How to Start an LLC in Maryland

One of the most crucial aspects of beginning a business is effectively structuring it. An LLC is undoubtedly the most popular option for most firms in Maryland, and it is one of the most accessible business structure types to those who want to launch a new venture. 

The limited liability attributes of a corporation are combined with the tax advantages and operational flexibility of a partnership to create a hybrid legal form known as a limited liability company. In the case of an LLC, which shields the owner(s) from personal losses if the business is sued, it separates the owner’s personal assets from those of the firm. In an LLC, the “owners” are called the “members.”

The Maryland LLC Act (Maryland Corporations and Associations Code, Limited Liability Company Act, Title 4A) specifies the requirements for creating an LLC in Maryland. 

The procedure for forming an LLC in Maryland is as follows:

What is an LLC?

As a separate legal entity from its owners, a limited liability company (LLC) is a corporate structure. As a result, a business entity or business owner is frequently exempt from liability for the obligations and debts of their company. Business owners, therefore, have a restricted amount of liability. Furthermore, LLCs are considered pass-through entities exempt from paying taxes under the corporate tax code. Instead, each LLC owner declares business income on their individual tax returns and is responsible for paying tax at that rate. This is in addition to the regular employment tax that LLCs are subject to.

Members, also known as LLC owners, can include people, corporations, other LLCs, and foreign entities (banks and insurance firms are not permitted to be LLC owners). The company is called a single-member LLC when one person is the lone member. If not, it is known as a multi-member LLC. A limited liability company (LLC) appeals to small and medium business owners who want to avoid the double taxation of a corporation and the personal liability risk of a sole proprietorship. For many small business owners in Maryland, an LLC offers a convenient compromise between a straightforward but limited sole proprietorship and an expansive but complicated corporation.

An LLC may engage in activities linked to any legal business, purpose, investment, or activity, whether for profit or not, according to the Maryland Corporations and Associations Article, Limited Liability Act, Title 4A, with the exception of the business of operating as an insurer. Additionally, the legislation specifies some guidelines for maintaining an existing LLC in Maryland. However, the law is fairly lenient when it comes to the decisions that an LLC can make. An LLC can be set up to last forever or to cease operations after a specific period, and as decided by its members, it can enter into contracts or conduct other business. In general, LLC members have a lot of discretion to structure the business however it best suits them.  

To guarantee that the name an applicant plans to use does not already exist and that the name chosen complies with Maryland’s LLC naming criteria, the first action to take before applying for an LLC in Maryland is to conduct a name search. Here is a list of the requirements for choosing a Maryland LLC name per Title 1, Subtitle 5 of the Maryland Corporations and Associations Code (§ 1-502);

You can check if your name is available by using Maryland Business Express’ Business Name Search to look up current Maryland firms. You can reserve the name by filling out this form if you have the ideal name for your company but are still waiting to register it. When conducting business in the real world, you are not required to use the official legal name for your LLC listed in your articles of establishment. A trade name, sometimes known as a fictitious business name or a “DBA” (short for doing business as), is an alternative. By submitting a Trade Name Application, you can register a business name with the Maryland Department of Assessments and Taxation. There is a $25 filing fee or a $75 cost for expedited service. Registration is not required, although it is advised. 

You could choose to register a trademark for your company in addition to a name. A trademark is a special graphic symbol or logo connected with a company that sets it apart from other companies or individuals. More information about trademarks can be found in the Secretary of State’s Office.

Step 2: Choosing an LLC Registered Agent in Maryland

All LLCs must appoint a registered agent, also known as a resident agent, under Section 2-108 of the Maryland Corporations and Associations Code. On behalf of the LLC, this person is entrusted with receiving all legal correspondence, such as process notices, official communications from the government, and other official notifications, such as litigation notices and tax forms. Even though the business owner might act as an LLC resident agent, it is recommended to hire a professional agency. Here are a few factors to take into account while selecting a resident agent:

The Maryland State Department of Assessment and Taxation’s business express web portal allows users to conduct certain types of searches, such as discovering the identity of a resident agent representing another LLC in Maryland. The department ID or business name can be used as a search criteria in this search.

How Do I Change the Registered Agent for My LLC in Maryland?

After deciding on the new agent to be appointed, the business owner should complete the resolution to change the principal officer or resident agent form, accessible via the Maryland Business Express portal. Once this is finished, the form should be delivered in person or by mail to:

State Department of Assessments and Taxation, Charter Division

301 W. Preston Street; 8th Floor

Baltimore, MD 21201‐2395

The application form must be accompanied by payment, a $25 fee for updating the records.  

