Key Takeaways

  • A Maryland LLC offers flexibility, limited liability, and tax advantages for business owners.
  • You must file the Articles of Organization with the Maryland Department of Assessments and Taxation (SDAT).
  • The state requires an annual report (Personal Property Return) by April 15 each year.
  • Choosing a registered agent with a Maryland address is mandatory.
  • LLCs can create an Operating Agreement to define management and ownership structures.
  • Certain businesses need additional licenses or permits at the state or local level.

What Is a Limited Liability Company (LLC)? 

The Maryland LLC Act contains specific requirements regarding the formation of an LLC in Maryland. An LLC is a unique formation that stands out from other company types. 

Though insuring is not allowed, an LLC is permitted to execute other lawful activities associated with the following both for profit and not for profit:

  • Business
  • Purpose
  • Investment
  • Activity 

Although Maryland's law is lenient when it comes to the actions an LLC may take, it does include requirements regarding the operation of an existing LLC. 

An LLC can either be formed with the intent to end activities at a specified time or to operate indeterminately. The members may determine what type of business or contracts to participate in. 

Typically, LLC members have a large amount of control when choosing the design and flow of the company. 

Maryland LLC Structure and Legal Basis

A Maryland LLC is governed by the Maryland Limited Liability Company Act, which provides members flexibility in management and structure. Members can choose whether the LLC is member-managed or manager-managed, allowing customization to suit small or large operations.

Unlike corporations, Maryland LLCs do not issue stock or require a board of directors. Instead, ownership is divided into membership interests, and members can allocate profits and losses in ways that differ from their ownership percentages if specified in the operating agreement.

Maryland LLCs are recognized as separate legal entities, which protects members’ personal assets from business liabilities. This protection remains intact unless members engage in misconduct, commingle funds, or fail to maintain proper records.

Advantages of an LLC

There are five distinct advantages of an LLC:

  • Liability
  • Credibility
  • Paying taxes
  • Flexibility
  • Legal requirements and paperwork

Personal assets and money of LLC members are generally protected from any lawsuits held against the actions and debt of the company. Therefore, if the LLC is taken to court, the members' homes and savings accounts will not be used to resolve the litigation unless an exception such as fraud has been met. 

Often, customers feel more comfortable doing business with an LLC due to the friendly atmosphere in the company and permission given by the state. Therefore, an LLC tends to have greater success than sole proprietorships and partnerships when it comes to sales and services. 

Unlike corporations, an LLC does not face double taxation. Income earned by the LLC is considered income belonging to the members and is only taxed when the members personally file their income tax return. In a corporation, one has to pay tax for the company's income and for the dividends and various profits that are distributed to the owners by the corporation. 

While the law provides suggestions pertaining to provisions of an LLC, it gives the members the freedom to choose how the LLC will ultimately operate. 

If an LLC has more than one member, it is encouraged that the members establish a written agreement relating to the operating procedures of the company.

In a corporation, it is required by law that a Board of Directors and officers be established in order to make business decisions and manage daily operations. In an LLC, the members may perform these acts themselves.

In addition, the requirements for record-keeping in an LLC are less strict than those for a corporation. Corporations are required to keep records of accounts, transactions, and minutes of shareholder and board meetings. While it is encouraged for business and legal purposes, an LLC is not required to keep these types of records.

Some actions that are required by law for an LLC are the filling of the Articles of Organization and various annual filings. An example of an annual filing is the Personal Property Return. This return informs the state of gross sales and assets belonging to the LLC.  

Maryland LLC Taxation and Annual Requirements

A Maryland LLC provides flexible taxation options. By default, single-member LLCs are taxed as disregarded entities, while multi-member LLCs are treated as partnerships. However, LLCs may elect to be taxed as an S corporation or C corporation by filing the appropriate IRS forms (Form 2553 or Form 8832).

Every LLC must file an Annual Report and Personal Property Return (PPR) with the Maryland Department of Assessments and Taxation (SDAT) by April 15 each year. This report includes information about the company’s assets and location of business operations. Late filings can result in penalties or forfeiture of good standing with the state.

