How to Start an LLC in Maryland (Step-by-Step Guide)

When starting a new company, choosing a business entity is the most important decision that the founders must make. For most businesses with more than one founding member, forming as an LLC is often the best option for a number of reasons.

An LLC is an uncomplicated business structure that affords business owners legal protection by separating personal assets from business debts. Moreover, LLCs often enjoy a lower tax rate than corporations. Nevertheless, creating an LLC can get complicated depending on where you are based, with the formation process, filing fees, and continuing legal obligations differing from state to state.

Starting an LLC in Maryland more or less follows the conventional procedure found in most states: no atypical requirements are expected of LLC founders and document filing fees are about average compared to other states.

Starting an LLC in Maryland step-by-step

1. Select a name for your Maryland LLC

Follow naming requirements

There are 2 major guidelines to follow when naming your LLC in the state of Maryland:

1. An LLC’s name must be distinguishable from the names of existing business entities on file with the Maryland Department of Assessments and Taxation.
2. An LLC’s name must contain one of the following phrases or abbreviations: “Limited Liability Company”, “LLC”, “L.L.C.”, “LC”, or “L.C.”

Need help coming up with a business name? Check out our free business name generator.

Reserve your LLC name with the Maryland Department of Assessments and Taxation

After selecting a name for your LLC, you can reserve it with the Maryland Department of Assessments and Taxation so that another business can’t use it before you are ready to legally form your LLC.

First, check the Maryland Business Express Business Name Search to confirm that your chosen name is available for use in the state. If the name is available, send an email to [email protected] expressing your intention to reserve the name.

2. Designate a registered agent (Resident Agent)

As in every U.S. state, forming an LLC in Maryland requires the appointment of a registered agent service to handle state and federal legal documents and service of process on the business’s behalf. However, the state uses the term, “resident agent”.

The resident agent must either be a state resident or business entity with a street address in Maryland OR if the individual or business is based out-of-state, they must have a business office in Maryland.

3. File Articles of Organization

An LLC is formed in Maryland through the filing of Articles of Organization with the Maryland Department of Assessments and Taxation. You can file the articles online (requires a Maryland Business Express account) or by postal mail. The filing fee is $100, although there is an additional 3% service charge for online filings.

Your Maryland LLC’s Articles of Organization must provide the following information:

• LLC’s name and address
• Resident agent’s name, address, and signature
• LLC’s general purpose

4. Create an operating agreement

Although not a legally mandated step for forming an LLC in Maryland, drafting a comprehensive LLC operating agreement is strongly recommended for all nascent limited liability companies.

The operating agreement should do the following:

1. Describe the LLC’s business structure
2. Establish the individual responsibilities and obligations of LLC members
3. Detail how the LLC will be run

Without an operating agreement clarifying the specific duties of its members, an LLC may face significant legal and operational difficulties.

5. Obtain an IRS Employer Identification Number (EIN)

All newly formed LLCs in the United States must acquire an Employer Identification Number (EIN) from the Internal Revenue Service (with the exception of single-member LLCs). The nine-digit EIN is like a social security number for a business and is necessary to pay income tax, file tax returns, open business bank accounts, and perform many other important functions.

You can apply for an EIN online on the IRS website without paying a filing fee.

6. Fulfill your legal obligations

After successfully registering your LLC in Maryland, it’s important to focus on ongoing legal obligations to maintain good standing.

File Annual Reports

All LLCs doing business in Maryland, both foreign and domestic, must file an annual report with the Maryland State Department of Assessments and Taxation. The annual report costs $300 plus applicable service fees and must be postmarked by April 15th of each tax year.

Obtain business licenses and permits

Like many states, Maryland does not have a single, general business license that every LLC needs to apply for. Instead, licenses are managed by local governments and regulatory bodies for certain industries – with the exception of tax licensing.

• Business tax license: Businesses that sell tangible goods and services in Maryland will be required to collect sales tax and pay it back to the state. To do this, you can complete an online registration that covers any state tax accounts, including a Sales and Use Tax License.
• Occupational licenses: Industry-specific licenses are mandatory for certain professions and business activities in Maryland, including those for contractors, barbers, cosmetologists, and real estate agents. The specific licensing agency may differ based on the profession.
• Local licenses: Counties and municipalities enforce their own licensing requirements for businesses operating within their boundaries. The specific type of license needed and the associated fees can differ based on both the location and the industry.

Business owners should contact their county’s office of inspections, licenses, or permits to find detailed information about local licensing requirements. Additionally, the website of the city or town where the business is located often provides valuable information about necessary business licenses.

The Maryland Licensing OneStop Portal provides a centralized resource where individuals can find information and apply for state-issued licenses.

Understand state taxes

By default, Maryland treats LLCs as pass-through entities, where the LLC itself does not pay any state income tax. The members instead pay income taxes on their personal share of profits and losses, according to their own rate and ownership.

