You did it. Your Maryland LLC is officially up and running, ready to take on challenges, roll in the profits, and change the world.
There’s no doubt that this is an exciting time in your business journey. After starting your LLC, it’s easy to get carried away in all the excitement and expectations. After all, as a new business owner, you’ve got a lot on your plate.
But the state does too. They need to keep updated records on thousands of businesses so that they can effectively reach out with any important tax or legal communications down the road. How do they do it? With your cooperation, of course.
In Maryland, an LLC’s annual report consists of two parts: a Franchise Tax and a Public Information Report. Each LLC must submit these filings to the Maryland Comptroller every year to keep their information current. Unsure how to go about it? Never even heard of it? No worries at all. That’s why we’re here. Keep reading for everything you need to know.
For brevity’s sake, we’ll refer to these two combined filings as the “Annual Report” in this guide.
What is the Maryland Annual Report? Why is it Important?
Consider an Annual Report the state’s yearly checkup on your LLC. It’s similar to a census in that its purpose is to collect the necessary contact and structural information about each Maryland business.
Each state has its own annual reporting requirements, and some don’t even require them. But in most states, you’re required to submit one per year that includes your LLC name, principal office address, resident agent information, and member/manager names and addresses. Whether you run a domestic or foreign LLC, you should plan on submitting an annual report.
Don’t be intimidated, but it’s not something you want to take lightly. This is how the state updates your LLC’s record with the most recent information. They need to know how to reach you with important information about your business status, upcoming filings, taxes, and service of process.
For example, if you change your resident agent, or your current agent resigns, you’ll need to keep the state informed so they can update their contact information. Miss one of their communications and your LLC in Maryland might end up falling out of good standing or, even worse, administratively dissolved.
Moreover, keeping your information current will help other businesses and potential customers find you. If the Department of Assessments and Taxation has the most updated data on record, anyone (including future patrons and partners) can find your business by performing a name search.
Note: Additionally, if your LLC owns, uses, or leases personal property in Maryland, it will need to submit a Personal Property Tax Return along with your Annual Report. You can find the official form here and detailed filing instructions here.
How Much Does the Maryland LLC Annual Report Fee Cost?
If you’re putting together a budget for all your LLC’s costs – like formation costs, name reservation fees, and initial operating expenses – it’s important to include annual filings like this one, just so that there are no surprises.
Costs vary from state to state. Some are free while others can be several hundred dollars. At $300, Maryland’s fee is fairly steep, so make sure you set aside this money each year to cover your Annual Report.
Due Date and Frequency for an Annual Report in Maryland
You will need to file an Annual Report with the Department of Assessments and Taxation (and Personal Property Tax Return, if applicable) every year your LLC is active. Both submissions are due by April 15th, the same as your federal and state taxes.
You don’t need to file an Annual Report in the same calendar year that you officially form your LLC. Instead, you’ll file by April 15 of the next calendar year. For example, if you file your Articles of Organization at any point during 2020, whether that’s on February 20 or December 1, you’ll file your first Annual Report by April 15, 2021.
What Happens if You Don’t File?
You might be thinking, “that sounds like a pain. How bad could it be if I just fly under the radar?” The short answer: don’t try it. Failing to file your Annual Report and/or Personal Property Tax Return can yield some serious consequences.
Late fees are calculated based on your county assessment and how late you submit your report, so the state will mail you a bill. However, according to these annual reporting instructions, it can be as high as $500. Plus, if you fail to file an Annual Report, the state can potentially dissolve your LLC.
Whether you’re researching for the future or April 15th is fast approaching, it’s wise to keep all of the Annual Report’s required information top of mind. Here’s what you’ll need to complete the form:
- LLC name
- Mailing address
- Department ID number
- Federal Employer Identification Number (EIN)
- State and date of LLC’s formation
- Federal principal business code (if known)
- Nature of business
- Trading as name (if applicable)
- Email address
You will also need to answer the following questions to determine whether you will need to submit a Personal Property Tax Return.
- Does your LLC own, lease, or use personal property in Maryland?
- Does your LLC maintain a retail sales or other licenses with a local unit of government?
- Does your LLC have gross sales in Maryland? If yes, you must provide the amount.
- Did your LLC dispose of, sell, or transfer all of its personal property before January 1?
If you need to complete a Personal Property Tax Return along with your Annual Report, the form will include detailed information about the monetary value of your LLC’s property, inventory, vehicles, equipment, research/development, and more.
It’s finally time to file. You’ve gathered all the necessary information and now you’re wondering how you can put it to use. There are two options: online and by mail.
Online Filing: You can submit a few different business documents through the Maryland Business Express filing portal, including your Annual Report. You will need to create an account if you haven’t already. Log in, choose the Annual Report filing option, enter your information, pay your fee using a credit/debit card, and you’re good to go! The Department of Assessments and Taxation will process it in 3-5 business days.
Department of Assessments and Taxation, Charter Division
P.O. Box 17052
Baltimore, Maryland 21297-1052
Don’t forget to include your $300 filing fee! If you’re filing a Personal Property Tax Return, include a separate check with the appropriate payment. The state will process your Annual Report in 5-7 business days and your Personal Property Tax Return in 7-10.
Does the State Send Reminders?
Reminders are always nice. They help you stay on top of your business requirements and ensure that you won’t fall out of good standing.
The Department of Assessments and Taxation will mail you or your resident agent a reminder in February, so you’ll have advance notice. However, we recommend establishing your own system of reminders – notes in your planner, alarms on your phone, whatever helps you the most.
Can I Hire a Service to Handle it?
You probably have a full plate as it is, and the thought of adding one more responsibility to your to-do list might make you shudder. You’re not alone.
Plenty of other LLC owners have outsourced their reporting duties to LLC services. These companies will take the entire process off your hands, handling your Annual Report each year. If that piques your interest, we recommend ZenBusiness, which is an experienced and trustworthy LLC company.
But their services aren’t restricted to forming an LLC or managing Annual Reports. They can also help you form your business, draft an operating agreement, handle resident agent responsibilities, and much more, all for a reasonably low price.
If thinking about your LLC responsibilities ties your stomach in knots, let ZenBusiness take some of those worries off your plate.
There you have it, everything you need to know about Maryland’s reporting requirements. Follow this guide to a T and your LLC will be prepared to operate smoothly and in good standing long into the future.
And remember, if at any point it seems overwhelming, you’re not alone. A good LLC service like ZenBusiness (or LegalZoom) can be a valuable resource, taking care of all the little details, so you can focus on growing your business.