Step 3: LLC Filing Requirements in Maryland

Here is a list of prerequisites for all candidates to file for an LLC in Maryland per state statutes:

For foreign LLCs, here are some of the requirements;

  1. The name under which the foreign limited liability company intends to register and conduct business in this state, if different;
  2. The state’s laws that it was created under and the time it was created;
  3. The nature of the business generally that is intended to be conducted in this state;
  4. The company’s resident agent’s name and address in this state;
  5. A declaration that if no resident agent has been appointed under item (d) of this subsection, the resident agent who has been appointed has had their authority revoked, or if the agent cannot be located or served with reasonable diligence, the Department is appointed as the resident agent of the foreign limited liability company;
  6. The location of the principal office of the foreign limited Liability Corporation or, if not required by local law, the address of the office that must be maintained in the state where the company was founded;
  7. Evidence of the Department’s legal standing in the jurisdiction where it is now organized, as accepted by the Department and
  8. A declaration indicating the corporation is a series company if the foreign limited liability company is one.

Do You Need a Maryland Address for LLC?

Yes, LLCs in Maryland must usually have a principal office address in the state. The Articles of Organization submitted to the state Department of Assessment and Taxation must include this address. Some services can give the LLC a Maryland address in cases where the company does not have a physical site. A virtual office or mailbox service that can provide an address for the LLC’s legal requirements is one of these services, as is a registered agent service. 

How to Get a Virtual Address for LLC in Maryland

Businesses may utilize virtual office addresses as their primary addresses per Maryland law. The address must still be legitimate (post-scan mail provided) where the company is located or its operations are carried out. To avoid legal problems, ensure your virtual address complies with state laws if you’re considering utilizing one.

For use as a business address and to receive mail and parcels on behalf of companies, Post Scan Mail offers virtual addresses. Businesses that don’t need a physical office space but still need a professional postal address may find it more affordable to use a virtual address for their LLC in Maryland. While a virtual address can be used for mail and official papers, it’s crucial to remember that some banks and financial institutions could demand a physical address to open business accounts. 

How to File for an LLC in Maryland

Individuals must fill out and submit the articles of organization form to the State Department of Assessment and Taxation (SDAT) to register an LLC in Maryland. 

There are three ways to do this: online, in person, and by mail. An overview of each step in the process is given below.


Business owners are advised to file LLC applications online with the Business Express web platform because it involves simple, quick processes. Before proceeding to the filing procedures, the applicant must register a user account on the website’s home page.


To file by mail, applicants must first download and complete the articles of organization form from the State Department of Assessment and Taxation website. They should then mail the completed form, along with a check or money order made out to the SDAT, to the following address:

State Department of Assessments and Taxation

Charter Division

301 W. Preston Street, Room 801

Baltimore, Maryland 21201-2395


Individuals may submit applications in person by hand delivery in drop boxes (using the standard filing or same-day options) by going to the State Department of Assessment and Taxation lobby. 

Before using any of the preferred application methods, interested parties should visit the State Department of Assessment and Taxation website for more information and instructions on how to apply. It is important to note that there are applicable filing fees and processing times for both domestic and foreign LLCs.

How to Create an LLC Online in Maryland

To form an LLC online in Maryland, applicants should follow the steps below:

A $3 eCheck fee or a 3% service/convenience fee will be added for filings where payment is made via Maryland Business Express. The Maryland Department of Information Technology (DoIT) contracts with NICUSA, Inc., a third party, to collect this charge as the state’s eGovernment service provider. The non-refundable service fee is used to create, maintain, and enhance the state’s online service offerings. Credit cards, PayPal, and eChecks are all accepted forms of payment. Accepted credit cards are Visa, MasterCard, Discover, and American Express. Customers may submit on paper to the Department of Assessments of Taxation to avoid paying the service cost.

Can You Have Multiple Businesses Under One LLC in Maryland?

The short answer is “yes”. Running many businesses under a single LLC is possible and legal. When choosing to do this, many business owners utilize a “Fictitious Name Statement” or a “DBA” (sometimes called a “Doing Business As”) to run a second company under a different name.

If the LLCs operate under state law, the Maryland Article of Associations and Corporations part of the statutes allows for forming DBAs. Even though DBAs are only optional, it’s crucial that firms that are thinking about them register with the state Department of Assessment and Taxation.

