Last Updated on June 13, 2022 by Fair Punishment Team
How would you describe your company? What kind of services or products does it offer? Is it a startup or an established company?
A limited liability corporation (LLC) is a legal entity that allows individuals to form businesses without having to file taxes individually. An LLC offers several benefits over sole proprietorship and corporations.
An LLC has its own tax ID number, which makes filing taxes easier. In addition, an LLC can provide protection from personal liability for the owners.
If someone were to sue you personally for negligence or fraud, they’d have no way to collect against you if you run your business as an individual.
An LLC also provides more flexibility than a sole proprietorship because it can be owned by multiple people. It can be set up with any type of ownership structure, including:
- Single-member – one owner
- Dual Member – two owners
- Multiple members – more than two owners
- Manager-managed – manager manages the day-to-day operations of the company
- Member-managed – members manage their own portion of the company
If you are considering starting an LLC, here are some things to consider before doing so.
Naming Your State
The first thing to decide when choosing whether to incorporate in Maryland is where you want to incorporate. The state of incorporation will determine what options you have available to you. For example, if you choose Delaware, you won’t have access to federal income tax advantages.
In order to create a new LLC in Maryland, you must first choose an LLC name. You may enter the LLC name as it appears in the article.
However, we recommend using a more descriptive name. The business name must be spelled correctly. Certain restricted words (banker, lawyer, attorney, etc.) may require more information and license.
You can buy your domain name for $10-$20 dollars. This is a great investment because you can use this website to create your own personal web page. You can also use your domain name to promote your business or company.
Choosing a business name is important because you want to make sure that your company gets off to a great start. Make sure that you choose a name that reflects what your company does well.
For example, if you run a cleaning service, then you should use a name that includes the word ‘clean’. Choose a name that makes people think about your business.
Maryland’s requirements for establishing an LLC include having a unique name. This name must be different from any other legal entity or registered company in the state.
The name must also be available before starting the process of forming a new LLC. Maryland does allow you to use the name of another LLC if it is not already being used by another company.
Once you have come up with the most ideal business name, this might be an opportunity to want to make sure to reserve it. To protect your idea, you can use a business name reservation style service.
A $50 filing fee accompanies the paperwork. Reserving your name in advance will in effect, buy you more freedom to focus on completing the rest of the paperwork. When choosing a good business name, you should also consider how well the name matches your product or service.
You may want to register a domain name that includes your brand name. This makes it easier for people searching for your services to locate you.
Determine Your Goals
The next step is determining why you want to create an LLC. Do you need to protect yourself from personal liability? Are you looking to reduce operating costs? Or do you plan on selling your product or service?
Decide Whether You Need A Registered Agent
You may not need a registered agent if you only plan on using an LLC for protection from personal liability. However, if you plan on selling your products or services, registering an LLC means you’ll receive a letterhead and business cards.
This will help potential customers know who to contact if they have questions about your LLC.
Maryland requires you to appoint a resident agent for your LLC. A registered agent is a person or entity authorized to receive service of process or other official legal document and notice on behalf of your LLC.
A registered agent can be any individual or company offering a registered agent service. They should meet the following criteria:
- Entities (or companies) must offer registered agent services.
- Registered agents must be available.
- Companies must register with the Secretary of State before providing registered agent services.
- A company must have an office location where it provides registered agent services.
- An individual must reside at that address.
- An individual must maintain a business presence there.
- Individuals must pay a fee.
- Individuals must be 18 years old. An agent must have an address located in Maryland. He/she must be available to accept documents during normal office hours.
A resident agent is someone who actually receives mail on behalf of any business, and is required by law to receive legal correspondences. A resident agent themselves must be able to provide a physical address in the state of Maryland.
He or she cannot use a post office box. Legal documents need to be delivered personally. A resident agent is responsible for informing the company’s members about any legal action.
You should avoid using your personal residence or a business address as an official point of contact. Instead, choose a location that is easily accessible by the mail delivery, phone service, Internet access, etc. This will make it easier for agents to get in touch with you if necessary.
When a customer receives any form of legal-style paperwork, he should be sure to contact us first. They’ll do everything they can to get him out of trouble. Their agents are trained to handle these types of documents.
Filing Your Articles
After the LLC is formed, it must be registered with the state. In order for the LLC to obtain an EIN, business license, and business bank account, it must file and approve the necessary forms.
Once this is done, the LLC will receive a certificate confirming that it was officially formed.
The Articles of the Organization actually can only be submitted online. Any mail types or in-Person specific submissions can be made out to taxation itself and the State Department of Assessment. The base filing style fee for the filing of articles by mail is $100.00.
An additional $50.00 must be paid if the Articles of Organization are filed online. If you would like it, a standard certified copy of your documents can be obtained for another small fee.
