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How to Form an LLC in Maryland: Maryland and its Many Business Benefits

If you’re looking to start a new business in the state of Maryland, it’s a smart decision to do business as a Maryland limited liability company. Forming an LLC in Maryland does not have to be difficult, but there are a few important steps within the process of forming an LLC that can take quite a bit of effort. With the right support, you can have your LLC up and running in no time.

This guide will tell you everything you need to know to get your business started. You will learn how to name your LLC and do a Maryland LLC search, how to choose a registered agent in Maryland, and you will learn how to file the required forms for your Maryland LLC.

Businesses are offered many benefits once they are registered as a limited liability company. Contact the professionals at LLC Formations so we can help you get started.

What is a Limited Liability Company (LLC)?

An LLC is a way of organizing your Maryland business with the state. When you do business as a Maryland LLC, you are granted many benefits that can help you grow your business while also protecting yourself from being personally responsible for debts or lawsuits.

One of the main benefits of doing business as an LLC is that LLCs have a limited liability status. This means that once you complete the LLC formation process, your business will be kept separately from your personal finances, which keeps all of your personal property, possessions, and bank accounts off-limits in the case of debts or lawsuits against your Maryland LLC.

If your business gets sued after you form an LLC, your personal property cannot be touched or considered in the ruling. Especially if you have personal property such as vehicles, boats, or real estate, be sure to register your company as an LLC so you can have all of your personal property protected.

There are a few requirements to complete before you receive your Certificate of Status showing that your Maryland LLC has been approved. If you need help to form an LLC, contact the professional team at LLC Formations so we can help you get started.

Here are the steps to forming an LLC in Maryland:

1. Choose a Business Name for Your Maryland LLC

As a business owner, step 1 of the LLC formation process is to choose an LLC name for your Maryland business. It’s important to keep in mind that your business name will represent your business to future customers and clients, so be sure to choose something clever and unique when naming your Maryland business.

Naming Requirements for Maryland State Business Names

There are a few requirements LLCs need to follow in order to have the company name accepted. First, LLCs must end the LLC name with the words “limited liability company” or any one of the following approved abbreviations: LLC, L.C.C, L.C., or LC.

Another one of the requirements is that the LLC name cannot imply that your LLC is a corporation within the company name. This means that LLCs cannot include the words “corporation” or “incorporated” anywhere in the name. You also cannot use the abbreviations of these words: “Corp.” and “Inc” for your business when you form an LLC in Maryland state.

For example, let’s say your name is Michael and your business is a pool cleaning service. You could name your LLC Michael’s Pool Cleaning Services, LLC, or Michael’s Pool Cleaning Services, Limited Liability Company, and it will pass the first rule for naming your Maryland LLC. However, if you name your LLC Michael’s Pool Cleaning Services Incorporated, LLC, it will not be approved because it does not pass the second rule for naming Maryland LLCs.

Choose a Unique Name for Your Maryland Business

Another one of the requirements is that your chosen name cannot be similar to an already existing name of a business in Maryland. For example, if you were to perform a Maryland name search and found a business called Mike’s Pool Cleaning Services, Inc., or Mike’s Pool Cleaning Services, LLC, you would have to use a different LLC name than Michael’s Pool Cleaning Services because of its similarity to the already existing business name. The alternative name, Michael’s Pool Management LLC, would be a better choice.

Using different punctuation or numbers also is not enough to make your name unique in Maryland. For example, if there is a company that is named Michael’s-Pool-Cleaning-Services LLC or One Michael’s Pool Cleaning Services LLC, you cannot name your company Michael’s.Pool.Cleaning.Services, L.C. or 1 Michael’s Pool Cleaning Services, LCC, and it get approved. It has to be completely unique from an existing business name so that they cannot be confused for each other when spoken or written.