There may be drawbacks, so just because it’s legal and feasible to run numerous different kinds of enterprises under one organization (LLC or corporation), it doesn’t mean you should. For instance, if a lawsuit is brought against one of the companies, the assets of the others may be in jeopardy.

How Long Does it Take to Setup an LLC in Maryland?

Depending on the application method, establishing an LLC in Maryland requires a different amount of time. All non-expedited applications typically take 4 to 8 weeks to process. However, all applications submitted online through the business Express site are deemed expedited and will be processed within 7 working days. However, applicants can choose same-day processing for an additional $325 fee. Applications can be processed the same day via mail or in person. However, there is a $425 expedited fee that is charged.

Step 5: How to Get an EIN for LLC in Maryland

A business must have an Employer Identification Number (EIN) or Federal Tax Identification Number to be recognized and file taxes—a corporate equivalent of a social security number. Every business in Maryland must have an EIN to operate. Still, to obtain one, a registration with the State Department of Assessment and Taxation is first required to obtain an Identification, which is required for obtaining an EIN.

Applicants can download the application form from the IRS website or submit an online application to obtain an EIN. To process an application, applicants may also phone the IRS at 800-829-4933. When being authorized, the results will be a nine-digit number. The process takes a few minutes, and the results are generated immediately when all validations have been completed. 

Step 6: Do LLCs Pay Taxes in Maryland?

Yes, LLCs in Maryland must file and pay state and federal taxes. However, because LLCs are “pass-through” tax companies, the individual LLC members are responsible for covering these income taxes. This implies that LLC owners must pay state and federal taxes on their sales, self-employment, and payroll.

How Are LLCs Taxed in Maryland?

The Maryland Department of Assessments and Taxation’s Personal Property Division requires an Annual Report and Personal Tax Return (Form 1) from any LLC conducting business in the state. Through Maryland Business Express (MBE), the report and return may be submitted electronically or by mail. Each year, it must be submitted by April 15 (though an extension is possible). The $300 annual filing fee excludes any state taxes the LLC may be required to pay.

LLCs in Maryland are automatically taxed as pass-through entities. LLCs distribute their profits to their members, who then pay individual income taxes on their portion of the profits. This avoids paying taxes at the entity level. LLC income is subject to federal self-employment tax at 15.3% (12.4% for Social Security and 2.9% for Medicare). Maryland LLC owners must pay state and municipal income taxes and the state sales tax.

Your Maryland LLC’s default tax status will change depending on how many LLC members you have. Multi-member LLCs are taxed as partnerships, whereas single-member LLCs (SMLLCs) are treated as disregarded businesses (much like sole proprietorships). The following forms must be used each year to file federal taxes if you are in default status:

Your filing requirements will vary if you file as an S-corporation or a C-corporation as an LLC.

Tax Benefits of an LLC in Maryland

According to state regulations, a Limited Liability Company (LLC) is formed. Since an LLC offers only a thin layer of protection from personal liability, many businesses opt for it as their legal form. 

In Maryland, LLC organizations have various tax advantages, but one primary advantage is pass-through taxation. 

Here are a few examples of how an LLC can elect to be taxed in Maryland, and note that each option has its benefits:

Paying income taxes as a Corporation: An LLC can choose to pay corporate taxes. If so, the LLC files corporate tax returns and pays income taxes on any gains. If the LLC must retain a sizeable portion of revenues in the business each year, choosing to be taxed as a corporation can lower the current taxes paid on the business’s profits because members only pay personal income tax on gains they actually receive.

Paying income taxes as an S-Corporation: The tax treatment of an LLC as an S-corporation is an option. An s-corporation, in contrast to a corporation, does not pay income tax on the LLC’s revenues; instead, the profits are distributed to the LLC’s members. Beyond the fact that there is no corporate income tax to be paid, the main benefit of an S-corporation is that LLC members are eligible to work for the LLC as workers and get a salary and benefits.

Paying income taxes as a partnership: The IRS will classify a multi-member LLC as a partnership by default if the LLC does not choose to be taxed as a corporation or s-corporation. According to the operating agreement of the LLC, profits and losses will be divided among the members and reported on their tax returns. On the money that the LLC makes, no income taxes are paid.

Paying income taxes as a sole propriety: A single-member LLC will be treated as a sole proprietorship for tax purposes if it chooses not to be taxed as a corporation or s-corporation. Every profit accrues to the owner directly through the company, just like in a sole proprietorship. On Schedule C of the owner’s personal income tax returns, the owner details the business’s profits and losses.