• Maryland tax rates: Maryland has graduated income tax brackets, so owners will pay based on their total reported income. These brackets go up to 5.75% as of 2024.
• Self-employment taxes: LLC members are considered self-employed and will have to pay self-employment taxes on their share of the LLC’s profits as a part of their personal tax returns. These taxes cover Social Security and Medicare contributions, and represent 15.3% of reported income.
• LLCs with employees: If your LLC has employees, you will also need to account for employer taxes. State and federal tax withholdings, as well as unemployment and workers’ compensation insurance funds, will apply.

LLCs active in Maryland (including foreign LLCs) may be required to register with the Comptroller to satisfy state tax requirements. This is done through a Combined Registration Application that applies to all relevant tax accounts.

Understand BOI reporting

The Beneficial Ownership Information (BOI) Reporting Rules, initiated by the Corporate Transparency Act (CTA), were implemented in 2024 and have implications for all LLCs in Maryland.

The Beneficial Ownership Information (BOI) Reporting Rules require certain businesses to disclose information about their beneficial owners to the Financial Crimes Enforcement Network (FinCEN). This measure, part of the Corporate Transparency Act, aims to increase transparency in business ownership and combat financial crimes like money laundering and terrorism financing.

Filing deadlines:

The rules set different company deadlines based on when they were formed or registered.

• LLCs formed before the start of 2024 must submit their initial reports by the end of the calendar year.
• LLCs formed or registered after the start of 2024 have 90 days after their formation notice to file.
• LLCs forming in 2025 and beyond have 30 days to submit their report.

The submission process is digital via FinCEN’s dedicated BOI reporting system.

Learn more about BOI Reporting.

Post LLC tasks

Set up business bank accounts

Establishing a business bank account is essential for LLCs, although not legally required. These accounts create a clear distinction between personal and business finances, which is pivotal for maintaining an LLC’s limited liability status. A clear separation not only makes accounting and tax reporting more straightforward but also improves the management of business expenditures and enhances the company’s professionalism with clients and vendors.

Platforms like Found, Relay, and Mercury are excellent options. These banks cater specifically to the needs of small businesses by offering online banking, competitive fees, and tools designed to enhance financial management.

Obtain a Certificate of Good Standing

The Maryland State Department of Assessments and Taxation issues a Certificate of Status to any business that meets all state requirements for good standing.

• What it is: A Certificate of Status is a legal document that verifies a Maryland LLC or Maryland corporation is in compliance with all state laws and has no outstanding payments. While they are not required, these certificates are often helpful in obtaining funding or proving credibility with partners.
• How to get it: To obtain this certificate, businesses must go to the Maryland Business Express website and provide the relevant information. There is no cost to the online request, but it is $40 total for a mailed certificate or $20 when done in person.

Build a website 

Even before your business officially opens, you can think about a website. Most people search the internet first when looking for an item or service, so this can get you in front of new customers and let people know you exist.

Even if you have no technical background, online tools make it simple to get started with easy steps like:

1. Search for and purchase a domain name.
2. Sign up for web hosting.
3. Use a website builder, like Domain.com or GoDaddy, to create simple drag-and-drop websites without coding.
4. Customize your website to appeal to your target audience by adding relevant pages, content, and visuals.
5. If you’re selling goods, add an e-commerce section to your site.
6. Launch to the public.

Costs to set up an LLC in Maryland

Starting and operating an LLC in Maryland involves various costs, which should be considered at the start.

• Incorporation fees: There are two main fees to consider during the initial formation of your new LLC. The first is the Articles of Organization, which entails a $100 fee paid to the Maryland State Department of Assessments and Taxation (SDAT), or an additional $50 for expedited shipping.
• Annual Report filing fee: All registered businesses in Maryland must file an annual report each year. There is a $300 fee to do so, along with credit card feeds if you file online. In Maryland, this form is combined with the Personal Property Tax Return that all LLCs must file.
• Registered agent services fees: In addition to the mandatory fees, LLCs can benefit from optional expenses that enhance both daily operations and legal safeguards. One example is a registered agent service, typically starting around $50 annually. These services handle legal notices and ensure filings are submitted on time.

Foreign LLCs

An LLC formed in a state other than Maryland that intends to do business in the state must first register with the Maryland Department of Assessments and Taxation.

Follow these steps to do business in Maryland as a foreign LLC:

1. Comply with Maryland LLC naming guidelines and confirm that the LLC’s name is available for use in the state with the Maryland Business Express Business Name Search.
2. Appoint a Maryland resident agent.
3. Obtain a Certificate of Good Standing from their home state.
4. File a Maryland Limited Liability Company Registration application with the Maryland Department of Assessments and Taxation. The application can either be filed online or by postal mail.  The filing fee is $100.