How to Dissolve a Business in Maryland | Essential Steps


Steve Bennett
Steve Bennett
Business Formation Expert
Hi there, I'm Steve. My mission is to empower the next generation of online entrepreneurs with the knowledge and tools they need to succeed. My business insights are based on real-world experience, ensuring that aspiring entrepreneurs can confidently start and run their own businesses.

All Posts by Steve Bennett →
Business Formation Expert  |   Fact Checked by Editorial Staff
Last updated: 
WebinarCare offers informative content for educational purposes only, not as a substitute for professional legal or tax advice. We may earn commissions if you use the services we recommend on this site.
WebinarCare is led by Steve Bennett, a seasoned expert in the business world. He's gathered a team that's passionate about giving you reliable advice on everything from starting a business to picking the right tools. We base our tips and guides on real-life experience, ensuring you get straightforward and proven advice. Our goal is to make your business journey smoother and more successful. When you choose WebinarCare, you're choosing a trustworthy guide for all things business.
Dissolve Maryland LLC

Deciding to dissolve a Limited Liability Company can be difficult for business owners. Still, it is sometimes necessary due to changes in the business landscape, financial challenges, or personal reasons. Dissolving a business requires specific steps and regulations to complete the process correctly and legally. This comprehensive guide will teach you how to dissolve a business in Maryland.

Webinarcare Editorial Team will help you easily dissolve your business. You must be guided by all the factors gathered in this article.

If you are starting an LLC in Maryland, having an operating agreement is one of the key requirements in dissolving a business. Before starting the legal paperwork, there are a few things to remember. Initially, confirm that all LLC members agree with closing the business. Once everyone is ready, voting should be used to document everyone’s assent. They must vote in favor of the dissolution before the legal procedure may begin. The procedures for the dissolution are listed below.

How to Dissolve a Business in Maryland

Dissolving a business in Maryland requires following specific steps to ensure a smooth and legally compliant process. The process usually includes the following steps:

Step 1: Make the Decision

Before dissolving your business, ensure this decision is right for your Maryland business. Consider discussing the decision with your business partners, members, or legal counsel to weigh the pros and cons and determine if dissolving the business is best.

Step 2: Hold a Formal Vote

Once you’ve decided to dissolve your Maryland business, you’ll need to hold a formal vote among the members to approve the dissolution. This step is important because it ensures that all members know and agree to the decision to dissolve the business.

To hold a formal vote:

  • Review your Maryland Operating Agreement to determine the required voting procedures, such as the percentage of affirmative votes needed for approval.
  • Notify all Maryland members of the upcoming vote and give them sufficient time to review the matter and make an informed decision.
  • Conduct the vote according to the procedures outlined in your operating agreement.
  • Record the vote results in your business meeting minutes or a written resolution.

If most members approve the dissolution, you can proceed with the dissolution process.

Get a Professional Service

It’s important to get legal assistance when dissolving an LLC. With that, you must have a Resident Agent. Ensure that the Resident Agent you choose is qualified and legal since they will file the Article of Dissolution for your LLC. We reviewed the Best Resident Agent Services in Maryland for you to check out.

LLC Service

Rating & Pricing

Top Features

Learn More

#1 Recommendation

$299 Per Year

  • Free LLC Formation

  • RA service in all states

  • Legal consultation

$125 Per Year

  • Flat price for RA service

  • LLC formation package

  • Fast service

Recommended: Dissolving an LLC can be as crucial as forming one. That’s why aside from hiring a Resident Agent, LegalZoom’s LLC dissolution service is significant since it ensures that your company’s closure is handled efficiently, responsibly, and legally, leaving no room for future liabilities. That’s why we recommend –

LegalZoom – Starts at $129 + Filing Fees

Step 3: Settle the Outstanding Debts and Liabilities

You must settle all outstanding debts and liabilities before dissolving your Maryland business. This includes paying off loans, settling pending lawsuits, paying owed taxes, and fulfilling any remaining contractual obligations. You can inform your Maryland Business Attorney to ensure it is settled.

