How to Start a Maryland LLC – MarketWatch

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Are you curious about how to start an LLC in Maryland? If so, you’re likely getting ready to launch an exciting new business venture. Maryland is a great place to run a company of any size, as the state’s business climate benefits from various tax incentives and a dynamic economy. By following the steps outlined below, you’ll complete all of the legal (and many of the practical) requirements for launching your new Maryland LLC.
If you type the phrase “How to start a business in Maryland” into a search engine, you’ll be overwhelmed by thousands of results. To help ensure that your entrepreneurial vision stays at the forefront of your mind as you learn how to start an LLC in Maryland, you’ll need to draft a business plan.
Your business plan should describe the purpose of your business and detail how and why it will be a successful venture. Use a business plan template that looks professional, as you may need to provide finalized copies to lenders and investors when securing financing. Make sure to address how you’ll:
Additionally, you’ll want to outline any values and goals that will drive the culture of your Maryland LLC. Addressing these issues will keep you focused as you launch your business and will give potential lenders and investors a sense of your passion for the project.
Before you can reap the benefits of an LLC in Maryland, you’ll need to verify that a limited liability company is the best structure for your unique business. Not every entrepreneurial vision is best served by an LLC structure. Sometimes, forming a corporation, partnership or sole proprietorship is the best structural option for a specific company. Don’t commit to launching a Maryland LLC until you’re sure it’s the right choice for your new business.
If you’re hoping to build a large company and are looking to expand its reach quickly, forming your business as a corporation may be a good idea. This structure will require you to assemble a board of directors and the company itself will be owned by its shareholders. Although the business will be burdened by significant regulatory oversight and reporting requirements, shareholders will be wholly insulated from personal liability if the business is sued, fined or goes bankrupt.
If you want maximum flexibility and control when it comes to the operation of your business, forming a sole proprietorship or partnership may serve your needs. There is no state registration requirement for sole proprietorships and general partnerships in Maryland, so you can simply open your doors whenever you’re ready.
These structures are taxed on the personal tax returns of their owners, so if you opt to form a sole proprietorship or partnership, take steps to keep your personal and business finances separate. The primary downside to these business structures is that they leave owners vulnerable to having their personal assets seized if the company is held financially liable for legal judgments, fines and debts.
Inside scoop: Partnerships that are not formed as general partnerships do need to register with the state before they can operate lawfully.
Learning how to start an LLC in Maryland reflects how this business structure operates: It’s not as complex as starting or running a corporation but it’s a little more involved than starting a partnership or sole proprietorship. LLCs serve as the middle ground business structure.
On one hand, they benefit from limited personal liability protection for owners (called members) like shareholders in corporations do. They also benefit from taxation flexibility like S Corps do, as LLCs can be taxed on the personal tax returns of members or they can be taxed as a singular corporate entity.
On the other hand, they benefit from a flexible management structure and minimal registration and reporting requirements like sole proprietorships and partnerships do. As a result of these benefits — unless a corporation, sole proprietorship or partnership structure clearly meets your business needs — an LLC is likely going to work well for your company.
Every LLC operating in Maryland must appoint a resident agent. This position is also commonly referred to as a registered agent or an agent for service of process. A resident agent may be a resident of Maryland over the age of 18, a Maryland LLC or a Maryland corporation. They must maintain a physical street address in Maryland and cannot list a P.O. box as their place of contact.
This agent will be named in your LLC’s articles of incorporation and will receive official government documents and paperwork associated with legal action on behalf of the LLC. While your LLC cannot serve as its own resident agent, any member or employee of the LLC may serve in this role.
Whether you’re still searching for the perfect name for your company or you landed on an ideal name long ago, you’ll need to see if that name is available for use in Maryland before you can start marketing your business. To protect the intellectual property interests of companies already operating in Maryland, the state prohibits new companies from adopting names that are already in use or indistinguishable from those already being used.
Inside Scoop: Picking a catchy name with local flavor will give you a leg up on the competition and a head start with your marketing goals.
To see if your preferred name is available, conduct a Maryland business search. If your preferred name isn’t being used but is very similar to another protected company name, you may need to rethink your naming strategy. For example, if you want to use the name Ralph’s Wrecking Service and another business goes by Ralph Wrecking Service, the state is likely going to nix your preferred name as indistinguishable from the name already in use.
When registering your company’s formal name with the state, you’ll need to comply with naming requirements mandated for every LLC. Meaning, you’ll need to add an LLC designation to your formal name. You can choose from any of the following options when picking an LLC designation to tack onto the end of your company’s legal name:
If the idea of adding a Maryland LLC designation to your company’s name makes you want to give up on the idea of forming an LLC, you may want to pump your brakes. You don’t have to use this ultra-formal legal name in your branding. If you register a trade name (also called a fictitious name or a “doing business as” name) that’s available in Maryland, you can use that less formal name in your branding.
While conducting a business name search in Maryland will verify name availability within the state, this step in the process won’t protect you from intellectual property concerns originating outside Maryland. Before you can protect your company’s name by trademarking it, you’ll need to conduct a nationwide trademark search to see if a similar business is using this name in another state.
One of the most important steps you’ll take when figuring out how to start an LLC in Maryland is filing your LLC’s articles of organization. Making this effort will allow the state to recognize the existence of your LLC. Maryland officials will then send back a receipt of your articles of organization paperwork, verifying that you’re now permitted to operate your business in the Old Line State.