Do You Have to Renew LLC Every Year in Maryland?

No, LLCs do not need to be renewed annually by business owners in Maryland. As long as it maintains good standing with the state, an LLC has no set lifespan or expiration date. Business owners must submit their annual reports, pay their annual franchise tax, and follow all applicable state and federal requirements to keep their positions active. If these conditions are not met, penalties may be assessed, and the LLC may ultimately be suspended or dissolved.

How Much Does It Cost To Start an LLC in Maryland?

It costs money to legally register your business in Maryland and maintain your company’s good standing. Some of these expenses must be paid to the Maryland Department of Assessments and Taxation (MD DAT), while others are owed to the federal or another state government agency. 

As soon as your company is established, you must register as an LLC with the Maryland Department of Assessment and Taxation and pay a registration fee. This covers online (if this option is chosen for the application), expedited filing, a certified copy of your articles of organization expenses, and the cost of expedited processing of that certified copy. Additionally, ongoing expenses for each LLC must be paid annually. These expenses include taxes, the cost of annual reports, and other optional fees like those for applying for a trade name or reserving an LLC name. 

The following is a list of potential expenses associated with an LLC application:

Make payments payable to the State Department of Assessments and Taxation for applications submitted by mail or in person.

Write to:

State Department of Assessments and Taxation

Corporate Charter Division

301 W. Preston St. Room 801

Baltimore, MD 21201

Can You Form an LLC In Maryland For Free?

No. However, although Maryland does not allow for the free formation of LLCs, applicants can cut costs by applying online using the Business Express portal and conducting some of the formation themselves.

Start an LLC in Maryland For Free Or Minimal Cost

In Maryland, filing fees are generally associated with all LLC applications; however, fees can be reduced using the business express application option, which is less expensive than the mail-in or in-person options. Normally, applications cost $100, and a $300 annual tax must be paid; however, processing strategies/options may reduce or raise costs. For example, any applicant wanting same-day processing should be ready to spend an additional $325 or $425. 

The applicants may also want to do the processing themselves, as hiring a lawyer would be more expensive, even though there are many benefits. Also, consider employing a less expensive registered agent choice rather than an expensive registered agent service as one of the other cost-effective measures.

What Businesses Should Consider Forming an LLC in Maryland?

Small and medium-sized enterprises should choose LLCs in particular since they offer a more straightforward form and have less administrative burdens than corporations. An LLC also permits various ownership and management structures for businesses with multiple owners. In the end, practically any kind of business can create an LLC as long as it is legitimate and runs in accordance with the laws of the state where it is created.

What are the Benefits of An LLC in Maryland?

Here are a few benefits that LLCs provide in Maryland:

How Does an LLC Work in Maryland?

The limited liability attributes of a corporation are combined with the tax advantages and operational flexibility of a partnership to create a hybrid legal form known as a limited liability company. In an LLC, the “members” are called the “owners.” Depending on the state, the members may be a single person (one owner), two or more people, corporations, or other LLCs. 

Simply put, an LLC offers business owners in Maryland the best of both worlds by streamlining the tax procedure and segregating your assets, obligations, and debts from your company’s. As a result, you won’t be held personally accountable for the debts or other obligations of the firm. However, you can still easily combine your business profits with your income for tax purposes.

LLC vs. S Corp in Maryland

A tax classification known as an S Corporation, or simply “S Corp,” permits a business’s taxable income, debt, credits, deductions, and losses to be passed directly to the business’s owner or shareholders. As a result, corporate taxes are not required to be paid separately. The term “S Corp” is derived from Internal Revenue Code Subchapter “S,” and there are numerous standards set down by the IRS (Internal Revenue Service) for a company to be eligible to be classified as an S Corp. An LLC on the other hand protects its business owner form bearing the liabilities of the business. 

The managerial and organizational criteria for an LLC and S corporation are specified by Maryland law, which can be the biggest distinction between the two types of business. An S company must adhere to a rather formal organizational structure, just like all other Maryland organizations, which calls for drafting bylaws, holding an annual shareholders meeting, electing a board of directors, and appointing a president, secretary, and treasurer. In contrast, an LLC is not required to comply with any of these standards under Maryland law. Members are free to set up LLC management in any way they see fit. An LLC’s members can elect one or more members to serve as managers, including designating a non-member, or designating all members to manage the LLC. However, a single-member LLC and a single-shareholder S company can both be created.

