How to Form an LLC in Maryland
Introduction
If you’re thinking about starting a business, you may want to consider forming an LLC. An LLC is one of the easiest ways to structure your business and protect your personal assets from creditors or lawsuits. You don’t need a lawyer to form an LLC and it’s cheap—most states charge around $150 for filing fees. In this guide, we’ll walk you through the process of forming an LLC in Maryland so that by the end of it, you’ll know everything there is to know about how this works and if it’s right for you. We’ll start with choosing a name for your new business and then move on through all the steps needed before filing paperwork with the state. So sit back and relax as we take care of all your needs: trust us!
Choose a name for your Maryland LLC.
The name of your Maryland LLC must be unique and distinguishable from the names of other businesses registered in Maryland. It can’t contain words like “corporation,” “incorporated,” or “limited” (unless you’re doing something special with that word). It can’t be misleading, offensive, or otherwise unlawful. Keep these rules in mind when choosing a name for your business:
- Make sure it’s not too generic. There are some very specific rules about what words are acceptable and which ones aren’t—for example, if you want to name your company after a specific person or place (like Slithery Snake LLC), that may not fly because it could easily confuse customers into thinking they were dealing with an individual rather than a corporation.
- Don’t use punctuation marks like hyphens or periods in your business name; they’re reserved only for making corrections on existing registrations at this point in time.
Select a Maryland concrete street address and a registered agent.
In order to form an LLC, you must choose a concrete street address in the state of Maryland. While it is possible to use a P.O. box as your physical address, most businesses typically use their headquarters or another office space that they own or lease. You can also have a member of your team act as the registered agent for the company if you are using a P.O. box for your physical address; however, we recommend having someone else serve as registered agent so that there will always be someone on call to receive official correspondence from state agencies and courts regarding lawsuits involving your business activities (especially if you plan on starting any lawsuits against anyone).
File the articles of organization in Maryland.
The next step is to file the articles of organization in Maryland. The filing fee for this is $100. You can file your articles online or by mail. The information you’ll need to include in these documents include:
- The name and address of every member, or owner, of the LLC
- The name and address of one manager (who will also be an owner)
- The name and address of a registered agent who can be contacted by other people on behalf of the LLC
Get an EIN from the IRS.
Once your LLC is formed and you are ready to open a bank account in its name, you’ll need an Employer Identification Number (EIN) from the IRS.
This is like a social security number for your business. You can apply online or by mail. We recommend applying online because it’s faster and more accurate than mailing in a paper application.
An EIN will make it easier for lenders to verify that you are who you say you are when applying for a loan or credit card, as well as being required by many banks when opening an account with them.
Create an operating agreement.
An operating agreement is a document that outlines the rules and regulations for your business. It’s not legally required for an LLC, but it’s highly recommended to have one. The operating agreement can be as simple or as detailed as you want it to be.
An operating agreement is not legally required for starting an LLC, but it’s highly recommended to have one because they outline the rules and regulations of your company—a useful tool when determining how much money each member will contribute toward taxes and what rights each has in terms of voting power or management control.
Every member should also sign this document so there are no questions about who owns what part of the company if disagreements arise later on down the line.
Open a business bank account.
After you form your LLC, it is important to open a business bank account. You will need a place to deposit any money that you make and this will also be where you pay bills. The bank account can be used as collateral for loans if necessary, so it’s important to have one.
You should also get a business credit card and PayPal account in addition to your bank account. You may be able to use these services without having an actual business name yet, but we recommend waiting until after forming so that they can help protect your personal identity as well as being useful tools for running the day-to-day operations of running a small business or side hustle!
Get any permits and licenses you need to operate in Maryland.
If you plan to operate a business in Maryland, you’ll need to obtain any permits and licenses required by the state. For example, if your LLC will be selling alcohol or tobacco, it needs a liquor license; if it will be providing services for the health care industry, it needs a health care contractor license; and so forth.
To find out what licenses and permits apply to your business type in Maryland:
- Visit the Department of Labor Licensing Unit website at dlucorp.org/licenses-permits/index.asp
- Click on “[State] Select” in the left sidebar, then click on “Permits & Licenses.” You can search by keyword or browse through all available permits when prompted with “No Records Found.”
Have the steps of how to form an LLC in Maryland ready so you can hit the ground running if you decide to take the plunge.
You’ve probably decided to form an LLC in Maryland because you have a good idea for a business and want some protection. That’s great! And if you don’t have the steps of how to form an LLC in Maryland ready, you could find yourself in over your head—or worse yet, lose all the money you put into starting your business.
So here are six things that every aspiring entrepreneur should have ready before they make the decision:
- Business Plan. This isn’t just an outline or a couple bullet points on what exactly it is that your company does; it needs to be detailed and thorough so that you can see all of the possible issues at hand and plan accordingly. Ideally, this will be created by a professional who specializes in helping entrepreneurs set up their companies properly; however, if money is tight (and most small businesses operate on tight budgets), then there are plenty of books on Amazon which discuss how to create one yourself without having any real experience doing so.* Budget.* Marketing Plan.* Sales Plan* Have everything ready before starting out because nothing will happen immediately after filing for incorporation (which usually takes about 2 weeks).
Conclusion
Congratulations on making it this far in the process! Now that you have your LLC, it’s time to get started on the fun part. You can use all the tools and resources listed above to make sure your business runs smoothly from day one.
