1. C Corporations
2. S Corporations
3. Advantages of a Maryland S Corporation
4. Forming a Corporation in Maryland
5. Maryland Post-Filing Requirements
6. Dissolving an LLC

MD articles of dissolution are documents that are used to formally dissolve an incorporated business.

C Corporations

Any corporation in the state of Maryland that was formed by default is considered a C corporation. A C corporation has not elected to become an S corporation. This term implies that the business is taxed under a specific IRS code, the C code.

Maryland C corporations are separated into two separate tax levels:

  • Initial tax: The initial tax that C corporations pay is on the profits of the business.
  • Secondary tax: The C corporation is then taxed again on salary and dividends earned.

S Corporations

S Corporations have an elected relationship with the IRS. They are given pass-through tax advantages. Instead of being double taxed, the shareholders report their profits and losses on their personal tax documents. They are not required to pay any taxes at the corporate level.

Advantages of a Maryland S Corporation

There are many advantages to forming an S Corporation in Maryland:

  • No Double Taxation: Maryland S Corporations are not double taxed like C Corporations.
  • Deductions: Maryland S Corporations also have the ability to claim loss deductions.
  • Self-Employment Taxes: All income in a Maryland S Corporation is treated as self-employment income. Taxpayers are only required to pay taxes on any actual earnings.

Forming a Corporation in Maryland

Fortunately, the process of forming a corporation in Maryland is convenient:

  • Step one: Choose a business name. The business name should include some form of the word “Corporation.” Businesses in Maryland can reserve a potential name for up to 30 days.
  • Step two: File Maryland Articles of Incorporation: This form should be filed with the Maryland State Department of Assessments and Taxation.

The state of Maryland requires that the Articles of Incorporation include:

  • The name of the person incorporating the business. It is possible to have more than one person incorporating.
  • The person's address.
  • The name of the business.
  • The purpose or intent of the business. This is the purpose for which the business is being incorporated.
  • The business address.
  • The name of the registered agent. A registered agent is required to register the business. The agent should be available to accept any necessary legal documents for the corporation. The registered agent can be an adult living in Maryland or another registered corporation.
  • The address of the registered agent.
  • The number of shares available in the business.
  • The value of each share available in the business. Maryland limits each share to $100,000 per share.
  • The name and contact number of each corporation director. Maryland requires a minimum of one director. They must be at least 18 years old but do not necessarily need to be listed in the Maryland Articles of Incorporation.
  • The signature of the person incorporating.
  • The signature of each registered agent.

Maryland Post-Filing Requirements

The incorporated business must continue to submit required documents to the state. One of these required documents is the Maryland Corporation Annual Report which is due every year on April 15. There is a $300 fee for this annual report filing. In addition to the annual report, it should also be accompanied by the minutes of any and all annual shareholder/director meetings.

Dissolving an LLC

It is important to follow the regulations set in the Articles of Organization regarding the dissolution of the business. There is often a section that includes specific rules on how, and if, the business can be dissolved. Not all Articles of Incorporation, however, will have this information. If it is not included, a unanimous decision may be required.

If there is no unanimous decision, the decision will be decided by the state. Maryland has regulations on the dissolution of an LLC. One member may need to request a legal resolution where the court will make the dissolution decision. The court will likely require that the members vote.

The vote must take place with a minimum of 10 days' notice and include the majority of the board members. Finally, at least two-thirds of the board members must vote to dissolve the business. If a vote cannot take place, then Maryland may require a written consent from each of the shareholders.

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