Maryland, like many other states, attempts to be business friendly in order to bring more companies to the state. For those planning to start up an LLC there, it s important to know how to get started and what the most important requirements are. That way it is possible to create an LLC with a minimum of difficulty, while still being sure to follow the laws of the land. Getting started can be the hardest part, but Maryland has information and resources that can help.

Getting Started

Naming the LLC

Anyone who is interested can do a search online for the name they are considering for their LLC. That way they can see if it has already been taken by another company. It is also important to see if there are any domain name problems, as most companies want to have a match with their domain name and their company name. In choosing a name for an LLC, there are restricted words that can only be used in some cases along with prohibited words that cannot be used at all. These are generally words that are in use by federal and state agencies, and using them for an LLC could cause confusion. The words Limited Liability Company or its abbreviation must appear in the name, as well.

Selecting a Registered/Statutory Agent

Every LLC should choose a statutory or registered agent. This is typically a third party, although it does not have to be. Generally, an individual who is a resident of the state of Maryland or a corporation that is authorized to do business in that state can act as a registered agent. This person or entity is able to receive official correspondence for the LLC. However, the company should take care in choosing a registered agent they can trust. By having access to this type of documentation, the person or entity is privy to a lot of information.

Filing Articles of Organization

In the state of Maryland, the Articles of Organization for a Domestic LLC can be filed online. There is a $100 fee for filing online. The Articles lay out all of the business’ information, and the intent it has to form in that particular state and manner. While not every state uses the same term for these articles, they all result in the same information being conveyed from the LLC to the state in which it is being formed.

Creating an Operating Agreement

There is no requirement for an operating agreement in Maryland, which is the case with most other states, as well. Not every LLC will create this agreement if it is not needed, but some still choose to do so for the peace of mind and contractual information it provides. Even for companies that choose to do this, though, there is no need to provide this document to the state. A Maryland LLC is perfectly legal without it.

Running Your Business

Getting Your EIN

What’s an EIN?

An EIN is an employee identification number, issued by the Internal Revenue service. Sometimes it is also called a Federal Tax Identification Number. It’s a unique number issued to each business.

You’ll need an EIN to

  1. Open a business bank account.
  2. File Federal and State Taxes
  3. Hire employees.

Before you get your EIN:

  1. Make sure your new business has been properly formed before applying.
  2. Be wary of paid sites. EINs are free direct from the IRS.

How do I get an EIN?

  1. Apply online: The easiest way is to apply online for an EIN. Note, the IRS website has office hours, and is only available Monday through Friday, 7am to 10pm. Yes, we also agree this is one of the most ridiculous things we’ve ever seen.
  2. Call: You can call 1-800-829-4933, between 7am to 7pm of your time zone, Monday to Friday.
  3. Snail Mail – You can download the form and mail it in.

Keep Business and Personal Accounts Separate

  1. Get a business bank account for your business. This will help you protect your personal assets from potential creditors and lawsuits, and will also make life A LOT easier come tax time.
  2. Get a business credit or debit card. This will help you keep your expenses separate and easier to track.

Accounting

No matter what business you run, accounting software and processes is a must for any small business. If you have an accountant, ask them which software they work with and recommend.

A good accounting system is necessary to:

  1. Track income and expenses, so you can easily see if you’re making money
  2. Makes filing income taxes so much easier.

Always try and find something that will:

  1. Sync with all of your bank and credit card accounts automatically – not just downloads, but auto sync.
  2. Automatch vendors, customers and other accounts.
  3. Let you accept credit cards and ach drafts with ease.

Maryland LLC Taxation

Considerations must be made when it comes to setting up Maryland taxes.

Sales Tax

Options such as sales tax can vary depending on the goods and services the LLC is selling. Sales tax setup may not be needed if the LLC is not selling goods or services that the state considers taxable.

Unemployment

The unemployment insurance tax is required by the state to cover employees who may need that service in the future.

Income Tax

The employee withholding tax is another state requirement to ensure proper tax payments are made.

Business licensing is important for a Maryland LLC. Additionally, business licensing requirements will generally differ depending on what kind of business the LLC actually is. Some types of businesses are much more strictly licensed and regulated than others, which is important to consider when forming an LLC and determining what steps to take to comply with all applicable laws. An EIN to pay taxes, hire employees, and open a bank account is also necessary.

Getting Insurance for your LLC

Workers’ Compensation insurance is the only type of insurance that is required in Maryland. That is convenient for companies that do not want a lot of regulations, but it is also difficult for companies that need to be protected. These companies may not realize that they should have more insurance protection than just what the law states, and that could leave them vulnerable. Generally, at least a liability policy is a good choice, but it is not a requirement according to Maryland state regulations for LLCs.

Keeping Your LLC Compliant

Maryland has guidelines for hiring in order to reduce problems with people who are not legally authorized to work in the US and those that may be mistreated and taken advantage of by dishonest employers. There is also a requirement for an annual report, which is due on April 15th each year and has a $300 filing fee. A Certificate of Good Standing is also available to companies that qualify.

How to File a Foreign LLC in Maryland

To register a foreign LLC, there is an online application and a $100 fee.