To settle your Maryland business’ debts and liabilities:

  • Review your business’ financial records to identify all outstanding debts and liabilities.
  • Contact creditors, lenders, and other parties to whom your business owes money or obligations, and arrange for payment or settlement.
  • If your business does not have sufficient funds or assets to cover all outstanding debts and liabilities, consult with legal counsel to determine the best course of action for settling these obligations.

Recommended: Legalzoom’s Business Attorney empower individuals with a tool that safeguards their future and protects their interests. With seamless accuracy and a commitment to excellence, Legalzoom ensures that legal matters are handled efficiently and effectively.

LegalZoom – Business Advisory Plan Membership – $39.09/month

Step 4: Distribute the Remaining Assets to Members

Once all debts and liabilities have been settled, you can distribute any remaining assets to the business members. Your operating agreement should do this or, if no such agreement exists, in proportion to each member’s ownership interest in the business.

To distribute assets:

  • Determine the fair market value of the remaining assets, such as real estate, equipment, or inventory. 
  • Calculate each member’s ownership interest in the business based on the operating agreement or their initial capital contribution.
  • Distribute the assets to each member according to their ownership interest.
  • Keep detailed records of all asset distributions for tax and legal purposes.

Step 5: File the Articles of Dissolution

After settling debts and distributing assets, you’ll need to file the Articles of Dissolution with the Maryland Secretary of State to dissolve your Maryland business officially. This document provides the state with notice that your business is ceasing operations and will no longer conduct business.

To file the Articles of Dissolution:

  1. Obtain the appropriate form from the Maryland Secretary of State‘s website. Visit the Maryland Department of Assessments and Taxation’s website and navigate to the Business Services section to find the necessary documents.
  2. Fill out the Articles of Dissolution Form with the required information, including your Maryland business name, the date of dissolution, and any other necessary details.
  3. Pay the filing fee of $100 in the Maryland Secretary of State’s office.
  4. Submit the completed form and payment to the Maryland Secretary of State’s office, either by mail or online, depending on your Maryland’s filing options.

Once your Articles of Dissolution have been processed and approved, your Maryland business will officially be dissolved.

Mail to: 
Maryland Secretary of State
CoState Department of Assessments and Taxation, Charter Division 301 W. Preston Street; 8th Floor, Baltimore, MD 21201-2395

Filling Fee:
$100

Step 6: Notify the IRS and Government Agencies

After dissolving your business with the Maryland Secretary of State, you’ll need to notify the Internal Revenue Service (IRS) and other Maryland government agencies of the dissolution. This is important to ensure your business complies with tax laws and other regulations.

To notify the IRS of the dissolution:

  1. File your final federal tax return using Form 1065 and check the box indicating that it is the final return for your business.
  2. Cancel your Employer Identification Number (EIN) in Maryland by mailing a letter to the IRS at the address where you filed your tax return. Include your EIN, business name, and reason for cancellation in the letter.
  3. Update your Maryland business status with any other relevant government agencies, such as the Maryland Department of Revenue, Department of Labor, and local licensing and permitting offices.

Step 7: Cancel Licenses, Permits, and Insurance Policies

To fully dissolve your Maryland business, you’ll need to cancel any business licenses, permits, and insurance policies associated with your business. This may include Maryland Business Licenses, professional licenses, sales tax permits, and any other permits required for your industry.

You must contact the issuing agency to cancel your licenses and permits and follow their specific cancellation procedures. You should also contact your insurance provider to cancel any remaining business insurance policies. With the cancellation of the mentioned licenses, permits, and Business Insurances in Maryland, you also need to remove a Resident Agent since he won’t be able to continue filing documents for your business unless you are the Resident Agent of your business. 

Step 8: Maintain Records of the Dissolution Process

For legal and tax purposes, it’s important to maintain detailed records of the steps taken to dissolve your Maryland business. This includes documentation of the formal vote to dissolve the business, debt settlements, asset distribution records, and copies of filed state and federal tax returns.

Keep these records for at least seven years, as they may be needed in the event of an IRS audit or other legal issues arising from the dissolution.

Cost of Dissolving an LLC in Maryland

The cost of dissolving an LLC in Maryland can vary based upon various factors. The Maryland Articles of the Dissolution filing fee cost $100. Other costs include any outstanding taxes or debts the business owes and potential costs for settling business contracts or selling business assets.

