LLC Cost in Maryland | How Much Does It Cost to Start an LLC

LLC Costs in Maryland

Forming a Limited Liability Company (LLC) in The Old Line State is a popular choice for entrepreneurs and small business owners who want to protect their personal assets and enjoy flexibility in their business operations. LLC formation costs vary from state to state, and it is essential to understand the costs involved in forming and maintaining an LLC in Maryland. This article will overview the initial and ongoing costs of establishing and running an LLC in Maryland.

If you would like to understand Maryland LLC Costs and to know more about how much it costs to form an LLC in Maryland, read the whole article until the end.

Webinarcare Editorial Team will help you understand how much an LLC Costs in Maryland. You must be guided by all the factors gathered in this article.

Initial LLC Formation Costs

When starting a limited liability company (LLC), knowing the initial costs associated with forming and registering your new business entity is essential. Understanding and preparing for these expenses can help you budget effectively and set your Maryland business on a path to success. Some common initial costs associated with forming an LLC include Articles of Organization filing fees, Resident Agent fees, and additional services, such as business name reservation fees. 

Articles of Organization Filing Fee

The first step in forming an LLC in Maryland is to file the Maryland Articles of Organization with the Maryland Secretary of State. This document officially creates the LLC and includes essential information about the business, such as its name, address, and Resident Agent. 

This document includes essential information about your LLC, such as:

  • The name of your LLC
  • The address of your LLC’s principal office
  • The name and address of your Resident Agent
  • The purpose of your LLC (optional in some states)

You can typically file the Articles of Organization online, by mail, or in person. A filing fee is associated with this process, which costs around $100. You can also file by mailing it to Maryland Secretary of State, which is located at CoState Department of Assessments and Taxation, Charter Division 301 W. Preston Street; 8th Floor, Baltimore, MD 21201-2395.

Resident Agent Fee

An LLC in Maryland must designate a Resident Agent who will be responsible for receiving legal and government documents on behalf of the business. You can act as your own Resident Agent or appoint someone you know. Professional Resident Agent in Maryland typically charge an annual fee ranging from $50 – $200.

 In Maryland, your Resident Agent must:

  • Be a resident of Maryland or a business entity authorized to do business in the state.
  • Have a physical address in Maryland (P.O. boxes are not acceptable)

Choosing a reliable and responsible Resident Agent is essential, as failure to receive and respond to legal documents can seriously affect your business. 

You can serve as your own Resident Agent or appoint a friend, family member, or professional Maryland Resident Agent Services.

Business Name Reservation Fee

If you have a specific business name in mind and want to ensure it is available when you are ready to file your Articles of Organization, you can reserve the business name with the Maryland Secretary of State. 

In Maryland, your LLC name must:

  • Include the words “Limited Liability Company,” “LLC,” or “L.L.C.”
  • Not contain any words or phrases that are prohibited by state law
  • Be distinguishable from the names of other businesses registered in the state

However, if you do not wish to file your LLC right away but want to hold the name that you have decided on, then you can reserve your LLC name for 30 days. You must file a name reservation application in the Maryland Secretary of State to keep the name. 

The online name reservation fee costs around $25, while the mail name reservation fee costs $25.

You can register your business under a different legal name if your preferred name isn’t available.  Once you have chosen a name, you can submit an application for a DBA (doing business as). If you have decided to file for a DBA, you can file it in three methods, online, by mail, and in person filing. for an easier way.

However, before filing Maryland DBA, you should know that you need to renew your DBA up to five years, which costs around $25 Filing Fee and $50 Expedited Fee

Ongoing LLC Costs

After you know the initial costs of forming an LLC in Maryland, you should also know the ongoing costs once you have filed for an LLC. Here are the involved costs that you need to know.

Annual Report Filing Fee

To keep your LLC in good standing in Maryland, you must file Annual Report with the Maryland Secretary of State. The Annual report provides updated information about your LLC, such as changes in address, members, or Resident Agent. 

