If you have a limited liability company (LLC) in Maryland, at some point, you may need to shut down the business. Maybe you’ve started another company or decided to relocate to another state — whatever the reason, you’ll need to follow the somewhat complicated LLC dissolution process.
If it’s done incorrectly, you’ll still be responsible for annual reports and fees and could face additional penalties down the line. But, lucky for you, this handy guide explains how to dissolve an LLC in Maryland.
Properly shutting down an LLC involves several crucial steps, as detailed below.
1. Vote for Dissolution
LLC owners, known as members, must vote to dissolve the LLC. Hopefully, you have an operating agreement that details the process. If not, Maryland law requires that you gain the written consent of all members. Once you do so, you’ll need to draft a resolution to dissolve the LLC.
2. Cancel Business Licenses and Permits
If you were required to get licenses and permits for your business, you’d need to contact the issuing agencies to cancel them so that you’re not charged renewal fees. If you have any outstanding fees, you’ll likely need to pay them before you are allowed to cancel.
3. Notify Creditors
If you owe money to any creditors, you’ll need to notify them in writing of the dissolution and give them detailed instructions on filing any claims for the outstanding debt. Each notice must be sent by registered mail with prepaid postage and a return receipt requested.
In Maryland, you must wait 19 days after sending your notices to creditors before filing your Articles of Cancellation.
4. Notify Tax Departments
Notify any relevant tax authorities of the dissolution and pay any outstanding taxes due. In Maryland, you’ll also need to close your business with the IRS and the Comptroller of Maryland.
5. Cancel Contracts and Settle Financial Obligations
If you have contracts with vendors, lessors, or any other outstanding financial obligations, you’ll need to ensure all your obligations are fulfilled and all contracts are canceled.
6. Distribute Assets to Members
If the LLC has any assets remaining in any form after all financial obligations have been settled, they must be distributed to members based on LLC ownership percentages. If the assets are equipment, property, or other non-cash assets, they’ll need to be sold first so distributions can be made in cash.
7. File the Dissolution Papers with Maryland
To officially terminate your LLC, you’ll have to file your Articles of Cancellation with the Maryland Department of Assessments and Taxation (SDAT). You can do so either online or by paper for free. Read on to see detailed instructions for both options.
To file your Articles of Cancellation online, visit Maryland’s filing website Business Express. Log in or create an account.
From your account home page, click “Start a New Filing,” then “End/Cancel/Revive a Business,” and finally, “Cancel a Maryland LLC.”
Search for your business by name or Department ID. From the results, click the “Cancel the LLC” button next to your business.
On this next page, you can view the disclaimer and fees. Once you’re done, click “Start Cancellation Here.”
On this new page, go through the following sections and fill out all the information requested.
There is no base cost for filing your Articles of Cancellation, but you can request expedited processing (seven business days) for $50 or rush processing (three business hours) for $425. However, be aware there is a 3% credit card fee and a $3 echeck fee.
Once you’ve completed your payment, submit your form to file your Articles of Cancellation.
To file your by paper, download, fill out, and print the Articles of Cancellation.
There is no charge to file your Articles of Cancellation. However, if you’d like to purchase expedited ten-day processing for $50, include a check or money order payable to “SDAT.”
Mail your documents to:
State of Maryland, Department of Assessments and Taxation
301 West Preston Street, Room 801
Baltimore, Maryland 21201
Note that due to construction work, walk-in appointments will not be available until Spring 2023. However, once construction has ended, you may file in person at the address above.
Additionally, if you need three-hour service, you can place your documents and a $425 payment in a dropbox located at the same address between 7:45 AM and 10 AM.
Regardless of the reason, LLC dissolution must be done right to avoid legal issues and financial penalties. Therefore, it’s highly recommended that you employ the services of an attorney to ensure everything is done correctly and all bases are covered.
How much does it cost to dissolve an LLC in Maryland?
Filing your Articles of Cancellation is free in Maryland.
How long does it take to dissolve a Maryland LLC?
Articles of Cancellation filed online will be processed in seven business days, and those filed by paper will be processed in four to six weeks. For an additional $50, you can receive ten-day expedited processing. You can also receive three-hour processing for $425.
Should I close an unused LLC in Maryland?
If you’re not using your Maryland LLC, you should close it to avoid unnecessary fees, filings, claims, and responsibilities.
What happens if I don't dissolve my LLC in Maryland?
If you don’t dissolve your LLC, you’ll still be accountable for any fees, filings, claims, and responsibilities your LLC may incur. However, your right to do business in Maryland will be revoked if you don’t pay your taxes, pay unemployment insurance contributions, or file your annual report. You won’t be able to dissolve your LLC until it’s back in good standing.
What is the difference between the dissolution and termination of an LLC in Maryland?
Dissolution is the decision of members to close the LLC— though you can file an Article of Dissolution for your records at no cost, it’s not legally required in Maryland. Once you’ve decided to dissolve, your LLC can still operate in a limited capacity to wind up, liquidize assets, and settle claims. Once all your affairs have been settled, file the Articles of Cancellation to officially terminate your LLC.