When filling out your LLC’s articles of organization, you’ll need to detail your company’s purpose, legal name and physical Maryland address. You’ll also need to provide the name, signature and physical Maryland address of your LLC’s resident agent. Don’t forget to submit the required filing fee with your paperwork.
Before you can hire workers, open a business bank account, file business taxes or apply for startup funding, you’ll need to secure a federal employer identification number (EIN). These numbers identify businesses in the ways that Social Security numbers (SSN) identify individuals. An EIN is also commonly referred to as a federal tax identification number (FTIN) and as a federal employer identification number (FEIN).
Inside Scoop: If you’re operating a single-member LLC, you can use your SSN instead of an EIN. But, applying for an EIN will allow you to keep your SSN private from business-related search activity.
Although creating an operating agreement isn’t a step when learning how to start an LLC in Maryland, you’ll need to take your time with this aspect of your business launch. You’ve crafted a vision of success with your business plan. You’ve detailed your contact information for the state in your articles of organization. Now, it’s time to formalize the powers, duties and responsibilities of your Maryland LLC members.
An operating agreement is a contract, created for your benefit, not for the benefit of the state. By drafting this document now, you may be able to head off the kinds of misunderstandings and infighting that too often lead to legal disputes among LLC members. When crafting your operating agreement, address these considerations that often prove to be influential aspects of the how to start an LLC in Maryland process:
The structure of your Maryland LLC will protect your personal assets if your company falls into debt, is sued or incurs major fines. However, your company won’t be protected from financial liability, natural disasters, employee injuries, criminal activity and other significant challenges by virtue of its legal structure. To protect what you’re working so hard to build, you need to invest in business insurance.
Additionally, you’ll want to connect with a local business attorney and a local accountant to make sure that your company’s legal and financial interests are protected. Far too often, new business owners only seek guidance from experts when they’re already in trouble. By consulting with a lawyer and an accountant proactively, you may be able to prevent the kinds of circumstances that lead to trouble in the first place.
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The practical side of figuring out how to start an LLC in Maryland centers around money. You can’t launch a successful business until you secure financing. And you can’t hope to keep your business afloat if you don’t have sufficient startup funds when you’ve yet to turn a profit.
When working to fund the launch of your Maryland LLC, get creative! In addition to applying for traditional bank loans, consider these alternative funding options to get your company off the ground quickly:
Finally, make sure to research any Maryland financing opportunities that may be available to you uniquely, either because of who you are or what your business is. For example, you may find unique funding opportunities by searching for “loans for Latino small business owners” or “grants for daycare providers.”
Before you can market your new Maryland LLC in earnest, you’ll need to build an online presence. Potential clients and customers don’t research businesses in local phone books anymore. Instead, they hop online. Similarly, when existing clients and customers want to know how to reach a business they’ve patronized in the past, they go online to find this information. If people and other companies can’t locate your LLC online, they’ll take their business elsewhere.
To begin building your online presence, reserve a memorable domain name and start building a website worthy of your brand. Your starter site doesn’t need to be overly complicated. It just needs to be memorable and on-brand, and it needs to provide critical details about your operations. Once you’ve established a strong starter site, secure business accounts on major social media sites and start posting.
Marketing your business is a vitally important part of learning how to start an LLC in Maryland. Once you’ve established a website and a social media presence, get creative with marketing locally. Connecting with the Maryland Chamber of Commerce or a local chapter can be a great place to start. Also, aim to capitalize on opportunities to connect with the community. Getting your Maryland LLC’s name and web address out into the marketplace is paramount during the launch phase of your business.
Don’t be afraid to seek guidance from attorneys, accountants and local business owners as you navigate this process. It’s normal to feel like you have more questions than answers when you’re launching a business. Browse some FAQs below for clarity on a few more common challenges facing aspiring Maryland LLC members.
Thankfully, this aspect of forming an LLC in Maryland is a no-brainer. The state Department of Assessments and Taxation automatically registers LLCs for this tax when their articles of organization are filed. Your Maryland LLC will receive a tax liability valuation from the Department and an additional local assessment on an annual basis.
Maybe you’re not concerned with how to start an LLC in Maryland from scratch but need to register a “foreign” (i.e., formed in another state) LLC so you can do business in the state. If so, you’ll need to take two primary steps:
Inside Scoop: Certification of existence is generally proven by submitting a home state’s equivalent of a so-called certificate of status.
If you discover that you’ve made errors on your Maryland LLC registration documents, don’t panic. Simply file articles of amendment and a filing fee with the state. To avoid an additional expediting charge automatically applied to electronic submissions, send your amendment to the Maryland State Department of Assessments and Taxation via postal mail.
Inside scoop: The state prefers either typed or electronically filed articles of amendment. If you submit a handwritten adjustment, the submission is more likely to be rejected.
Note that formation companies may offer promotional deals or additional free services.
Maryland business registration involves many nuanced steps. Consider using an online LLC filing platform to benefit from a smooth filing process that is easy to track.
Legal Disclaimer: This article contains general legal information but does not constitute professional legal advice for your particular situation and should not be interpreted as creating an attorney-client relationship. If you have legal questions, you should seek the advice of an attorney licensed in your jurisdiction.
Are you thinking of starting an LLC in a different state? Below are the links to our other all-inclusive, state-specific LLC formation guides.
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