Many Maryland entrepreneurs choose to form a limited liability company (LLC) because of the many benefits of this business entity type. An LLC provides liability protection, for instance, so your assets are not at risk if your business is sued or cannot pay debts.
An LLC is a “pass-through entity” for tax purposes, meaning that the LLC itself is not taxed. Instead, income passes through the business to the LLC owners or members, who report it on their tax returns. LLCs also offer flexibility in terms of management and taxation.
Creating an LLC is relatively straightforward, but ensuring it’s done correctly is crucial to getting your Maryland business on the right foot. The most critical step is filing articles of organization.
What Are Articles of Organization for an LLC?
The articles of organization is a legal document filed with the Maryland Department of Assessments and Taxation to form an LLC officially. It will include your business name, address, resident agent information, and more, as detailed below.
First, Select a Resident Agent for Your Maryland LLC
Maryland requires LLCs to appoint a resident agent, a person or company authorized to accept and respond to official business correspondence, such as legal, tax, or financial documents.
The resident agent ensures all required notices and documents are received. In Maryland, the resident agent can be an LLC member, individual, or entity that meets state requirements. In Maryland, a resident agent must:
- Be 18 years or older
- Have a physical address in the state
- Be available during regular business hours
- Be registered to operate in the state, if it’s a business
Many business owners hire a resident agent service to ensure their LLC stays fully compliant and for convenience.
If you choose to be your resident agent, you must be at your resident agent’s address for all business hours. A resident agent service allows you to be wherever you need to be to run and grow your business.
How to Submit Articles of Organization in Maryland
To start, visit the Maryland Business Express website and create an account to access the articles of organization online.
In Maryland, the articles of organization require the following information:
- LLC name
- Principal office address
- Resident agent information
- Resident office address
- Business purpose
Once you’re signed in, you’ll select “new business filing.” Then select limited liability company as your business type and “use online forms.”
Next, you’ll enter your business name, and the system will search to see if the name is available.
Then you’ll enter your business address, contact information, and resident agent information. You’ll have the opportunity to review all your information before payment.
The filing fee is $100. You should receive confirmation within seven business days if you file online. The turnaround time for filing by mail can be up to six weeks.
Some entrepreneurs hire an LLC formation service like ZenBusiness to handle this step, saving time and ensuring the process is done correctly.
Draft an Operating Agreement
Maryland does not require an operating agreement, but it’s a crucial document that defines members’ ownership percentages and profit allocations. Those are the two key elements, but it should also include the following:
- Each member’s rights and responsibilities
- Management structure and roles
- Voting rights of each member
- Rules for meetings and voting
- What happens when a member sells their interest, becomes disabled, or dies
You can find operating agreement templates online, but it’s best to have them drawn up or reviewed by an attorney. The language of an operating agreement is crucial and can often help determine how member disputes will be resolved. Here you can obtain a free operating agreement template for your Maryland LLC.
Contact Information for the Maryland Department of Assessments and Taxation
Maryland Department of Assessments and Taxation
Department of Assessments and Taxation
301 W. Preston Street, Room 801
Baltimore, MD 21201-2395
Outside the Baltimore Metro Area: 1-888-246-5941
There’s only one way to create an LLC in Maryland: successfully filing articles of organization. If you make any mistakes, you’ll likely have to refile, so be sure to do it right the first time and set your business up for serious success!