the following registered agent service providers to receive documents on your behalf:
Northwest is one of the leading registered agents in the country. The company charges a $125 annual fee, and you get the following services:
- Document scanning
- Pre-filled state forms
- Annual report reminders
- Compliance alerts
- Mail forwarding
- Online document storage
You will also get access to a free compliance calendar and the company’s detailed corporate guide. Another good thing about Northwest is that you will get a discounted rate of only $100 per year if you use their registered agent service in more than four states.
ZenBusiness is another top-rated LLC formation company that will help your business remain compliant by offering you the following registered agent services for $199 per year:
- Fast turnaround services
- Document scanning
- Email notification
- Access to a personalized dashboard
- Worry-free compliance
You can also upgrade the ZenBusiness’ registered agent package to include two free filing amendments every year and annual support notifications.
These aren’t the only services ZenBusiness offers. You can also pay for LLC formation services (more on that below), annual reporting, business license reports, and banking and finances.
IncFile is another top LLC formation company that combines excellent service and affordability to give you complete peace of mind. The company offers automatic mail forwarding, bespoke email and SMS alerts, and a custom dashboard through which you can manage everything.
One good thing about IncFile is that they offer a free year of registered agent services if you use their LLC formation service. Otherwise, an IncFile registered agent service costs $119 per year.
File an Article of Organization
Once you have chosen a unique name for your LLC and hired a registered agent, the next step in forming your Maryland LLC is filing an Article of Organization.
The Maryland Article of Organization is a document used to legally and officially register your business with the state, making it a separate legal entity under Maryland laws.
Having all the information ready before you start filing an Article of Organization for your Maryland LLC is vital. You will need the following details about your Maryland LLC:
- The name of your Maryland LLC
- A statement of purpose for your Maryland LLC
- The name and address of all members and managers
- The name and address of the hired registered agent
- The management structure of your Maryland LLC (manager-managed or member-managed)
- The effective date of LLC formation.
Once you have the above details, go to the Maryland Secretary of State website and register your business by filing an Article of Organization. You will need to pay an association filing fee of $100.
Please note that all business owners are required by the Maryland LLC Act to file a Personal Property Tax Return and an Annual Report. The fee for doing this is $300.
Create an Operating Agreement
You are not legally required to create an Operating Agreement for your Maryland LLC. However, this does not mean that you should skip this step.
An Operating Agreement is a legal document that outlines the inner workings of your LLC’s structure. Think of it as something similar to a prenup, except that an Operating Agreement is less expensive and a lot simpler. This document will protect the interest of all members of your LLC in case of any disputes in the future.
The Maryland CACA section 4A-402 gives business owners much flexibility about what they can include in their Operating Agreement. For instance, here are some of the topics you can cover in your Operating Agreement:
- The management structure, including ownership rules, voting rights, and roles of each member
- Rules for sharing of losses and profits
- The protocols for admitting and removing members
- Protocol for amending the Operating Agreement
- Standard procedures for resolving disputes
- Rules for transfer of ownership
Unlike the Article of Organization, your Maryland Operating Agreement is a private document that doesn’t need filing with the Secretary of State.
Obtain all Licenses and Permits
It is essential to obtain all the required licenses and permits during the company formation process to avoid getting in trouble with your federal, state, or local government.
While a general business license is often required in Maryland, you may need other types of licenses and permits, depending on the type of business.
We recommend checking for any location-specific license and permit using The Maryland Department of Licensing website. It is a great place to check the exact license you require for your Maryland business, depending on your specific business and location.
Acquire Federal and State Tax IDs
Once your business is formed in Maryland, you must register your LLC with the State and Federal government to acquire a Federal and State Tax Identification Number.
Also known as Employer Identification Number (EIN), a Federal and State Tax ID is a 9-digit number assigned to LLCs by the IRS. This number is unique for every Maryland business, thus protecting your LLC from identity theft and fraud.
You will also need a Federal and State Tax ID for the following purposes:
- Hiring employees for your Maryland LLC
- Opening a business bank and credit account
You can obtain a federal and state tax ID for your Maryland LLC by applying for it through the Internal Revenue Service website. You will not be charged anything to get your Maryland Federal and State Tax ID (EIN)
Open Business Bank and Credit Accounts
Once your Maryland LLC is up and running, you will need a business-specific bank and credit account.
Opening a business bank account for your Maryland LLC separates your business and personal finances. This makes accounting more manageable and prevents issues of mixing assets unintentionally or inappropriately.
You will need the following documents to open a business bank account in Maryland:
- Your Federal and State Tax ID
- Your Operating Agreement
- Your Article of Organization
You can open a business account with a local or national bank. Here are three options local to Maryland:
Purchase Maryland Business Insurance
After forming your LLC in Maryland, you must purchase the relevant insurance policies. While some business insurances in Maryland are required by the state, others are optional.
Like all states, Maryland requires businesses to carry workers’ compensation insurance for their employees. Other common Maryland business insurance includes:
- General liability insurance
- Commercial property insurance
- Commercial automotive insurance
- Business income insurance
- Professional liability insurance
Find quotes for all of the insurance your business needs by using a comparison site like Insureon.
Buy an LLC Formation Package to Speed Up the Process
If forming a Maryland LLC still seems like a complex, time-consuming and challenging process, then you don’t have to go it alone. Many companies offer LLC formation packages, and you can use them to speed up the process.
The good news is that some companies, such as ZenBusiness, have free LLC formation packages – you will only need to cover the Maryland state filing fee. For instance, ZenBusiness’ Starter pricing plan is entirely free, and it includes a 100% accuracy guarantee, deduction tracking, and a standard filing speed.
The most popular ZenBusiness LLC formation package is the Pro pricing plan. At only $199 per year plus a state filing fee, you will get worry-free compliance, an operating agreement, and an expedited filing speed of four to six days.
You can also pay $349 per year for the Premium package to get your Maryland up and running in only one to two days. This package includes a custom business website builder, business documents, and a domain name & email address.
FAQs About Forming an LLC in Maryland
How Long Will It Take to Form My Maryland LLC?
It takes around a week to form your Maryland LLC via online submission, while paper filing is between seven to 10 weeks.
How Much Does It Cost to Set Up an LLC in Maryland?
The primary cost of forming an LLC in Maryland (filing an Article of Organization) is $100. There could be additional costs, including acquiring the relevant permits and licenses.
Can I Act as my Own Registered Agent in Maryland?
Yes. You can appoint yourself to act as a registered agent for your Maryland LLC as long as you are a Maryland resident with a permanent physical address. You must be available during regular Maryland business hours to receive, sign, and forward business and legal correspondence documents.
Can I Form a Single-Member LLC in Maryland?
Yes. Maryland state law allows you to form a single-member LLC. Forming your Maryland single-member LLC is straightforward; you only need to follow the steps outlined in this article or hire a professional LLC formation company.
We hope you found our article on forming an LLC in Maryland helpful. Generally, the steps are fairly straightforward and affordable.
However, if you find this guide time-consuming and complex, you should hire a professional LLC formation company to speed up the process for you.