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How to Start an LLC in Maryland (May 2024 Update)

Meow Technologies, Inc.

Meow Technologies, Inc.

Starting a business can be an exciting yet daunting process. If you’ve decided that a limited liability company (LLC) is the right structure for your company, forming one in Maryland has a clear path to follow. This comprehensive guide will walk you through all the steps, requirements, costs, and considerations for starting an LLC in Maryland from start to finish.

What is a Maryland LLC?

An LLC is a business structure that combines aspects of partnerships and corporations to provide business owners with flexibility and personal liability protection. LLCs need to register with the state but have less stringent reporting rules and corporate formalities compared to a corporation.

Some key benefits of starting an LLC in Maryland include:

  • Personal asset protection - An LLC separates your personal and business assets so your home, car, and savings are protected if your business is sued.
  • Pass-through taxation - LLCs aren't taxed as a separate business. Instead, profits and losses are passed onto the owners’ personal returns.
  • Operational flexibility - Members can largely decide on the management structure and rules for running an LLC.
  • Credibility and legitimacy - Forming an official business shows customers you are serious and committed.

An LLC can be a great fit for small businesses including consultants, retail stores, restaurants, web developers, landscapers, photographers, marketing agencies, construction contractors, and more.

Steps to Form an LLC in Maryland

Follow these eight key steps to legally form your Maryland LLC:

  • Choose and Verify an Available Business Name
  • Appoint a Registered Agent
  • File Articles of Organization
  • Create an Operating Agreement
  • Get an EIN
  • Obtain Business Licenses
  • Understand Tax Obligations
  • File Annual Reports

Let’s explore each step in more detail.

Step 1: Choose and Verify a Business Name

The first step is deciding on a name for your Maryland LLC. You’ll want it to be memorable, catchy, and representative of your business. You also need to make sure it complies with naming guidelines.

Rules for Maryland LLC names include:

  • Must contain words like “Limited Liability Company” or abbreviations like “LLC” or “L.L.C.”
  • Cannot duplicate another Maryland business’s name
  • Certain words like “bank” or “university” require extra licensing

Check name availability using the state’s database. You can also reserve a name for 30 days for a $25 fee while you finalize details.

Make sure to search if your preferred domain is available too before selecting a final name.

Step 2: Appoint a Registered Agent

All Maryland LLCs must designate a registered agent (RA), which is a person or business entity that agrees to receive important legal documents on behalf of your LLC. This person must have a physical street address in Maryland available during normal business hours.

You can choose a third-party registered agent service to act in this role or appoint yourself or a business co-owner. Using an RA service can help maintain privacy and ensure you don’t miss important notices.

Step 3: File Articles of Organization

The formation document that formally creates your LLC is called the Articles of Organization. This must be filed with the State Department of Assessments and Taxation (SDAT).

Information required includes:

  • LLC name
  • Principal Maryland address
  • Registered agent name and signature
  • Primary purpose
  • Member information

You can submit the articles in person, by mail, or electronically through the Maryland Business Express portal for a $100 fee. Processing times range from 1 week to 8 weeks depending on method.

Step 4: Create an Operating Agreement

An operating agreement serves as your LLC’s internal governing document that lays out ownership details, member responsibilities, distribution of profits and losses, management structure, voting rights, and more.

While not legally required, it keeps things running smoothly and can help you avoid disputes. Include provisions on:

  • Member percentages
  • Member rights and responsibilities
  • Rules for holding meetings and votes
  • Adding or removing members
  • Financial and accounting procedures
  • Dissolution terms

Work with an attorney to customize your agreement.

Step 5: Obtain an EIN

An Employer Identification Number (EIN) is a unique 9-digit number that identifies your business for tax purposes. It's required if your LLC has multiple members or employees. You can easily get one for free from the IRS website whether you have employees or not.