In Maryland, the Annual report fee costs around $300 which can be paid on 1 year (15th April).

Franchise Tax or Annual LLC Tax

Some states require LLCs to pay an annual franchise or LLC tax, separate from the Annual report filing fee. Franchise tax, or annual tax, is a fee imposed by Maryland on businesses, including LLCs and Maryland Corporations, for the privilege of operating within their jurisdiction. This tax is separate from income taxes and is usually based on factors such as the company’s net worth, assets, capital, or a fixed dollar amount, depending on the Maryland’s specific tax regulations. 

The franchise tax in Maryland costs $300.

Maryland LLC Taxes To Be Paid

The State of Maryland is one of those rarest states in the United States that does not levy any personal income tax on businesses. However, the business LLCs must file other taxes with the State authorities.

Maryland Sales Tax

A sales tax is a government-imposed tax on the sale of goods and services. It is generally added to the price of a product or service at the point of sale and paid by the consumer. The tax is collected by the retailer or service provider, who then remits the collected tax amount to the relevant government authority. In Maryland, the sales tax rate is 6.00%. 

Maryland State Income Tax

Considering other taxes in Maryland, you should pay for the state income tax, which costs 8.25%. 

Maryland LLC Federal Self-Employment Tax

Federal self-employment tax rates are the same across all states. Self-employment taxes are imposed on self-employed individuals or members of a Limited Liability Company (LLC) taxed as a sole proprietorship or partnership.

The self-employment tax consists of the Social Security tax and the Medicare tax. As of 2021, the self-employment tax rate is 15.3%, which consists of:

  • Social Security Tax: 12.4% (applied to the first $142,800 of net self-employment income in 2021)
  • Medicare Tax: 2.9% (applied to all net self-employment income)

Please note that these rates are subject to change, so it’s essential to consult the IRS website or a tax professional for the most up-to-date information. Additionally, some self-employed individuals may be eligible for deductions, which can reduce their taxable income and the amount of self-employment tax they owe.

Maryland Property Tax

The property tax is fixed at 1.10% of industrial, commercial, residential, agricultural, and all other properties.

Business Licenses and Permits

Depending on the nature of your Maryland business and the location of your operations, you may need to obtain a Business License and permits. The costs of these licenses and permits will vary based on your specific business and location. In Maryland, the business license ranges from $50 – $300. However, research the requirements for your LLC in Maryland and budget for these expenses accordingly.

Optional LLC Costs

Here are the optional costs you must consider if you will form an operating agreement or hire a professional service.

Operating Agreement

Although not required by law in Maryland, it is highly recommended that LLCs draft an operating agreement. This document outlines the LLC’s ownership structure, management, and operating procedures. Hiring a Business Attorney to draft an operating agreement can cost anywhere from $500 to $2,000, or you can use online resources and templates to create one yourself.

However, if you are wondering how to create an operating agreement, you can check out the Operating Agreement to know and understand how it works.

Professional Services

You may hire professionals such as attorneys, Maryland Accountants, or business consultants to help you establish and run your Maryland LLC. These services can provide valuable expertise and guidance but come at an additional cost. Consider the potential benefits and weigh them against the costs when hiring professional assistance.

Can I Set Up an LLC For Free?

It’s impossible to set up an LLC entirely for free, as state filing fees and other costs are associated with establishing an LLC. Each state has its own fees for filing the Articles of Organization, the primary document required for forming an LLC. These fees typically range from $50 to $500, depending on the state.

However, you can save money by handling the formation process instead of hiring a professional service. Here are some steps to help you minimize the cost of setting up an LLC:

  • Choose your LLC’s name and check for availability in your state. This can generally be done through the Secretary of State’s website.
  • Prepare and file the Articles of Organization yourself. Maryland offer an online filing option or downloadable forms on their websites. By completing this process independently, you can avoid paying additional fees for a professional service.
  • Act as your own Resident Agent if permitted within Maryland. Maryland allows the business owner to serve as the Resident Agent, saving you the cost of hiring a professional registered agent service.
  • Create your own Operating Agreement using online resources and templates. Although not required in every state, an Operating Agreement is highly recommended to outline your LLC’s ownership structure and management. By drafting this document yourself, you can save on legal fees.
  • Research and apply for any required licenses and permits on your own. Depending on your business type and location, you may need specific permits or licenses. These costs can vary, but handling the application process yourself can save you the expense of hiring a professional service.