It’s also important to factor in professional fees, such as if you hire an attorney or accountant to assist with the dissolution process. After the LLC is dissolved, the remaining company assets are divided among the members. The exact breakdown of these costs can often be complex and will depend on the specific circumstances of the LLC, so consulting with a legal or financial advisor can be helpful.

Reasons Why an LLC in Maryland Dissolves

There are numerous reasons why an LLC in Maryland dissolves, and these reasons could impact other LLCs. It is best to understand the why’s and how to deal with it rather than knowing that your LLC may dissolve sooner or later. Here is the list of possible reasons why an LLC dissolves.

  1. Expired Duration: In Maryland, an LLC will automatically dissolve if it reaches the end of its defined duration stated in the Articles of Organization.
  2. Member Vote: An LLC may dissolve in Maryland if the members vote for dissolution. Usually, the LLC Operating Agreement outlines the percentage of member votes required to dissolve the LLC.
  3. Judicial Dissolution: A court in Maryland may order the dissolution of an LLC if it is in the best interests of the members, especially in cases of fraud, illegal activities, or oppressive behavior.
  4. Bankruptcy: If the LLC becomes insolvent and cannot pay its debts, it may be forced into bankruptcy. This usually leads to the dissolution of the LLC.
  5. Non-compliance: If the LLC does not comply with state laws or fails to meet legal requirements, such as filing annual reports or paying taxes, the state may forcibly dissolve the LLC.
  6. Merger or Consolidation: If the LLC in Maryland merges or consolidates with another company and the LLC is not the surviving entity, it will be dissolved.
  7. Death or Withdrawal of a Member: Unless specified otherwise in the Operating Agreement, the death, withdrawal, bankruptcy, or incompetence of a member may cause the LLC to dissolve.

Please note that the process for dissolution typically includes settling all business debts, distributing any remaining assets among the members, and filing a formal notice of dissolution with the Maryland Secretary of State.

After the Maryland LLC Dissolution

Once your Maryland business has been dissolved, it typically cannot be reinstated or “taken back” after a few years. Instead, you would need to form a new LLC in Maryland if you wish to operate a business under a limited liability company structure again.

To create a new Maryland LLC, you would need to follow the standard formation process, which generally includes the following:

  • Choosing a Unique Business Name: Ensure that another business does not already use the name you choose in Maryland and complies with state-specific naming requirements.
  • Appointing a Resident Agent: Designate a Resident Agent who will be responsible for receiving legal correspondence on behalf of your LLC.
  • Filing Articles of Organization: Submit the Articles of Organization with the Maryland Secretary of State’s office, along with the required filing fee.
  • Creating an Operating Agreement: Draft an agreement outlining the rules and regulations governing your new LLC, including member roles, ownership percentages, and management structure.
  • Obtaining Necessary Licenses and Permits: Apply for any required business licenses, permits, and tax registrations with the appropriate state and local authorities.
  • Registering with the Internal Revenue Service (IRS): Obtain an Employer Identification Number (EIN) from the IRS, which will be necessary for tax purposes and other business activities.

Availability of the Business Name

When a business is in Maryland was dissolved, the business name becomes available for other business owners to use after a certain period. However, the specific rules and regulations regarding the availability of a dissolved business name can vary. Keep in mind that even if the name becomes available, other factors, such as trademarks or potential confusion with existing businesses, may still impact the ability of another business owner to use the name.