Tips When Naming Your Maryland LLC

1. Make it easy to spell. You want people to be able to find your business easily.

2. Keep it short. Keeping your LLC name short will make it easier to remember.

Conduct a Name Search for Your Maryland LLC

Maryland has a database that you can use to see which names are taken in Maryland state. When you’re on the database, simply type in your name of choice. If the name is available, the database will say “The business name you entered was not found. You may try your search again.” If the database finds any businesses with the name you entered, it will list the LLCs. If a name comes up, you will need to choose a different name for your Maryland business.

If you need help with choosing a name for your LLC in Maryland, contact the professionals at LLC Formations so we can help you get your Maryland LLC started.

2. Choose a Registered Agent for Your LLC in Maryland

In Maryland, Registered Agents are also called Resident Agents. The role of a Resident or Registered Agent is to accept legal mail (known as “service of process”) on behalf of your Maryland LLC. Official notices from the government will be sent to the address, and it is the responsibility of your Registered Agent to give these notices to you so you can take care of the matters regarding your business.

Complaints, subpoenas, and summons all fall under the category of Service of Process. The address of your Registered Agent will also be used as a point of contact between your LLC and the state of Maryland. You must file each legal notice with the address of your Maryland agent.

One of the requirements of your Registered Agent is that his or her address must be a Maryland street address. You cannot use a PO Box address. Another one of the requirements is that your Maryland Resident Agent should be available to reach during normal business hours (9 a.m. to 5 p.m.). Your Resident Agent must be over 18 years of age.

The reason Maryland requires LLCs to have a steady Resident Agent registered with the state is that it makes tracking legal mail and court documents within the state easy. Visit https://llcformations.com for more information about the role of a Registered Agent in Maryland.

Who Can Be a Registered Agent?

While a separate person or company can be your Registered Agent, you can also be your own Resident Agent as a business owner. There are three specific options you can choose when picking the Resident Agent for your Maryland LLC:

  • You can be your Resident Agent
  • You can ask a friend or family member to be your Resident Agent
  • You can hire a Resident Agent service for your LLC in Maryland

Why Should I Hire a Service for My Maryland LLC?

Something to consider before naming yourself, a friend, or someone in your family as your LLC’s Resident Agent is the fact that your Resident Agent’s address will be listed on public records. Businesses often prefer to keep their privacy, so hiring a service is a great option if this is important to you as a business owner.

There are also risks to consider when you are your own Resident Agent, or if you ask a friend or someone in your family to be your agent. If your Resident Agent fails to be available when a process server (someone who serves court documents or notices of lawsuits) needs to reach you, your Maryland LLC could lose its liability protection, or worse—your Maryland LLC can be shut down.

This is why many businesses prefer to hire a service to handle affairs for their Maryland business. When you hire a service, the service is made up of people who know the requirements, the service will be responsible for your mail, and the service will be available during regular business days and hours so your Maryland state business can remain in good standing.

If you need help with choosing between the best services for your LLC in Maryland, contact the professionals at LLC Formations so we can help you get your business entity up and running.

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3. File the Articles of Organization for Your Maryland LLC

The next step in the Maryland LLC formation process is filing your Articles of Organization with the Secretary of State. This step is very important because the Articles of Organization officially forms your LLC as a legal business entity within the state of Maryland. The Articles of Organization document includes the required information about your LLC’s name, the purpose of your LLC, and your Resident Agent information.

How Do I File the Articles of Organization with the State?

To file the Articles of Organization with Maryland state, you can either file online or by mail. Regardless of if you file online or by mail, you will need to include the filing fee requirement that pays for the state fees. The filing fee in Maryland includes an additional small charge that pays for your copy of your Articles of Organization once they have been approved by the state.

What if My Articles are Not Approved?

When you send your Articles of Organization to the state, they will be reviewed and processed. If anything is discovered to be wrong with your Articles of Organization, you will have 60 days to make the appropriate corrections and return the documents back to the state. If your Articles of Organization are not returned to the state in time, the state will no longer review or process them, and your state fees for the filing will not be refunded.

If there aren’t any issues with your Articles of Organization, your Maryland LLC should be approved in 6 to 8 weeks.