While you can’t set up an LLC for free, taking a do-it-yourself approach and minimizing the use of professional services can help you save money during the formation process. However, handling these tasks requires time and effort, and there may be additional legal or financial risks if mistakes occur.

FAQs

What are the filing fees for forming an LLC in Maryland?
The filing fee for forming an LLC in Maryland is $100.
How much does it cost to file Articles of Organization in Maryland?
It costs $100 to file Articles of Organization in Maryland.
Are there any additional fees for forming an LLC in Maryland?
You may need to pay for a name reservation and registered agent service, which can increase the overall cost.
How much does it cost to reserve an LLC name in Maryland?
It costs $25 to reserve an LLC name in Maryland.
Is there a fee for filing the Annual Report in Maryland?
Yes, the fee for filing the Annual Report in Maryland is $300.
Are there any penalties for not filing the Annual Report on time in Maryland?
Yes, there is a $100 late fee for not filing the Annual Report on time in Maryland.
Do I need to hire a Maryland attorney to form an LLC?
No, you do not need to hire a Maryland attorney to form an LLC, but it can be helpful.
What are the costs associated with hiring a Maryland attorney to form an LLC?
The costs can vary based on the attorney’s fees and services provided.
What is the cost of obtaining an EIN for an LLC in Maryland?
Obtaining an EIN for an LLC in Maryland is free.
Can I form an LLC online in Maryland?
Yes, you can form an LLC online in Maryland using the Maryland Business Express website.
How long does it take to form an LLC in Maryland?
It typically takes around 7-10 business days to form an LLC in Maryland.
Is expedited processing available for LLC formation in Maryland?
Yes, expedited processing is available for an additional fee.
What is the cost of expedited LLC formation in Maryland?
The cost of expedited LLC formation varies based on the level of service requested.
Is publication required for forming an LLC in Maryland?
No, LLCs do not require publication upon formation in Maryland.
What is the cost of a Registered Agent in Maryland?
The cost of a Maryland Registered Agent varies based on the provider and level of service.
Do I need to use a Registered Agent service in Maryland?
Yes, LLCs in Maryland are required to have a Registered Agent.
Can I act as my own Registered Agent in Maryland?
Yes, you can act as your own Registered Agent in Maryland if you meet the requirements.
What is the annual fee for a Maryland Registered Agent?
The annual fee for a Maryland Registered Agent varies based on the provider and level of service.
What is the fee for converting an existing business to an LLC in Maryland?
The fee for converting an existing business to an LLC in Maryland is $100.
Is forming an LLC in Maryland more expensive than in other states?
Maryland’s LLC formation fees are relatively affordable compared to other states.
Is there a fee waiver available for small businesses forming an LLC in Maryland?
No, there is no fee waiver available for small businesses forming an LLC in Maryland.
What are the ongoing costs of maintaining an LLC in Maryland?
The ongoing costs of maintaining an LLC in Maryland include the Annual Report fee, hiring a Registered Agent, and any required business licenses or permits.
What is the cost of an Operating Agreement in Maryland?
The cost of an Operating Agreement in Maryland can vary based on your provider and level of service.
Is an Operating Agreement required for LLCs in Maryland?
No, an Operating Agreement is not required for LLCs in Maryland, but it is highly recommended.
How much does it cost to file for Dissolution of an LLC in Maryland?
It costs $100 to file for the dissolution of an LLC in Maryland.
What happens if I do not file for Dissolution of an LLC in Maryland?
If you do not file for Dissolution of an LLC, you may still be liable for legal and tax obligations.
Is there a penalty for not filing for Dissolution of an LLC on time in Maryland?
Yes, there is a late fee of $100 for not filing for Dissolution of an LLC on time in Maryland.