FAQs

How do I dissolve my Maryland LLC?
You can dissolve your Maryland LLC by filing Articles of Dissolution with the State Department of Assessments and Taxation (SDAT).
What is required to dissolve a Maryland LLC?
To dissolve a Maryland LLC, you need to file Articles of Dissolution and settle all debts and obligations.
How much does it cost to dissolve a Maryland LLC?
The filing fee for Articles of Dissolution in Maryland is currently $100.
Can I dissolve my Maryland LLC online?
No, currently, you cannot dissolve your Maryland LLC online. You need to file by mail.
What is the mailing address to dissolve a Maryland LLC?
You need to mail your Articles of Dissolution to
Do I need to publish a notice of dissolution in Maryland?
No, you do not need to publish a notice of dissolution in Maryland.
Is there a penalty for not dissolving my Maryland LLC?
Yes, if you do not dissolve your LLC and continue to file annual reports, you will be charged annual fees and penalties until you dissolve.
Can I dissolve my Maryland LLC if it has unpaid taxes?
No, you cannot dissolve your Maryland LLC if it has unpaid taxes. Before you dissolve, you must settle all Maryland state taxes due.
Do I need to notify the IRS if I dissolve my Maryland LLC?
Yes, you need to notify the IRS by filing Form 966, Corporate Dissolution or Liquidation, within 30 days after the date of dissolution.
What happens to my Maryland LLC’s name after dissolution?
After dissolution, your Maryland LLC’s name will become available for someone else to use.
Can I change my mind after I submit Articles of Dissolution in Maryland and reinstate my LLC?
No, once Articles of Dissolution are filed with the SDAT, you cannot undo or revoke them.
If I fail to file Articles of Dissolution, will my Maryland LLC be automatically dissolved?
No, your Maryland LLC will not be automatically dissolved. You must file Articles of Dissolution to dissolve your LLC.
Do I need to file final taxes for my Maryland LLC before dissolved?
Yes, you must file final tax returns for your Maryland LLC, and pay all outstanding liabilities before dissolving your LLC.
Can I put someone else in charge of dissolving my Maryland LLC?
Yes, you can hire an attorney or an accountant to handle the dissolution of your Maryland LLC.
Can I change my Maryland LLC’s address while filing for dissolution?
Yes if you wish to change your LLC’s address of record, follow SDAT’s procedures to do so before you dissolve your LLC.
Can I dissolve my Maryland LLC if I am in a foreign country?
Yes, you can dissolve your Maryland LLC from anywhere in the world, as long as you follow Maryland State DBA requirements.
Do I need to file Articles of Dissolution with the Secretary of State for Maryland?
No, you file Articles of Dissolution with the SDAT, not with the Secretary of State for Maryland.
How do I notify my Maryland registered agent that I am dissolving my LLC?
You need to notify your registered agent in writing that you are dissolving your LLC.
How do I confirm that my Maryland LLC has been dissolved?
You will receive a confirmation letter from the SDAT, in the mail, or by email, if you included an email address in the Articles of Dissolution.
What if I can’t find my Maryland LLC’s original Articles of Organization?
That’s fine; you can still dissolve your Maryland LLC by distributing its remaining assets, paying off creditors, and properly disposing of business records.
What is the timeline to request a reinstatement of my Maryland LLC after it has been dissolved?
You must apply for reinstatement within one year of the dissolution of your Maryland LLC, without extension of time.
Do I need to file LLC tax returns for periods after my Maryland LLC is dissolved?
Yes, you need to file LLC tax returns for any periods after your Maryland LLC has been dissolved.
Can creditors and claimants levy against LLC members after dissolution of my Maryland LLC?
Yes, after dissolution the LLC will wound up and affair settle before the cancellation of its charter, and thus creditors and claimants may file suit.
Can a foreign LLC or corporation dissolve an LLC in Maryland?
Yes, a foreign LLC or corporation can dissolve an LLC in Maryland if it is registered and in good standing with the state of Maryland.
What do I do if someone files a lawsuit or has claims against me after my LLC has been dissolved?
You should contact a Maryland corporation and business lawyer for detailed guidance specific to your business.
Where can I learn more about dissolving my Maryland LLC?
You can find more information about dissolving your Maryland LLC by visiting the SDAT website or by consulting a business professional.
How can I dissolve my Maryland LLC?
You can dissolve your Maryland LLC by filing Articles of Dissolution with the Maryland Department of Assessments and Taxation.
Is there a fee for dissolving a Maryland LLC?
Yes, there is a $100 fee for filing Articles of Dissolution with the Maryland Department of Assessments and Taxation.
