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Maryland LLC CostYou 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.

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.

Bare Minimum Cost to Start an LLC in Maryland

Required: LLC Name Reservation Fee

    • $25 with an option for $20 expedited service

Optional: LLC Formation Service

    • $39 for an LLC service like ZenBusiness and $79 for LegalZoom

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.

To clarify, most states don’t require name reservations, and they’re rarely necessary. If you’re concerned about someone else registering the name you want, you could opt to simply form your LLC instead of reserving the name.

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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.

The information you’ll need to file your Articles of Organization includes your LLC’s official business name, a description of the purpose of your LLC, your LLC’s Maryland street address, the name and address of your resident agent, your resident agent’s signature, the signature of your LLC’s authorized person, and your return address.

If you would rather get some help for this step, you’re in luck! There are plenty of reputable LLC formation services that will prepare and file your Articles of Organization on your behalf. You have plenty of options for this service, but we prefer ZenBusiness. They offer great low rates and well-rounded services, and with our exclusive discount code, you can get 20% off!

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.

What are some of the most commonly required business licenses for Maryland LLCs? If your business operates in a regulated industry, you will probably need some sort of professional license to operate in compliance with state law. On the municipal level, things like alarm permits, building permits, and zoning permits are all very common.

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 setup 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 IncFile) 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.

There are many different companies offering LLC formation services these days, and it can be tricky to tell which one is the right choice for your needs. We think ZenBusiness and IncFile are the two best LLC formation companies, and we wouldn’t hesitate to recommend either of them to our families and friends.

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, 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 Registered 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.

Attorney Fees

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 $500-2,000.

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.

If you don’t want to go digging for your own attorney, we compiled the following list of highly rated business lawyers in Maryland. All of these attorneys are primarily focused on the business world, they all receive five-star ratings from clients, and they all have excellent Avvo ratings.

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.

The information required to file your annual report includes your LLC’s full legal name, your LLC’s SDAT Department ID, your LLC’s federal tax ID number, the jurisdiction where your LLC was originally formed, your LLC’s mailing address, your LLC’s Federal Principal Business Code, an indication that your LLC does or does not own real estate, intellectual property, or vehicles in the state of Maryland, an indication that your LLC does or does not have a Trader’s License in the county or counties where it operates, a Personal Property Tax Return (if you answered ‘yes’ to either of the previous questions), the date, and your name, signature, phone number, and email address.

For more info on annual reports for Maryland LLCs, check out our full article on this topic!

Taxes

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 out of 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.

Key Steps for Starting a Maryland LLC

  1. The first step to forming a Maryland LLC is to come up with a good name for your business. You’ll want to make sure the name you want is still available and hasn’t already been claimed by another business, so you’ll need to search the state’s business database to verify its availability.
  2. Next, you’ll need to choose your resident agent. While you can legally serve as your own resident agent in Maryland, this role can actually be more of a hassle than you might expect. That’s why we always recommend hiring a reputable resident agent service that can handle the responsibility of this position on your behalf.
  3. The third step involves the preparation and filing of your Articles of Organization. You’ll need to fill out the paperwork and pay a $100 fee. Once the state processes this document, your LLC will be officially open for business!
  4. That’s not the end of the road for the startup process though, as you’ll also need to create an operating agreement for your LLC. There is no legal requirement for Maryland LLCs to have written operating agreements, but it’s still an extremely important element of any LLC. The operating agreement is an internal document that outlines how your LLC will operate, and there are several aspects of this document that can prevent messy ownership disputes down the line.
  5. You will also need to acquire a federal tax ID number (also known as an EIN, or employer identification number). This is essentially a Social Security number for your business, as it is a nine-digit code used to file taxes, hire employees, open business banking accounts, and more.
  6. Next, you’ll need to register for any relevant taxes with the Maryland Comptroller, and also obtain all licenses and permits that apply to your business type. Keep in mind that, depending on the nature of your business, you might require licenses from the federal, state, county, and municipal governments.

Once you’ve finished all of these steps, you’re ready to operate a compliant business entity with the state of Maryland!

Key Steps for Maintaining a Maryland LLC

After you’ve completed all of the items in the previous section, you’ll need to focus on maintaining your LLC. The first step in this process is to open a business bank account. This will help you keep your business and personal expenses entirely separate, and it will also help immensely with your accounting and taxation responsibilities.

You should also keep detailed records of every financial transaction that takes place with your LLC. This means maintaining a file of invoices for every purchase and sale you make, along with information regarding your employees or contractors and the work they perform for your business.

As we already mentioned, annual reports are a key component of LLC maintenance in this state, and there are harsh financial penalties for delinquent reports. Additionally, you might want to hold an annual meeting to discuss goals and priorities for your LLC, although this is an optional step.

The Top 3 Maryland LLC Services

If you want to hire a reputable LLC formation service to handle the heavy lifting on your behalf, these are the three companies we trust and rely on the most.

  • ZenBusiness ($39) – ZenBusiness offers a well-rounded LLC formation package at a great low rate. Their standard LLC package includes a full year of registered agent service, an accounting assessment, and a customizable operating agreement. ZenBusiness also receives stellar customer feedback.
  • IncFile (FREE) – That’s not a typo! IncFile really does form LLCs for free. Even better, they include 12 months of registered agent service in their free package. IncFile has a ton of experience and more than 500,000 satisfied customers, so they’re always a reliable choice.
  • Northwest Registered Agent ($225) – Northwest offers a bit more of a premium service, but if you have the money, we think it’s worth it. Like ZenBusiness and IncFile, Northwest also includes a year of registered agent service with the purchase of any LLC formation package. They also offer the best customer support in this industry, with knowledgeable representatives who are familiar with the details of business formation processes in every state.

Frequently Asked Questions

Before we wrap things up, let’s take a look at some of the most common questions we hear from readers regarding the LLC formation process in Maryland.

What are the state business tax rates in Maryland?

If your LLC is taxed like a sole proprietorship or general partnership, you’ll need to pay taxes on your business income at the state’s personal income tax rates (between 2% and 5.75%, depending on your income level). If your LLC is taxed like a corporation, you’re required to pay Maryland’s 8.25% corporate income tax on your business revenue.

How quickly does Maryland process LLC formations?

The Secretary of State should be able to process your LLC’s formation within 4-6 weeks. If you’re in a hurry, you can pay a $50 expediting fee to shorten your turnaround time to roughly 7-10 business days. (Online filings are automatically expedited at no extra cost.)

How many small businesses are there in Maryland today?

The state of Maryland is home to more than 475,000 small businesses. Entrepreneurs of all backgrounds and business types find that Maryland is a great place to own and operate a small business.

What are the top small business resources and websites in Maryland?

The Maryland chapter of the Small Business Development Center is a great place to start, as they offer a wide variety of tools and resources for Maryland LLCs. The U.S. Small Business Administration’s Maryland District Office is another valuable resource, and the state’s small business resource page also has plenty of good info.

Should I form my LLC in Maryland, or choose a state like Delaware or Wyoming?

Some people like to form their LLCs in states with favorable legal settings. For instance, Delaware is often seen as the most business-friendly state, as it has an entire court system that’s dedicated solely to business matters. As for Wyoming, this state has some of the most generous anonymity laws for LLC ownership.

However, for most people, your best option is to simply form your business in your home state. Forming in a different state can be a tremendous hassle, and it can add some unnecessary complexity to tax issues as well.