Remember, this procedure is held in place for your own benefit, so thoroughly going through it and utilizing every segment to your business advantage is the best thing to do.
Creating The Operating Specific Agreement
An operating style agreement is a legal document that outlines how your LLC will operate. Having an easy-to-read Operating Agreement is beneficial for various reasons, including resolving disputes that may arise over finances and other potential litigation.
Not having this agreement specifically in place could lead to court decisions based on state laws, not necessarily what is best for the LLC and its members!
The operating agreement should include information about the company’s purpose, how profits and losses will be shared, procedures for admitting new members, and who will manage the company.
An operating agreement outlines who own what shares of the LLC. It also shows how the LLC will be run. It is legally necessary to file this document with the state.
In addition, it is recommended to do so. Such an agreement is useful when there are multiple shareholders. It helps reduce conflicts between them.
Obtaining An EIN Number
The 9-digit employer identification number is used to identify employers for tax purposes. To open a business bank account, you need to apply for an individual taxpayer identification number.
The purpose of an employer identification number is to provide a unique identifier for each business entity.
Once the articles of your organization and the operating style agreement are firmly in place, it’s recommended to look into obtaining an EIN for your Maryland business or company proactively.
Among many other things, It’s vital if you are hiring employees or if you are investing in multiple members.
Is There Anything Else You Can Do At This Stage?
Research Your Options
Once you’ve decided where you want to incorporate, the next step is researching your options. There are different ways to register an LLC. Here are three common methods:
- Online Registration – this method requires you to pay $100 plus fees online. You can then print out a certificate of formation.
- Paper Application – this method involves filling out a paper application. You must complete all required fields, sign the document, and mail it back to the Secretary of State.
- Electronic Filing – this option lets you fill out forms online and submit them electronically. Once your documents are approved, you’ll get a confirmation email that includes instructions on how to download your certificate of formation.
File With The Secretary Of State
After you file your paperwork, you’ll receive an official Certificate of Formation. You’ll also receive a copy of the Articles of Organization (AO) and Operating Agreement (OO). Both documents include information about the name, address, and other details of the LLC.
Pay Fees And Taxes
After you register your LLC, you’ll be responsible for paying taxes. You’ll need to file quarterly reports with the IRS. In addition, you’ll need to pay annual franchise taxes.
Keep Records
Keep records of your transactions and meetings. You’ll use these records to prove ownership of your company assets.
Protect Yourself From Personal Liability
If you plan on running your own business, you’ll want to protect yourself from personal liabilities. An LLC protects its members by limiting their personal liability.
The Basics Of Business Ownership
Business owners often wonder what happens when they die. They worry about how their family will manage their businesses after they pass away.
Many people assume that the business will simply continue under someone else’s control. But, there are actually two main scenarios that happen when a person dies.
In the first scenario, the owner passes away before his or her business has been incorporated. If the owner dies without having incorporated the business, the business continues under the same management. This means that the business remains in the hands of the deceased owner’s family.
In the second scenario, the owner passes after incorporating the business. When this occurs, the business becomes part of the deceased owner’s estate.
It goes through probate, which is a legal procedure used to settle the affairs of a decedent. During probate, the executor of the estate manages the business until it is sold.
When a person dies, he or she transfers ownership rights to the business to the executor of the deceased owner’s estate. Executors typically sell the business to satisfy debts and expenses associated with the death.
Frequently Asked Questions
What Are The Tax Requirements?
You should also think about how much money you make and how many deductions you take. Some states don’t allow certain types of deductions, such as home office expenses. Also, check out the tax rates in your area. These rates vary based on your income level.
Maryland LLCs must make sure to file a yearly report with the State Department of Assessments and Taxation (SDAT).
Their annual style report mainly serves to make sure the state has updated information about who owns your LLC and where to reach them.
The annual report costs $300 per year to file, which is quite a bit of money. Maryland also requires businesses that have their own personal property actually in the state itself (such as your LLC) to file a Personal Property Report (PPR), along with the annual report (which you should do too!).
The tax owed on your personal property is determined by the assessed value multiplied by the tax rate of the county in which the personal property is located.
You need to file a PPR if you own, use, or lease personal property in Maryland, or if you hold a state-issued trader’s license (buying or selling goods). The annual report and PPRs are both filed together.
Final Thoughts
If you’re looking for a way to protect your assets, consider starting an LLC. With an LLC, you can shield your assets from creditors, lawsuits, and other claims.
Your LLC can be set up in any state, so it doesn’t matter where you live. And, because an LLC isn’t taxed at the federal level, it won’t affect your taxes.
We sincerely hope that this article has given you a thorough insight into the world of starting an LLC in the fantastic state of Maryland!
It’s a brilliant state to start a business in and has many investing opportunities lined up if you’re willing to take a look around!