Step 6: Obtain Licenses and Permits

Most Maryland businesses need licenses, permits, and registrations to operate legally:

  • Zoning permits
  • Sales tax permits
  • Health department permits
  • Professional licenses

Rules vary widely by industry and location, so review requirements for your city, county, and state. The Maryland Business Express portal provides guidance.

Step 7: Understand Tax Obligations

Maryland LLCs don’t pay state business taxes. Instead, income passes through to members’ personal tax returns. However, you still need to pay $300 yearly LLC franchise taxes and may need to collect sales tax depending on your industry.

Work closely with an accountant to ensure tax compliance. Deduct business expenses through your LLC and keep personal and company finances completely separate.

Step 8: File Annual Reports

Maryland requires all LLCs to submit annual reports and franchise tax payments to remain compliant. You must file your report and pay $300 by April 15 each year or face fees and dissolution.

Key Considerations for Maryland LLCs

Beyond the formation process, several key factors play into starting and running an LLC in Maryland:

Costs - Total Maryland LLC costs consist of state filing fees ($100 plus $300 per year after) plus any registered agent fees, legal/accounting fees, business licenses, and taxes. Budget accordingly and ensure sufficient startup funding.

Reporting Requirements - Maryland LLCs must submit annual reports, franchise taxes, business property taxes, and possibly sales taxes regularly. Keep detailed financial records from day one.

Right Business Structure - While offering many perks, LLCs have drawbacks to consider as well including pass-through taxation. Weigh your options.

Financing Your Business - Starting an LLC doesn’t require major upfront investments but you need capital to get off the ground. Explore financing options beyond savings like loans, investors, and grants.

Marketing - Focus on establishing a brand identity and online presence quickly. Network locally and leverage resources like the Maryland Chamber of Commerce.

Legal and Accounting Help – Connect with professionals to ensure ongoing compliance and business health.

Conclusion

Launching an LLC lets you tap into Maryland’s business-friendly economic climate while limiting personal liability. Carefully weigh pros and cons, follow state rules, and seek expert guidance to set your business up for success. Utilize tools and resources for Maryland entrepreneurs along the journey.

While forming an LLC takes precision and planning, the process is very attainable if you follow the eight steps covered above. For additional help, consider working with an experienced business lawyer or formation company.

Meow Technologies is a financial technology company, not a bank or FDIC-depository insured institution. Likewise, Meow Technologies is not an investment adviser and none of the information presented herein should be relied upon as financial advice or a recommendation to make any financial decision nor should it be considered to be tax or legal advice. The information is the opinion of Meow Technologies for educational purposes and may not be suitable for all companies. Products, like the one described herein, are offered through Meow Technologies and are not advisory services which are only offered through Meow Advisory, LLC.** The FDIC’s deposit insurance coverage only protects against the failure of an FDIC-insured bank.**

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**Disclaimer: Meow Technologies is a financial technology company, not a depository, bank or credit union, and your account at Meow is not, itself, an FDIC-insured product.

Meow currently partners with three banking providers. Banking services are provided by Third Coast Bank SSB; Member FDIC, Grasshopper Bank, N.A; Member FDIC, and FirstBank, a Tennessee corporation; Member FDIC.

By opening a Maximum Checking account through Meow and if you choose to receive banking services provided by Grasshopper Bank, N.A, you deposit your funds into a deposit account at Grasshopper Bank, N.A. which sweeps those funds into deposit accounts across a network of Federal Deposit Insurance Corporation (“FDIC”)-insured banks, for up to the current standard maximum deposit insurance amount (“SMDIA”) of $250,000 per eligible depositor, per destination institution, for each ownership capacity or category, subject to applicable terms and conditions, including Grasshopper's ICS Deposit Placement Agreement. Grasshopper Bank, N.A. uses a third-party vendor and agent to help administer this sweep process. Visit https://www.intrafi.com/network-banks/ for a list of the banks and savings associations with which we/Grasshopper, N.A. have a business relationship for the placement of deposits at destination institutions, and into which your deposits may be placed (subject to applicable terms with you, and any opt-outs by Grasshopper, N.A. or you). The current maximum deposit insurance amount for your funds is up to $125 million in FDIC insurance through the sweep network of Grasshopper Bank, N.A, subject to change at any time with notice from Meow and/or pursuant to applicable law. Terms and restrictions apply. Subject to applicable rate sheet. Interest rate on checking products quoted in Annual Percentage Yield (APY). Interest rates and yields are effective as per the date on the applicable rate sheet. See applicable terms and restrictions and refer to the applicable rate sheets for additional information.