If the LLC owns tangible personal property or operates in Maryland, it may also owe a personal property tax, assessed at the county level. Members should check with local tax authorities for applicable rates.

Additionally, LLCs conducting business activities that require regulation—such as food service, construction, or health services—must obtain appropriate business licenses or permits from the Maryland OneStop Business Portal.

How to Start an LLC in Maryland

There are five steps to starting an LLC in Maryland:

  1. Name your LLC
  2. Choose a registered agent
  3. File the Articles of Organization
  4. Create an operating agreement
  5. Obtain an employer identification number (EIN)

Giving your LLC a name is the most crucial step upon start-up. 

Members want to be sure that the chosen name is relatable to the business and can be easily discovered by future customers.

The name is required to contain either Limited Liability Company or its abbreviation, L.L.C. or LLC. Words such as bank, attorney, and university are restricted unless members file additional paperwork. In order to use these words, the state may require that the member mentioned be a licensed individual such as a doctor or lawyer.

Words that could potentially mislead customers to thinking the LLC is a federal or state agency are forbidden. 

It is also important to verify that the chosen name is not already in use. This can be done by running a search on the State of Maryland website.

Maryland LLC Forms and Filing Instructions

To start a Maryland LLC, you must complete and submit the Articles of Organization to the State Department of Assessments and Taxation (SDAT). This can be done online through the Maryland Business Express portal or by mail. The filing fee is typically $100, with an additional $50 expedited fee for faster processing.

Required Information in the Articles of Organization includes:

  • The LLC’s name (must include Limited Liability Company, L.L.C., or LLC)
  • The name and Maryland street address of the registered agent
  • The business purpose (optional but recommended)
  • The signature of the organizer or member forming the LLC

Once approved, the SDAT will issue a Certificate of Organization, confirming the LLC’s formation.

LLCs are also advised to:

  • Obtain an EIN from the IRS for tax and banking purposes.
  • Draft an Operating Agreement, even though it is not legally required.
  • Register for state taxes, such as sales and use tax or employer withholding tax, through the Comptroller of Maryland if applicable.

Maintaining a Maryland LLC in Good Standing

To keep a Maryland LLC in good standing, businesses must:

  1. File the Annual Report (PPR) each year before April 15.
  2. Maintain a registered agent with a valid Maryland address.
  3. Renew or update business licenses when required.
  4. Keep accurate financial and operational records.
  5. Update the SDAT if there are changes in membership, address, or management.

Failure to comply with these requirements can result in the LLC being marked as “Not in Good Standing” or even forfeited. Reinstatement requires filing all missing reports and paying outstanding fees.

Foreign LLCs Doing Business in Maryland

If your LLC was formed outside Maryland but plans to operate within the state, you must register as a Foreign LLC with the SDAT. The registration process requires filing a Registration of Foreign LLC form and providing a Certificate of Good Standing from your home state.

Once approved, the LLC can conduct business in Maryland but must comply with the same reporting and taxation obligations as domestic LLCs.

Frequently Asked Questions

  1. How long does it take to form a Maryland LLC?
    Online filings are typically processed within 7 business days, while mailed submissions can take 4–6 weeks unless expedited.
  2. Do Maryland LLCs pay an annual fee?
    Yes. The annual report filing fee is $300, due by April 15 each year.
  3. Can I be my own registered agent in Maryland?
    Yes, if you are a Maryland resident with a physical address in the state. However, many businesses use professional registered agent services for privacy and reliability.
  4. Is an Operating Agreement required in Maryland?
    No, but it is strongly recommended to prevent future disputes over management, profit distribution, and member responsibilities.
  5. How do I dissolve a Maryland LLC?
    To dissolve your Maryland LLC, file the Articles of Cancellation with the SDAT, pay any remaining fees or taxes, and ensure all final reports are submitted.

If you need help with Maryland LLC, you can post your legal need on UpCounsel's marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.