Starting LLC in Maryland: Peculiarities & Detailed Manual
Want to start an LLC in Maryland? It is a profitable decision for a business, as the state has waived corporate tax in favor of gross corporate income tax. So you’ve decided to start an LLC? Not sure how to initiate the process? To start an LLC in Maryland, you need to get ready for several stages.
We’ve prepared a guide for you with just six steps to form your LLC and to get success! You can also refer to the virtual LLC formation service.
Note: ZenBusiness is the best service to file the LLC. You’ll surely appreciate reasonable prices, company values, and other peculiarities.
An Maryland LLC: The Notion & Essence
Many Maryland business owners choose to start an LLC. So, unlike a corporation, they can take advantage of flexible management. We’re talking about the protection of personal assets that sole proprietorships and general partnerships lack.
The state of Maryland puts forward simplified requirements for registration and maintenance of LLC and invites business owners to choose the type of taxation. Do you still have doubts about the LLC?
6 Stages to Form an LLC Correctly
Stage №1: Choose Your LLC Name
The LLC name is a significant aspect, as it is the name of your company that makes the first and strongest impression on the audience of your potential customers! The name must be different from existing company names and must meet Maryland’s regulatory requirements. Now get started with the following aspects.
LLC name in terms of jurisdiction
The State of Maryland obliges business owners to include the abbreviation DDS or the phrase – limited liability company in the name. Please note that the terms corporation or registered are prohibited. In addition, you cannot use the designations of other forms of business: banks or law firms.
Take care of the explanations
You must include in the title an explanation of the nature of your business. For example, if you are engaged in the computers’ repairing, write in the LLC title – computer wizard. If you have any values or principles, also indicate this. For example, if you are farming, use the term natural, nitrate-free, etc.
So, you need to get a little creative and fully comply with Maryland’s legal requirements.
Stage №2: Hire a Registered Agent
A registered agent is called a statutory agent in Maryland and will help you to start an LLC. The agent can be an Maryland resident, natural or legal attorney responsible for sending and receiving legal documentation on behalf of the future company. A company representative can also be an employee of the company or its owner. The State of Maryland notifies:
An individual or an entity fulfills the role of a resident agent. Their role is to represent your business entity should any lawsuits arise. Due to Maryland legislation, the said resident must have an actual physical address in the state.
A registered agent guarantees an excellent reputation for your Maryland LLC. Also, if your business gets worse, Maryland can take legal action against it without notifying you. The registered agent will always receive appropriate notification and will be able to take timely measures to protect your interests as an attorney.
You should apply to the online service to get started a business in compliance with all regulations and requirements. So, you will have the opportunity to filter spam and protect your personal and contact information. If you use the ZenBusiness and Northwest Registered Agent to form an LLC, you will receive the free services of a registered agent.
Stage №3: Applying for Registration
To register a business in Maryland, you must file the Articles of Association with the Maryland State Secretariat. If you are anxious about your LLC formation, you can submit your documents for pre-processing, which will allow the Secretary of State’s office to advise you of the eligibility. It can be a good option if you get started for the first time in an LLC without consulting an attorney. Be sure to provide:
- The desired name of your business.
- Personal and contact details of the registered agent.
- Business management form.
- Personal and contact details of the manager of your company.
- Signature of the applicant and registered agent.
- Date of application submission.
Expenses to establish an LLC: the fee amounts to $100.
Duration of processing: it depends on the way you send your papers. If you mail the form, it may take 4-6 weeks for the state to process them and send the forms back. You can speed things up by paying an additional $50. In this case, the state will process the documents in seven business days. In case you fill in an online form, you will get the response within three business days. Be aware that processing will not start at all unless you fill in all the forms correctly.
Stage №4: The Operating Agreement Background
While an operating agreement is not binding in Maryland, creating one could significantly improve the company’s climate. An operating agreement is a document that describes the structure of a project, the way it works, the rights and obligations of each partner.
This document reflects the consistency of partners and thereby reduces the chance of controversy and disputes. Therefore, it is significant that all members of the future LLC carefully read this document before joining the company.