Receive Your Letter of Confirmation Certificate

Once approved, your LLC will be a legally formed business in Maryland, and you will receive a letter of confirmation along with your copy of your Articles of Organization. Do not order a Federal Tax ID number (also called an EIN) or start to use your LLC for any business purposes until you have received confirmation that it has been approved for business in the state.

Once your LLC is officially approved and formed in Maryland, your work is not done. Maryland requires that you submit an annual report and pay a yearly fee. You will also have to file state taxes every year.

What are the Filing Fees for Starting an LLC in Maryland?

The filing fee for your Articles of Organization $105 for regular filing. The state fee for an expedited filing is $155. The state fee needs to be paid by check or money order. Your check or money order for the state fee needs to be made payable to “Maryland Department of Assessments and Taxation.”

If you file your Articles of Organization online, an eCheck is an acceptable payment method for the state fee with an added charge of $3 for the service.

Can I Expedite the Filing to Start an LLC?

You can expedite the filing by paying an additional fee. If you file by mail, it will take between 7-10 business days. If you need help to start an LLC, contact the professionals at LLC Formations so we can help you get your business up and running.

4. Create the LLC Operating Agreement for Your Maryland LLC

After you have created your Maryland LLC, Maryland allows members to create a Business Operating Agreement for your business. Businesses don’t need to file the Operating Agreement with the state since it is not one of the legal requirements of opening an LLC. Instead, the LLC Operating Agreement is an internal document that exists to make managing the business easier. Although it is not one of the requirements, we suggest that every LLC has an Operating Agreement to keep the business and its members safe and that a certified copy is kept with other documents.

What is an Operating Agreement?

An Operating Agreement is a document that details how responsibilities will be split between members of the business. It sets forth how the business will be managed operationally and financially. Your LLC’s Operating Agreement should lay out who its members are and what each of their specific roles in the company is. It also defines how taxes will be paid and how losses or gains will be distributed between members within the business.

Operating Agreements also have the responsibility of spelling out what percentage of the business each member owns. You and other members of your LLC may want or need to work with an attorney while filling out your LLC’s Operating Agreement, or you can speak with a professional service that has experience with helping businesses draft their Operating Agreement.

Why Do I Need an Operating Agreement?

Operating Agreements are important because they help keep businesses organized. Operating Agreements are important because if your business is ever sued or brought to court, a copy of your Operating Agreement will most likely be requested as one of the documentation requirements to see how you run your business. Having a professional Operating Agreement adds credibility to your business and can provide legal support if needed at any point.

Although the LLC business structure protects your personal property, it does not protect the property listed under the LLC. By having an Operating Agreement, you’re keeping your business organized so it can remain in good standing.

Be sure to keep a certified copy with all of the original signatures with your other important business documents.

5. Get an Employer Identification Number (EIN) for Your Maryland LLC

Obtaining an EIN is an important part of doing business as an LLC. You’ll need an EIN to do many important things, such as obtain property as a business, obtain business licenses, open a business bank account, and pay employee payroll. You cannot open a business bank account without an EIN, which means that you will miss out on a lot of monetary opportunities for your LLC. Your EIN is also crucial for when it comes times to file taxes and handle your tax return.

What is an EIN?

An EIN is short for an Employer Identification Number. It is to your LLC what a social security number is to a person. The IRS uses your EIN for filing and tax purposes. EIN’s allow you to open a business bank account and apply for specific permits or business licenses. An EIN for you LLC also helps with employee payroll if your business has employees.

The Different Names for an EIN

FEIN, Employer ID Number, EIN Number, Federal Employee ID Number, Federal Tax Number, Federal Tax Identification Number, Federal ID Number, and Employer Identification Number. Each of these names mean the same thing, so do not be confused if you see them being used interchangeably on documents.

Additional Benefits of Having an EIN for Your LLC Maryland

1. File taxes at the local, state, or federal level

2. Qualify for business loans or business lines of credit

3. Receive a business credit card with your business bank account

4. Having the business bank account will keep your personal property separate from your LLC finances

EIN applications for LLC’s are 100% free in Maryland state.

