Building the Foundation: How to Start an LLC in Maryland in 8 Steps

Maryland is a powerful business location, with proximity to the US capital and easy connections to the entire US East Coast. In addition, Maryland offers a supportive business environment, including no franchise tax. Will you join the many small Maryland businesses with individual or partnership owners? 

Registering the business as a limited liability company (LLC) offers a unique mix of liability protection and tax advantages. Read on for how to start an LLC in Maryland.

What Is a Maryland LLC?

A Maryland limited liability company or LLC is a legal business entity that combines the limited liability typically associated with corporations with the pass-through taxation of a sole proprietorship or partnership. An LLC based in Maryland or doing business in the state is considered a Maryland LLC. All Maryland LLCs must file their articles of organization with the Secretary of State.

What to Consider Before Forming an LLC in Maryland?

Before forming a Maryland LLC, you’ll want to consider the business structure to determine the best entity to form for long-term business goals. A corporation may be the best business structure if you plan to take the company public or want to have shareholders in the future. 

On the other hand, if you need a simple setup, liability protection, and minimal annual filings, an LLC is a business entity that will protect your personal assets and add credibility to your business.   

Then, consider your vision and mission, target market, opportunities within your industry, and long-term company goals. You’ll want to consider target customers and perform market research to identify opportunities and hone in on your target market. You’ll also want to create a business plan with financial projections, including cash flow analysis. 

8 Steps to Start an LLC in Maryland

If you’re ready to start an LLC in Maryland, there are just a few simple steps and you’ll be up and running. Here’s what you need to start a business in Maryland. 

Step 1: Decide on a Business Name

Your business name is a unique connection point with your target audience. Ideally, the business name should be easy to remember and express the nature of the business. Your business name must be unique and from existing business entities in the state. Remember that the name must include “limited liability company” or one of its abbreviations like LLC.

Once you have some name options, it’s a good idea to search the US patent and trademark office to confirm that the chosen business name isn’t trademarked. Next, check with the Maryland business database to confirm that another business doesn’t already have that name.

You should also check possible business web domain names. A Google search of possible names will show you what websites exist with that name or similar names so that you can secure a web domain for the business. Sometimes, you can also choose to use a DBA, trade name, or fictitious name.

Step 2: Choose a Registered Agent

A registered agent, sometimes called a resident agent, is an individual or business entity designated by the Secretary of State to receive and accept legal documents on behalf of the business. A Maryland registered agent must have a physical address in the state and be available during normal business hours to accept service of process if the business is sued.

All LLCs and businesses in Maryland must have a registered agent. If you’re a Maryland resident and available during regular business hours, you can consider acting as your own registered agent.

Step 3: Prepare and File LLC Articles of Organization 

The articles of organization for an LLC are a legal document that provides the necessary information about the LLC, including its name, address, purpose, and the names of its members or managers. To register an LLC in Maryland, you’ll have to file articles of organization with the Maryland Secretary of State. In Maryland, you can file the articles of organization online. 

After filing the articles of organization, the LLC becomes a legally recognized entity, separate from its owners. This protects you from business liability, as your personal assets are separate from the company’s debts and liabilities.

Step 4: Draft an LLC Operating Agreement 

An LLC operating agreement is a legal document that outlines the rights, responsibilities, and operating procedures of the members of an LLC. Creating an operating agreement is essential to smooth company operations. It serves as a contract between the members and governs the company’s internal affairs.

Common elements of an operating agreement include:

• Management structure
• Decision-making process
• Equity structure
• Dispute resolution
• Capital contribution
• Distribution and handling of profits and losses
• Management
• Buyout
• Dissolution
• Additional agreements or points of management

What’s Next After Filing an LLC in Maryland?

Once you’ve completed the first four steps, you’ve created a business entity that is nearly ready to function. All that remains is the final setup, such as an EIN, business licenses, and opening a bank account. Here are the additional steps to start operating a business in Maryland. 

Step 5: Apply for EIN

All LLCs should apply for an EIN. An EIN, or employer identification number, is necessary to hire employees and open a business bank account. You will need an EIN for each business entity. You can’t have multiple LLCs under one EIN. 

You can apply for an EIN using IRS form SS-4 and submit the application online or by mail. 

If you have already applied for an EIN but lost it, there are a number of ways to recover it, including directly through the IRS or via the confirmation letter you received following EIN approval.

Step 6: Open a Business Bank Account

As a small business owner, keeping your business bank account separate from your personal bank account can protect you from liability and make bookkeeping easier. Once you have the EIN, opening a bank account for your LLC is an important step in managing your company’s finances and separating personal and business expenses. 

Opening a business bank account is important to protect assets and ensure compliance with legal and tax requirements. It can facilitate tracking your business transactions, maintaining accurate financial records, and demonstrating the legitimacy of your business to clients, suppliers, and financial institutions. 

You can ask banks about interest rates, monthly fees, and additional fees to find the best available option when opening a business bank account.

Step 7: Obtain Licenses or Permits

In Maryland, most businesses are required to obtain a business license. You can apply online or check for necessary business-specific licenses at both the state and local levels. Depending on the nature of your business, you may need to register for specific licenses with the Secretary of State or apply for a local business license in the city or county. 

Step: 8: Get Business Insurance

In Maryland, business owners must carry certain types of insurance coverage for various risks. While Maryland state law only requires businesses to have workers’ compensation insurance, you might choose additional business insurance to protect yourself and your company, such as general liability insurance. Additional coverage may be necessary, for example, for commercial vehicles. 

Other types of business insurance to consider for your Maryland LLC include: 

• Umbrella insurance
• Directors and officers’ liability insurance
• Liability insurance
• Property insurance
• Professional liability insurance
• Commercial vehicle insurance
• Business owner’s policy
• Cyber insurance

2 ​​Types of LLCs to Consider in Maryland

In Maryland, you can choose from two LLC forms. While other LLC forms, like 3LCs and PLLCs, don’t exist in Maryland, professionals or social outreach companies can choose to form an LLC in Maryland and operate with either a single-member or multi-members. 

Single-member LLC

A single-member LLC is a limited liability company formed with a single owner or member. These business entities offer the same legal protection for your personal assets from business liability as any other LLC. A single-member LLC is a separate business entity offering simplified administration, management, and pass-through taxation so you can easily launch your business.

Multi-member LLC

If you want to start a business with a partner or multiple partners, a multi-member LLC is a good option. There’s no limit on how many members an LLC can have. Any limited liability company with two or more members is a multi-member LLC. With a Maryland multi-member LLC, you’ll gain a legal business entity offering liability protection, pass-through taxation, and simplified administration. 

Expanding Your Maryland Business

Forming a Maryland business is an opportunity to build financial freedom and long-term growth. However, new business owners need research, persistence, and a great support team. There’s so much to do when launching and expanding a business!

You can rely on doola’s LLC formation services for guaranteed business formation in any state. You get company formation, an EIN, and help to open your business bank account so you can focus on building your Maryland business. 

FAQs