An attorney can help draw up an operating agreement and determine the way income and liabilities will be distributed among the owners of your LLC. You will find more information about the operating agreement here. Prepare to enter the following information:
- Names of all participants.
- The rights and obligations of each of the listed participants.
- Description of procedures for voting or resolving differences between members.
- Regulations on the financial share of participation of LLC members.
- Description of the way you’re going to manage the LLC.
So, do not neglect this stage of LLC formation. It largely guarantees your safety and the observance of your rights by all members of the business project.
Stage №5: Tax Compliance
To conduct a business that you want to register as an LLC successfully, you need to comply with several tax requirements at various levels.
Requirements of Federal Significance
Does your LLC involve multiple owners? Then you need to take care of the EIN! The EIN, or Employer Identification Number, is a unique nine-digit number assigned by the IRS to US corporations. This number must be obtained by all business owners under whose leadership the hired employees work. A business owner can obtain an EIN from the IRS in person or by mail.
Your state’s cess requirements
These taxes depend on the type of your business. Maryland also levies income taxes, so in case your LLC is a sole proprietorship as well as a partnership, then you’ll make payments on the individual tax returns. If your LLC is a corporation then you are obliged to pay corporate income taxes of the state. For further state information, taxation click here.
When you launch a business in Maryland, you will have to pay several additional taxes. Thus, entrepreneurs in retail sales are subjected to a sale tax accordingly, which currently amounts to 6%. In-depth instruction on this type of fee is provided here.
You are also subjected to employer taxes in case you hire employees. Withholding taxes are compulsory in this case; this means you withhold some of the employee’s wages and return it to the state. For guidance on managing those types of fees, turn to the Comptroller of Maryland. Furthermore, you are to cover unemployment insurance taxes, as the said program is fully funded via taxation. The instruction on UI taxes is given here.
Maryland may also charge you with the industry-specific fees, e. g. alcohol taxes. A comprehensive list of these taxes is available here.
You can use Maryland’s bFile to get a hold of all your taxes and ease the whole procedure.
Local Tax Business Demands
In selected areas of the state, you may be charged with these as well. For instance, you might have to pay property taxes twice – to the state and the local government accordingly. The rates also vary from county to county. The comprehensive report on the state policies is available here, and your local government office may also come up with additional information.
Stage №6: Getting Business Licenses & Permits
You don’t have to get a general business license to operate an LLC in Maryland. That means you register your entity with the state – for this purpose, address the Maryland Business Express.
Nonetheless, you need to obtain special permits from the federal government if you operate within certain branches like agriculture or aviation. All federally-regulated industries, which demand licenses, are provided by the Small Business Association.
Maryland issues hundreds of industry-specific permits, and you are to get all the necessary ones to operate there smoothly. Since the state provides a variety of licenses, it won’t be hard to obtain the one suiting your type of LLC. Check the state guide so you won’t get lost in the nuanced paperwork. Turn to Maryland’s OneStop for the rightful choice.
Other Stages for Business Owners After LLC Registration
After completing the six mandatory steps towards starting an LLC, you need to take care of the following.
Opening a business bank account
Separate your personal and LLC accounts. Thus, you will be sure of the safety of your personal and financial data. Besides, you won’t have any hassle when filing your charge returns. Your EIN will help you open a business account quickly, no matter what you choose a bank or credit union.
All owners of companies/corporations, regardless of their form of management that attracts employees, must go through the compensation insurance procedure. All basic and detailed information is available with the Maryland Bureau of Workers’ Compensation.
This policy aims to protect the rights of workers who are injured at work and unable to work. It will not be superfluous to get a civil liability insurance policy, as well as pay attention to some other types of insurance.
You must report annually on your profits even if your LLC bears losses; this form assesses your income taxes. This resource operates in Maryland, and it is designed to assist business owners with filing their reports.
Referring to the services of a qualified accountant
All LLCs of Maryland are to provide an annual report. The document in question comprises all the vital information on your LLC progress over the year. You can submit the paper online by clicking here.