How to Get an EIN in Maryland as a Foreigner

You can apply for an EIN for an LLC without having a social security number. You just cannot apply online. To apply for an EIN without a SSN or an ITIN, fax or mail Form SS-4 to the IRS. If you are a foreigner applying for an EIN for a Maryland state LLC, you do not have to use a third party designee to get an EIN. You also do not need an attorney or an accountant unless you want to.

Foreigners seeking an EIN for an LLC in the state of Maryland do not need an American Address to apply. You also do not have to call the IRS. In fact, applying for an EIN by phone is no longer accepted.

EIN Responsible Parties for LLCs in Maryland

Single-Member LLC: The sole member is the responsible party for the EIN.

Multi-Member LLC: Only one member needs to be the responsible party for the EIN. The information for all of the LLC members is neither necessary nor wanted by the IRS when applying for an EIN. The IRS will get the information about the other members when the taxes for your LLC are filed. Though anyone in the LLC can be the responsible party for the EIN, it is best that you decide among yourselves who will be more likely to file and organize the LLC’s taxes properly and choose that person to be the EIN responsible party because they will be responsible for correctly handling all of your LLC’s tax requirements.

Company-Owned LLC: Since 2018, the IRS has no longer allowed a company to be an EIN responsible party. A responsible party has to be a single person

How to Know if Your EIN Application is Approved

The IRS will issue your LLC once your application has been approved. You will then receive an EIN Confirmation Letter (CP 575) for your Maryland state LLC. The method you used to apply for your EIN will determine how you will receive your confirmation letter from the IRS.

If You Filed through an Online Application

You will receive a download link soon after submitting your EIN application if it is approved. There is not a wait time. The IRS will also send you a backup copy of your CP 575 in the mail, and it should arrive in 4 to 5 weeks.

If You Filed by Fax

If you used Form SS-4 to apply for your EIN and faxed it to the IRS, then the IRS will fax you your confirmation letter later. It is usually within 4 to 7 days. Be sure to use a fax you have easy access to when sending your EIN application to the IRS.

If You Filed by Mail

If you mailed in Form SS-4 to the IRS to apply for your EIN, you should receive your confirmation letter within 4 to 8 weeks.

Additional Resources

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How are LLCs Taxed in Maryland State?

In Maryland, LLCs are taxed based on the number of members within the business. This means that in Maryland, LLCs have to choose to be taxed as an S-Corporation or C-Corporation, file the appropriate paperwork, and follow the state requirements.

Single-Member LLC

Single-Member LLCs are taxed as disregarded entities in Maryland state. This means that the LLC is owned by a single person and thus should be taxed like a sole proprietorship. If a single company owns an LLC, the LLC is taxed as a division or branch of the parent company.

Multi-Member LLC

Multi-Member LLCs are taxed like partnerships in Maryland. If you want your LLC to be taxed as an S-Corporation, you first need to apply for an EIN. Once you have that, you need to fill out and submit Form 2553 to the IRS. If you want your LLC taxed as a C-Corporation, then you will also need an EIN. Once you have that, you will then need to fill out and file Form 8832 instead of Form 2553.

Corporation

It is recommended that you speak with an accountant if you choose to have your LLC taxed as a corporation. Taxing an LLC as an S-Corporation is actually quite common, especially if the LLC makes around $70,000 in net income yearly. Taxing an LLC as a C-Corporation is less popular but feel free to do so if that is what you want to do. Just remember to speak with an accountant to make sure it is the best choice for your Limited Liability Company.

How Can LLC Formations Help You?

Starting an LLC is a big step to take, but it is a step worth taking, especially in Maryland. Maryland allows LLC owners to have a lot of freedom when operating their business. As long as you have the proper business licenses and follow the state requirements, you can focus on growing your LLC for years to come.

You do not have to do it all on your own. Building a trusted professional circle around you could make a huge difference in your LLCs success. Contact the professional team at LLC Formations so we can help you complete all of the requirements. Our next article features the steps to starting your business in Massachusetts.