The advantages of starting an LLC in Maryland can be impressive. This business structure provides much-needed protection from liability. LLC status also confers a level of respect that sole proprietorships and general partnerships often lack.
Despite all this, there are a few downsides worth considering. Chief among these? Startup and maintenance costs.
The financial component of launching an LLC can be a huge barrier. Filing fees abound, as do special taxes and licensing expenses. All this can add up quickly, leaving you to wonder: Is the personal liability protection really worth all these added costs?
The simple answer is yes, but with a few reservations. You may be surprised to discover that the cost of launching your LLC is not as high as anticipated. A lot depends on how much guidance you need and the level of legal protection you’re hoping to gain.
Regardless of your specific intentions for your LLC, it’s important to get a sense of the full range of expenses before you start filing the necessary paperwork. To help, we’ve outlined common LLC Maryland costs you might encounter, as well as insight into how these upfront investments might prove beneficial.
The Maryland LLC formation process looks a bit different from one organization to the next, but generally involves a specific series of filings and naming procedures. We’ve highlighted these below, along with the typical costs that accompany each step.
The first step on the path to launching a successful Maryland LLC? Choosing the right name. If you have a great idea in mind, you’ll need to conduct a search with the Maryland Business Express website to ensure that it’s actually available.
Thankfully, Maryland’s name search can be completed free of charge. Should your search prove successful, however, it may be in your best interest to reserve your desired name until you’re able to finalize the formation process. Complete Maryland’s corporate name reservation form and pay a filing fee of $25, plus an additional $20 if you want expedited service.
If you expect to file for doing business as (DBA) in Maryland, be prepared to submit a trade name application and a minimum of $25 for the filing fee. Same-day processing, if necessary, will dramatically increase the cost to a total of $425.
The cost of not completing this application could be considerable if you operate under a trade name, as the maximum penalty is $500—not to mention an increased risk of business forfeiture. This could leave you unable to do business in the state of Maryland.
Every Maryland LLC must file articles of organization with the State Department of Assessments and Taxation (SDAT). As a core component of your LLC, this document outlines all the basics. Essentials include where your business is based and how it will be operated.
In Maryland, articles of organization submissions are always accompanied by a $100 filing fee. Should key provisions in the original articles of organization need to be changed later on, a $100 amendment fee may also be required. Advance planning is helpful, as an expedited service fee of $50 applies to both the articles of organization and all amendments. When in doubt, check the official fee schedule for payment details.
In Maryland, as in all states, a registered agent is a key component of LLC operation. This individual or business is responsible for accepting service of process on your LLC’s behalf. This role is actually referred to as resident agent in Maryland, perhaps referencing the need for all agents to have actual addresses (and not just P.O. boxes) within the state.
The cost of appointing a registered agent will largely depend on who you select for this important duty. You’re allowed to serve as your own registered agent—and technically speaking, this approach is free of charge. That being said, the extra effort must be considered.
Accepting service of process isn’t as easy as it seems; it means consistently being available during business hours. If, like many modern business leaders, you require maximum flexibility, this approach is not ideal.
An excellent alternative? Using a registered agent service. This could cost up to $400 per year, but it will free you of a major administrative burden so you can focus on other important tasks. We’re pleased to offer a registered agent service for just $199 per year.
In Maryland—as in most states—operating agreements are completely optional. In most cases, however, they’re worth completing, as they provide a valuable blueprint for the day-to-day functioning of your LLC.
Operating agreements also enhance protection from personal liability, as they provide clear indication of the structure of your business. This creates a much-needed distinction between your classification as an LLC and that of a sole proprietor or partnership.
Flexibility is built into the very concept of the operating agreement, which has no specific structure and can be adapted to meet the needs of each LLC. Likewise, it can be completed by a variety of individuals or services.
Some LLC members are happy to take on this responsibility themselves, while others prefer to get attorneys involved. Still others find an excellent middle-ground in the form of operating agreement services, which streamline the process and provide valuable insight.
The inherent flexibility of operating agreements extends to pricing. Depending on how you choose to draft and review this document, you could potentially complete it free of charge—or it could cost you as much as $1,000. In most cases, if you seek professional assistance, the final cost will land somewhere between these two ends of the cost spectrum.
Of course, long-term costs are worth considering. Without an operating agreement available to outline various rights and responsibilities, your LLC’s members could be vulnerable to disputes. In the worst-case scenario, this could lead to time-consuming and costly legal proceedings. Imagine how much easier and less expensive it would be to simply refer back to the details from your operating agreement.
In addition to the basic costs outlined above, forming and maintaining an LLC may mean covering special expenses. These don’t apply to all businesses but can add up quickly when they’re required. Common costs worth considering include:
While business licenses and permits are not required for all Maryland entities, most need to obtain at least a few to maintain compliance. Costs for these can vary based on the type of license or permit required. This, in turn, depends on the industry and the purpose of the business.
We’ve highlighted a few examples of common licensing expenses below:
The concept of the franchise tax varies somewhat from one state to the next. In Maryland, this tax should not be a concern for most types of businesses. It exclusively applies to utility service sales, such as phone, gas, or electric.
Calculated at two percent of gross receipts, this particular tax recognizes the privilege of doing business as a utility company in Maryland. Payments should be made to the SDAT.
Maryland LLCs are required to file annual reports with the SDAT. For now, this report costs $300 to file. This could change, however, as Governor Larry Hogan has announced legislation meant to eliminate the $300 fee for businesses that file annual reports online.
Don’t stress if you’re starting to feel overwhelmed by all the costs highlighted above, don’t stress. While these may seem exorbitant, they all move you towards your ultimate goal of gaining protection from personal liability.
What’s more, many of these costs can easily be written off on your taxes. Examples of deductible expenses include:
Of course, you’ll want to proceed with caution as you write LLC formation and maintenance expenses off your taxes. These need to be calculated correctly—and they should be thoroughly documented.
While it’s possible to tackle all this on your own, it might be worth your while to work with an accountant or tax lawyer. This could reduce your risk of getting audited and may even help you maximize your write-off expenses.
We’ve outlined a variety of Maryland LLC expenses in this guide—and even after examining these, you may struggle to keep them all straight. When in doubt, refer back to this table, which covers several of the main fees you can expect to pay:
LLC Filing Fee | $100 |
Registered Agent Service (Optional) | 199$ – 400$ a year |
Reserve Business Name (Optional) | $25 |
Filing a DBA (Optional) | $25 |
Operating Agreement (Optional) | Up to $1000 |
Annual Franchise Tax | 2% of gross receipts |
Annual Report | $300 |
By now, you should be well aware that Maryland LLC formation costs will vary from one business to the next. Basic filings such as the articles of organization or trade name application may be straightforward (assuming you don’t need expedited service), but other concerns will be highly dependent on your industry and location.
Don’t be afraid to get an expert in your corner so you can better understand your financial and administrative obligations. A little insight can save you a world of trouble, ensuring that you’re fully compliant as you strive for ambitious business objectives. Play your cards right, and you’ll be set up for success.
This portion of our website is for informational purposes only. Tailor Brands is not a law firm, and none of the information on this website constitutes or is intended to convey legal advice. All statements, opinions, recommendations, and conclusions are solely the expression of the author and provided on an as-is basis. Accordingly, Tailor Brands is not responsible for the information and/or its accuracy or completeness.
Shai Shmarel started his life as a corporate lawyer before switching to being an SEO and Content Manager at Tailor Brands. He has experience in managing companies, rankings SERPs and covering a content-driven approach for all things legal, business and marketing. When off work, you’ll usually find him chilling with a cup of coffee and a book in the desert.
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