The best LLC service for most people is ZenBusiness because it’s easy to use and affordable. Click here to sign up for ZenBusiness and start an LLC in Maryland today.
Regarding business formation, every state has different rules and regulations. LLCs are among the most popular business structures because they offer personal liability protection and tax benefits without some of the formalities associated with corporations.
That said, there are still some steps you’ll need to take to form an LLC in Maryland. This article will show you everything you need to do.
The 7 Best LLC Services for Starting an LLC In Maryland
There are plenty of LLC services out there, and we’ve tried dozens of them so you don’t have to. Here are the best LLC services for starting a Maryland LLC:
- ZenBusiness – Best overall
- Incfile – Best for entrepreneurs on a tight budget
- Rocket Lawyer – Best legal consultation services for LLCs
- LegalZoom – Most popular LLC services
- LegalNature – Best for LLC documents and contracts
- MyCompanyWorks – Best same-day processing
- Swyft Filings – Best customer service
Create Your Maryland LLC In 9 Easy Steps
Maryland is a great state to do business in due to its appealing geographical location and thriving economy. Open a Maryland LLC today to get access to the Washington–Baltimore metropolitan area, the Chesapeake Bay region, or the pastoral economies of western Maryland.
In Maryland, LLCs are easy to form and offer many benefits for businesses, including personal liability protection and pass-through taxation. You can have your Maryland LLC up and running in no time by following these simple steps:
- Choose a name for your Maryland LLC
- Appoint a registered agent
- File Maryland Articles of Organization
- Create an Operating Agreement
- Get a business license (if needed)
- Obtain an EIN
- Open a business bank account
- Clearly understand Maryland’s tax requirements
- Determine insurance your business needs
Step 1: Choose a Name for Your Maryland LLC
The first step in starting any business is coming up with a name for it. The State of Maryland defines a trade name as “a name, symbol, word, or combination of 2 or more of these that a person uses to identify the business or occupation of the person of the person, and to distinguish it from the business or occupation of another person.”
Through the Maryland Business Express online portal, you register your LLC’s name with the state. The trade name must be distinguishable from any other business entity or corporation registered in Maryland.
Before deciding on a name, there are a few things you should keep in mind:
Decide on a memorable name that suits your brand
For customers, your name is one of the most critical factors—and it can tell a lot about your brand. Choose a name that connotates the quality of your product or service.
For example, Wrangler is a denim company. The name represents an outdoor, rugged lifestyle.
Naked & Famous is another denim manufacturer. The name is a play on the brand’s transparency (they use only Japanese denim and do not over-wash or heavily treat their jeans). Their high-end quality is implied in the name.
Make sure your name is original
If you come up with a name and find that it’s already taken in Maryland, you can’t use it. You may have to get creative and come up with a name that’s different but still meaningful to your brand.
You can check for name availability on the Business Express online filing portal and you can cross-reference it with the USPTO database to make sure it’s not already trademarked.
If the name you choose is already taken in Maryland, there are a few ways to circumvent this issue:
- If you are in a completely different industry, you may be able to get away with using a similar name.
- You can use your personal name as the LLC’s trade name.
- Add other words to the name. For example, a marketing agency could add “Marketing” to the end of its company name).
- Choose a “fictitious” or “assumed” name. You can file for an assumed name certificate with the state of Maryland.
- Use a DBA (Doing Business As) if you already operate under a different name.
If your Maryland LLC is going to do business in a similar industry or competes against another company with the same name, it’s best to choose a different name to avoid legal trouble.
Ensure you can use your name online and on social media
If your domain name is already taken, you may have to go back to the drawing board. And in most cases, you want to make sure that the .com domain is available. This is important for two reasons:
- .com is the most recognized domain extension.
- It’s easier for customers to remember.
This has become less important in recent years with the rise of new domain extensions (.co, .io, etc.), but it’s still something to consider.
The best way to check for domain availability is to use a tool like Namecheap or GoDaddy.
You should also search for the name on social media platforms like Twitter, Facebook, and Instagram to make sure it’s available and that no one is already using it.
Step Two: Appoint a Registered Agent
A registered agent is an individual or business entity that agrees to receive service of process (legal documents) on behalf of your LLC. A registered agent is important because they are the only point of contact between your LLC and the state.
The registered agent must have a physical address in Maryland and be available during normal business hours. The registered agent can be an individual within the company or an outside party, like a registered agent service.
You can also act as your own registered agent, but we don’t recommend it. It can be a hassle to keep track of legal documents and if you don’t have a permanent address in Maryland, you won’t be able to.
To find a registered agent, make sure to keep the following in mind:
- The registered agent must be a Maryland-based business or a Maryland resident.
- They must have a physical address in Maryland (no P.O. boxes).
- They must be available during normal business hours to accept legal documents on behalf of your company.
- The registered agent can be an individual within your company or an outside party, like a registered agent service.
- You can act as your own registered agent, but we don’t recommend it.
If you aren’t sure where to look for a registered agent or you don’t feel like going through the hassle, you can use ZenBusiness’s registered agent service.
Step 3: File Maryland Articles of Organization
Articles of Organization, also known as a certificate of formation or charter, is a document that officially creates your Maryland LLC.
The articles of organization will include the following information:
- The name and address of the registered agent.
- The names and addresses of the members/managers.
- The date when the Articles of Organization were filed.
- The business purpose of the LLC.
- Your registered agent’s signature.
- Your signature.