What factors should I consider when determining LLC costs in Maryland?
You should consider the filing fees and ongoing costs, such as Registered Agent and Annual Report fees, when determining LLC costs in Maryland.
What is the cost to file an LLC in Maryland?
The cost to file an LLC in Maryland is $100.
Can I file my LLC online in Maryland?
Yes, you can file your LLC online in Maryland.
What is the processing time for filing an LLC in Maryland?
The processing time to file an LLC in Maryland is usually around 4-6 weeks.
How many members are required to form an LLC in Maryland?
Only one member is required to form an LLC in Maryland.
What is the annual maintenance cost for LLCs in Maryland?
The annual maintenance cost for LLCs in Maryland is $300.
Are there any additional taxes for LLCs in Maryland?
Yes, LLCs in Maryland are subject to State Income Tax and Sales & Use Tax.
What is the deadline for filing annual reports for LLCs in Maryland?
The deadline to file annual reports for LLCs in Maryland is April 15th.
Is a registered agent required for Maryland LLCs?
Yes, Maryland LLCs are required to have a registered agent.
Can I be my own registered agent for my Maryland LLC?
Yes, you can be your own registered agent for your Maryland LLC.
Does Maryland require an operating agreement for LLCs?
Although it’s not required, it’s always recommended to have an operating agreement for your Maryland LLC.
Are there any franchise taxes for LLCs in Maryland?
Yes, LLCs in Maryland are subject to franchise taxes.
How much is the franchise tax for LLCs in Maryland?
The minimum franchise tax for LLCs in Maryland is $300.
Is it possible to dissolve an LLC in Maryland?
Yes, it’s possible to dissolve an LLC in Maryland.
Can I cross-register an out-of-state LLC in Maryland?
Yes, out-of-state LLCs can be cross-registered in Maryland.
What is the cost to cross-register an out-of-state LLC in Maryland?
The cost to cross-register an out-of-state LLC in Maryland is $100.
Can I change my LLC name in Maryland?
Yes, you can change your LLC name in Maryland.
What is the cost to change an LLC name in Maryland?
The cost to change an LLC name in Maryland is $100.
Are non-residents allowed to form LLCs in Maryland?
Yes, non-residents are allowed to form LLCs in Maryland.
Do I need a lawyer to file an LLC in Maryland?
No, you don’t need a lawyer to file an LLC in Maryland, but it’s always recommended to consult with one.
Are there any residency requirements for LLC owners in Maryland?
No, there are no residency requirements for LLC owners in Maryland.
Can LLCs in Maryland be managed by members or managers?
LLCs in Maryland can be managed by members or managers.
What is the cost to hire a registered agent in Maryland?
The cost to hire a registered agent in Maryland varies depending on the company.
Can I amend my articles of organization in Maryland?
Yes, you can amend your articles of organization in Maryland.
What is the cost to amend articles of organization in Maryland?
The cost to amend articles of organization in Maryland is $100.
Are there any annual meetings required for LLCs in Maryland?
No, there are no annual meetings required for LLCs in Maryland.
Can LLCs in Maryland own property?
Yes, LLCs in Maryland can own property.
What is the annual personal property tax for LLCs in Maryland?
The annual personal property minimum assessment is $300, which is due each year by April 15th.
Is a business license required for LLCs in Maryland?
Yes, a business license is required for LLCs in Maryland.
What is the cost to purchase a business license in Maryland?
The cost to purchase a business license in Maryland varies depending on the type of business activity.

Also Read

Conclusion

Forming and maintaining an LLC in Maryland involves various costs, including initial filing fees, ongoing annual report fees, and taxes. Understanding and planning for these costs is essential when establishing your LLC. Additionally, consider any optional expenses, such as hiring professional services or drafting an operating agreement, to ensure the success and longevity of your LLC in Maryland.

Leave a Comment