By opening a Maximum Checking account through Meow and if you choose to receive banking services provided by Third Coast Bank SSB, you deposit your funds into a deposit account at Third Coast Bank SSB. If you also hold funds in a sweep program with Third Coast Bank SSB, Third Coast Bank SSB sweeps those funds into deposit accounts across a network of FDIC-insured banks, for up to the current SMDIA of $250,000 per eligible depositor, per receiving bank, for each ownership capacity or category, including any other balances you may hold at that receiving bank directly or indirectly through other intermediaries, including broker-dealers. Third Coast Bank SSB uses a third-party vendor and agent to help administer this sweep process. Visit Third Coast Bank SSB for a list of the banks and savings associations with which we/Third Coast Bank SSB have a business relationship for the placement of deposits at receiving banks, and into which your deposits may be placed (subject to applicable terms with you, and any opt-outs by Third Coast Bank or you). The current maximum deposit insurance amount for your funds is up to $50 Million in FDIC insurance through the sweep network of Third Coast Bank, subject to change at any time with notice from Meow and/or pursuant to applicable law. Terms and restrictions apply. Subject to applicable rate sheet. Interest rate on checking products quoted in Annual Percentage Yield (APY). Interest rates and yields are effective as per the date on the applicable rate sheet. See applicable terms and conditions and refer to the applicable rate sheet for additional information.

By opening a Maximum Checking account through Meow and if you choose to receive banking services provided by FirstBank, a Tennessee corporation, you deposit your funds into a deposit account at FirstBank, which sweeps those funds into deposit accounts across a network of FDIC-insured banks, for up to the current SMDIA of $250,000 per eligible depositor, per destination institution, for each ownership capacity or category, subject to applicable terms and conditions, including FirstBank's ICS Deposit Placement Agreement. FirstBank uses a third-party vendor and agent to help administer this sweep process. Visit IntraFi for a list of the banks and savings associations with which FirstBank has a business relationship for the placement of deposits at destination institutions, and into which your deposits may be placed (subject to applicable terms with you, and any opt-outs by FirstBank or you). The current maximum deposit insurance amount for your funds is up to $125 million in FDIC insurance through the sweep network of FirstBank, subject to change at any time with notice from Meow and/or pursuant to applicable law. Terms and restrictions apply. Subject to applicable rate sheet. Interest rate on checking products quoted in Annual Percentage Yield (APY). Interest rates and yields are effective as per the date on the applicable rate sheet. See applicable terms and restrictions and refer to the applicable rate sheet for additional information.

***FDIC insurance coverage is only available to protect you against the failure of an FDIC-insured bank that holds your deposits (and does not protect you against the failure of Meow or other third party). Your account with Meow and all services provided to you are subject to the Meow Terms of Service (“Account Agreements”) and other applicable terms and no other representations or warranties, express or implied, are provided to you except as expressly set forth in those written Account Agreements. If you have any questions regarding your account, please contact team@meow.com.

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FirstBank’s general policy is to allow you to withdraw funds deposited in your account on the first business day after the day we receive your deposit. Funds from electronic deposits will be available on the day we receive the deposit. In some cases, we may delay your ability to withdraw funds beyond the first business day. Then, the funds will generally be available by the SECOND business day after the day of deposit.