When can I dissolve my Maryland LLC?
You can dissolve your Maryland LLC at any time.
What if I want to dissolve my Maryland LLC before it has conducted any business?
You can dissolve your Maryland LLC before it has conducted any business by filing Articles of Cancellation with the Maryland Department of Assessments and Taxation.
What information do I need to include in Articles of Dissolution for a Maryland LLC?
The Articles of Dissolution for a Maryland LLC should include the name of the LLC, the date of its formation, and a statement that the LLC has been dissolved according to the provisions of the Maryland LLC Act.
Can I reinstate my Maryland LLC after it has been dissolved?
Yes, you can reinstate your Maryland LLC within 5 years of its dissolution by filing a form with the Maryland Department of Assessments and Taxation and paying a $100 fee.
Is a Maryland LLC required to file a final tax return?
Yes, a Maryland LLC must file a final tax return for the year in which it was dissolved.
Do I need to notify all my Maryland LLC’s creditors before dissolving it?
Yes, you should notify all your Maryland LLC’s creditors before dissolving it.
Can one member of a Maryland LLC dissolve it without the consent of the other members?
No, all members of a Maryland LLC must agree to dissolve it.
Can I dissolve a Maryland LLC even if it has outstanding debts?
Yes, you can dissolve a Maryland LLC even if it has outstanding debts.
Do I need to submit proof that my Maryland LLC has paid its taxes before dissolving it?
Yes, you need to submit proof that your Maryland LLC has paid all taxes owed to the state before dissolving it.
What happens to any remaining assets of a dissolved Maryland LLC?
Any remaining assets of a dissolved Maryland LLC will be distributed to its members according to their ownership interests or as otherwise agreed upon.
Can employees of a dissolved Maryland LLC file for unemployment benefits?
Yes, employees of a dissolved Maryland LLC may be eligible for unemployment benefits.
Is a public notice regarding the dissolution of a Maryland LLC required?
No, a public notice is not required, but some companies might choose to do so.
Can a Maryland LLC be dissolved by court order?
Yes, a Maryland LLC can be dissolved by a court if its members have acted fraudulently or illegally.
Am I required to file annual reports with the Maryland Department of Assessments and Taxation after dissolving my LLC?
No, once you have dissolved your Maryland LLC, no further filings will be required.
Is it necessary to dissolve a Maryland LLC if it is no longer active?
It is advisable to dissolve a Maryland LLC if it is no longer active to avoid any unwanted legal implications.
How can I dissolve a Maryland LLC if I am not currently located in Maryland?
You can still dissolve a Maryland LLC if you are not located in the state by filing dissolution forms with the Maryland Department of Assessments and Taxation.
How can I request a certificate of good standing for my Maryland LLC prior to dissolving it?
You can request a certificate of good standing from the Maryland Department of Assessments and Taxation website.
Will my Maryland LLC be removed from the state records after it has been dissolved?
No, it will not be removed, but it’ll be marked as “LLC—not in good standing.”
Do I need to file dissolution forms with the Internal Revenue Service (IRS)?
No, you do not need to file dissolution forms with the IRS, except for the final the tax return for the year when the LLC was dissolved.
What happens if I do not dissolve my Maryland LL C but just stop using it?
You will still be responsible for paying filing fees, annual fees, and taxes even if you stop using the LLC, so it’s always advisable to dissolve it.
What is the deadline for filing Articles of Dissolution for a Maryland LLC?
There is no deadline for filing Articles of Dissolution.
Can an attorney help me dissolve my Maryland LLC?
Yes, an attorney can help you with the legal requirements for dissolving a Maryland LLC.
How do I obtain proof of dissolution for my Maryland LLC?
You can get proof of dissolution for your Maryland LLC by ordering and paying for a certified copy of the filed Articles of Dissolution from the Maryland Division of Corporations.
How long will my Maryland LLC remain active if I take no steps to dissolve it?
Your Maryland LLC will remain active until its Articles of Dissolution or Articles of Cancellation are filed and accepted by the Maryland Department of Assessments & Taxation.

Also Read

Conclusion

Dissolving Maryland business can be complex and time-consuming, but following the steps outlined in this guide will help ensure a smooth and successful dissolution. By conducting a formal vote, settling debts and liabilities, distributing assets, filing the Articles of Dissolution, notifying government agencies, and canceling business licenses and permits, you can legally dissolve your Maryland business and move forward with the next chapter of your professional life.

Leave a Comment