To file the Articles of Organization, you can do it online, by mail, or in person. The filing fee is $100 and it can take up to two weeks for the state to process your LLC.
If you want to file online, you can do so through the Maryland Department of Assessments and Taxation website.
Once you’ve submitted the Articles of Organization, you should receive a filing confirmation within two to three weeks.
Once your business has been approved, you’ll receive an LLC Certificate of Good Standing from the SCC. This certificate shows that your business is in good legal standing and can be used to open a bank account, get insurance, or sign leases.
Step 4: Create an Operating Agreement
An operating agreement is essentially the LLC’s constitution. It outlines the rules and regulations for how the business will be run and is signed by all members of the LLC.
The operating agreement should include:
- The names and addresses of the members/managers.
- How new members will be admitted into the LLC.
- Voting rights of members/managers.
- Profits and losses distribution.
- LLC dissolution procedures.
- Processes for hiring employees, taking on debt, selling the business, and accepting new partners.
An LLC operating agreement isn’t required by the state of Maryland, but we highly recommend that you create one. If you don’t have an operating agreement and something goes wrong, the court will look to the default rules set by state law, which might not be what you had in mind for your business.
Step 5: Get a Business License (if Necessary)
Depending on what kind of business you’re running, you might need to get a business license from the county or city where your LLC is located.
For example, if you start a home-based business, you might need to get a zoning permit. If you’re running a food-related business, you’ll need to get a license from the health department that allows you to operate in a commercial kitchen.
The best way to find out if you need a business license is to contact your county or city’s office of business affairs. They will be able to tell you what licenses and permits you need in order to operate legally.
The good news is that most businesses in Maryland won’t need to get a business license, but if you need to, the Maryland OneStop portal can help you figure out which licenses you need and how to apply for them.
Step 6: Obtain an EIN (Employer Identification Number)
Whether or not you plan to hire employees, you’ll need to obtain an EIN (Employer Identification Number) from the IRS.
An EIN is a nine-digit number that is used to identify your business for tax purposes. You can apply for an EIN online, by mail, or by fax.
If you want to apply online, you can do so through the IRS website. The process is pretty simple and only takes a few minutes.
Once you have your EIN, you’ll need to use it when opening a business bank account, filing taxes, and hiring employees (if you plan to do so).
Step 7: Open a Business Bank Account
Once you have an EIN, you’ll be able to open a bank account for your Maryland LLC. This is important because it will help you keep your personal and business finances separate.
If you register a single-member LLC, you will be taxed as a sole proprietor. This means that your personal and business finances will be combined.
If you register as an LLC with more than one member, you’ll be taxed as a partnership. This means that your personal and business finances will be separate.
Either way, we recommend that you open a business bank account. This will help you keep track of your business expenses and income, and it will make filing taxes a lot easier.
When opening a business bank account, you’ll need to provide your EIN, Articles of Organization, and LLC operating agreement (if you have one).
There are a few things to keep in mind when opening a business bank account:
- Look for a bank that offers features that are important to you and specific to your business. For example, an interior design studio owner might want a business bank account that integrates with Studio Designer.
- Find a bank that integrates with your accounting software. Managing payments through your bookkeeping software automatically will save you a lot of money and time.
- Consider getting a business credit card. This can be a great way to build business credit and earn rewards on your business spending.
Step 8: Clearly Understand Maryland’s Tax Requirements
The final step is to make sure that you understand your tax obligations. Since LLCs are pass-through organizations, the taxes are passed through to the individual members of the LLC.
This means that you’ll need to pay personal income tax on your share of the profits or losses (if any) from the LLC. You’ll report this to the IRS using Schedule K-1.
For doing business in Maryland, you’ll also need to pay a $300 annual report fee to the Maryland State Department of Assessments and Taxation.
In Maryland, the corporate income tax is 8.25%, meaning that if your LLC makes a profit, you’ll need to pay this tax on the profits.
If your business sells products, you must charge customers sales tax and then remit those funds to the state. For instance, in Maryland, there is a 6% surcharge on retail sales and 9% on liquor sales.
Maryland state law allows LLCs to be taxed as corporations if they choose to do so. Sometimes, businesses that make lots of money do this to save on taxes.
Step 9: Determine Insurance Your Business Needs
Depending on the kind of business you run, you’ll need to purchase certain kinds of insurance. Here are a few common types of insurance you may need:
- Workers’ Compensation Insurance: If you have employees, you’ll need to purchase workers’ compensation insurance. This will protect your business if an employee is injured on the job.
- Business Property Insurance: If you own property (e.g., an office, warehouse, or store), you’ll need to insure it against fire, theft, and other risks.
- Commercial General Liability Insurance: This type of insurance protects your business from liability for damages caused by your business operations.
- Commercial Auto Insurance: If you use a vehicle for business purposes, you’ll need to purchase commercial auto insurance.
In addition to the above, you may need other types of insurance depending on your business. For example, if you sell products, you may need product liability insurance.
You can purchase insurance through a business insurance broker or directly from an insurance company.
Final Thoughts About How to Start an LLC in Maryland
Starting an LLC in Maryland begins with deciding what type of business you want to run and then taking the necessary steps to get your business up and running.
Be sure to file your Articles of Organization with the Maryland State Department of Assessments and Taxation, obtain an EIN from the IRS, open a business bank account, understand your tax obligations, and purchase insurance for your business.
By following these simple steps, you’ll be on your way to starting a successful Maryland LLC.