S corporations must meet tight shareholder requirements, according to IRS regulations. An S corporation may only issue one class of stock and cannot have more than 100 stockholders. Non-resident aliens, corporations, or partnerships cannot be stockholders in an S company. The IRS will tax the S corporation as a C corporation if any of the regulations are broken. In contrast, LLC members are exempt from these limitations and are allowed to have an unlimited number of members.

LLC vs. Sole Proprietorship in Maryland

The most straightforward and popular business structure is a sole proprietorship. There is no separation between the business and the owner of this unincorporated business, who is entitled to all earnings and is liable for all of the company’s debts, losses, and liabilities. In contrast, an LLC is a corporate entity with one or more owners or members. The company is independent of its employees.

Due to the lack of a legal distinction between a sole proprietorship and its owner, the owner is responsible for paying all debts and losses and receiving all earnings. On the other hand, members of an LLC benefit from limited liability, which shields them from being held personally responsible for the business’s financial commitments.

For the most part, establishing a single proprietorship is as simple as hanging a “Open for Business” sign. Creating this company entity needs significantly less paperwork than creating an LLC. Still, depending on the kind of business you’re running, you might need to obtain a few permissions or licenses. Even so, since it’s far easier than setting up an LLC, you’ll have more time to devote to developing a strong business plan rather than filling out paperwork.

This also applies to taxes and other charges. Additionally, sole proprietorships pay lower fees. In addition to other yearly expenses, you must pay to register your LLC with your state. However, you won’t have to pay these ongoing costs if you set up a sole proprietorship.

LLC vs. Corporation in Maryland

A C-corporation is a business that has shareholders who are also its owners yet operate independently of them. A company entity known as an LLC combines partnership and corporate formations. Single-member limited liability companies (SMLLCs) and partnerships both have the option of owning an LLC. In contrast, a C-corporation’s ownership is split between shareholders, directors, and officers who fill various positions.

When a C-corporation, also known as a C-Corp, is formed, the files required are articles of incorporation, while for an LLC, the applicants fill out the articles of organization.

An LLC has the advantage of continuing to be treated as a pass-through organization, which means that the owners’ business profits are only subject to one tax; however, you can also choose to be taxed as a C Corp or S Corp. The flexible nature is the key. In most cases, an LLC can help you implement the optimum tax strategy. C-Corps can select between the C Corp or S Corp tax structures. You can reduce your tax burden by reinvesting assets by choosing the C Corp structure. However, if your C Corp received dividends from the business, each owner would be subject to income tax and a second tax at the corporation tax rate. In summary, unlike C Corps, LLCs are not liable to double taxation.

Business License vs. LLC in Maryland

A business license and an LCC are two distinct ideas in Maryland. An authorization to conduct business in the state is a business license. An LLC, on the other hand, is only a type of business structure created by submitting the relevant documents to the Maryland Department of Assessment and Taxation and paying the associated filing fees. The majority of LLCs doing business in Maryland are required to have business licenses from the relevant authorities.

Do I Need a Business License if I Have an LLC in Maryland?

Yes, business owners may require a license or permit after creating a Maryland LLC. Your industry and the location of your Maryland Limited Liability Company will decide the criteria. Your Limited Liability Company (LLC) needs a Maryland business license to operate in a certain area or sector of the economy.

A person can receive a business license in Maryland by applying to the appropriate licensing or regulating body. The agency applied to will depend on the location and type of commercial operations the company conducts.

There are two types of state-level business licenses:

Some states have a general license requirement, which means that all firms operating there must have the license regardless of what they do. However, you can conduct business in Maryland without a general business license. Therefore, your Maryland LLC does not require a regular state business license. However, your LLC can need a business license, depending on the kind of enterprise you conduct.

The majority of states have laws requiring occupational business licenses. This implies that a license or permit may be necessary depending on what your firm performs or what you do for a living. For instance, an occupational business license might be required if you sell old automobiles or operate a hair salon. But for other kinds of enterprises, a permit might be optional.

The Maryland Department of Labor has a good overview of licensing requirements and agencies on its Links to Business Licenses page.

How to Dissolve an LLC in Maryland

The Department of Assessments and Taxation, Charter Legal Department, 301 W. Preston Street, Room 801, Baltimore, MD 21201, is where “Articles of Cancellation” for a Maryland Limited Liability Company (“LLC”) must be sent to dissolve it. Articles of Cancellation need a filing cost of either $50 for expedited processing or $0 for non-expedited processing.