Think about your LLC a year from now: raking in profits and taking Maryland by storm. You have big plans, but before your business can officially take off, you’ll need to make a bit of an investment.
And we’re not talking about renting office space or paying employees – before you sell a single product, there are startup costs associated with launching an LLC in Maryland.
While you’re making plans and dreaming big, make sure that you consider all the possible costs associated with starting an LLC. To help you out, we’ve compiled the most common Maryland startup fees here.
Quick Note: If you’d like to keep your costs of starting an LLC as simple and low as possible, consider hiring ZenBusiness – a reliable business formation service. To get a better idea of the value they offer and how it works, we compared them to the two most well known services:
Bare Minimum Cost to Start an LLC in Maryland
- Required: LLC Name Reservation Fee
- $25 with an option for $20 expedited service
- Required: Articles of Organization Fee
- $100 (online or hard copy) with an option for $50 expedited processing
Overall Maryland LLC Formation Costs
LLC Name Reservation Fee
The state of Maryland does not require name reservation as part of starting a business, so no pressure here. But reserving a name can still be helpful in certain situations. If your LLC is still in the works and you want to protect its name in the meantime, you may want to take advantage of this service. It’s $25 to place a 30-day hold on your name. Although if you’re ready to start your business, diving right into the Articles of Organization will save you time and money.
Articles of Organization Fee
This is the big one, the most important form that you’ll file to start your Maryland LLC. Without filing the Articles of Organization, your LLC doesn’t exist in the eyes of the state. Every other business operation is predicated on this filing, which you can submit online or as a hard copy. It’s going to set you back $100, plus another $50 if you want to expedite the process. But the good news is that you only have to file the Articles of Organization once, so you won’t need to pay this fee again.
Business and Professional Licenses
Some businesses need to obtain licensure with the state or local government before commencing business. As an example, real estate brokers must apply for licensure with the Real Estate Commission. Some licenses are required by the state, and others by specific cities and/or counties, so check with the Department of Labor, Licensing, and Regulation as well as your local government to see which your LLC might need.
LLC Formation Service
Starting an LLC can be a complicated and time-consuming process. If you want to spend less time on paperwork and more time planning your business, you might opt for an LLC formation service. These services take care of the registration process for you, so you don’t have to spend the time on research, paperwork, and filings.
Most of these services (like ZenBusiness and Northwest) offer basic LLC formation service like Articles of Organization filing, tax consultations, and phone/email support for a flat rate, with options to pay more for premium packages with premium services like Employer Identification Numbers, Operating Agreements, and expedited filing.
Resident Agent Service
Appointing a resident agent is an important part of your LLC formation process. Your resident agent is responsible for handling sensitive legal and tax documents and keeping your business compliant with Maryland business law. In short, you need an agent you can trust.
While you can be the resident agent for your own LLC, this puts pressure on you to keep up with business filings and potential legal disputes. Sometimes it’s better to hand off that responsibility to a professional. A resident agent service ensures that your annual reports and other forms are filed efficiently and on-time, saving you from the penalties of delinquent filings and the stress of having to do it yourself.
Not all resident agent services are equal, so you’ll need to be careful in choosing one. Fortunately, we’ve done some research for you, and we recommend Northwest Regsitered Agent. In addition to resident agent services, Northwest also handles LLC formation — and they’ll include a resident agent free for one year when you form your business with them. We think they’re the most reliable choice, but if you’d like to evaluate all your options, check out our Best Resident Agent Services guide.
If you have questions or concerns about the LLC formation process or if it’s the best business structure for you, sometimes it’s best not to take chances and consult an attorney. They’re not cheap, but they can provide essential business advice, professional filing assistance, and peace of mind.
Some attorneys offer free consultations (usually 30-60 minutes) but will charge by the hour after that. On average, business attorneys charge between $150-350 per hour. Some will offer a flat rate for setting up an LLC, which can range from $500-2000.
Cost variations depend on the experience and location of the lawyer. Finding the right business lawyer can be daunting because there are so many to choose from. Using a site like Avvo, which gives access to a database of Maryland business attorneys, will help you compare rates, locations, specialties, and more, so you have confidence that you’ve found the perfect fit.
Foreign Qualification Fee
This only applies if your LLC was formed in another state and is now expanding into Maryland. In this case, instead of the Articles of Organization, you’d file an “LLC Registration Form.”
All foreign business entities are required to foreign qualify in Maryland, or they could incur some pretty severe penalties. To qualify, file your LLC Registration Form online or by mail. Like the Articles of Organization, it costs $100 and is a fee you only need to pay once.
LLC Annual Fees
Every year, your LLC must file an Annual Report by April 15 to ensure that the state has your most current, accurate information. At $300, the Annual Report isn’t cheap, so be sure to keep it in mind as you draft your yearly budget. You can submit an electronic Annual Report online, or a paper one by mail or in person.
LLCs do not have to pay taxes directly to the federal government, although their members must report income and losses on their own tax returns. At the state level, Maryland doesn’t impose a franchise or privilege tax on its LLCs. But there are some specific circumstances that would require your LLC to pay business-related taxes.
- Any income that is allocable to members residing outside the state is taxed 7.5%.
- If your LLC has employees, it must pay a withholding and unemployment tax.
- If your LLC sells merchandise, it must pay a sales or use tax.
- If you’ve set up your LLC to be taxed as a corporation, it will need to pay an 8.25% corporate income tax.
If any of these describe your business, you will need to register using the Maryland Combined Registration Online Application.
What If I Don’t Pay?
Looking at all these fees, you might be thinking: how can I pay less? While you might be tempted to look for loopholes or find a way around them, this could cause you bigger problems in the future.
To avoid penalties, you’ll need to keep up with your Annual Reports, resident agent changes, tax payments, and other required filings. Say your schedule gets busy around April 15 and you forget to file your Annual Report. If your LLC owns property in Maryland, you will incur a late fee of your county assessment plus interest. But whether or not your LLC has property, you will fall out of good standing with the state. Without good standing, you cannot foreign qualify in most other states, apply for some business loans, renew professional licenses, and more.
Fail to pay your taxes on time and you will be billed for the amount plus late fees, and you will lose your good standing. Remain in good standing for too long without reconciling your delinquent filings, fees, and/or taxes and your business will be forfeited, meaning it cannot conduct business in Maryland unless you file to have it reinstated and pay all outstanding fees.
Planning Your Expenses
By now, your budget spreadsheet might be looking a little crowded, but have no fear! Most of these are one-time fees that you won’t have to worry about again. Plus, with all these on the books, there won’t be any surprise costs when you register an LLC in Maryland.
Soon, you’ll have these fees behind you and you’ll be forging ahead, growing your business and earning profits. As you do, make sure to keep up with the few recurring fees – like Annual Reports – so your business doesn’t fall out of good standing.