How Much Does an LLC Cost in Maryland (Formation Fees)
If you're thinking of forming your LLC in Maryland, it's good to know the ins and outs of the formation process and the costs you'll pay to the Secretary of State.
Through my experience as a Mergers and Acquisitions specialist and after consultation with LLC experts in Maryland, we’ll provide our insights on the costs and fees of LLC formation so you can plan your budget well and take care of your filing fees.
When planning to start an LLC, consider employing a professional Maryland LLC service to help avoid errors that could prolong the LLC formation process.
Quick Summary
- An LLC in Maryland costs $100 to submit your Articles of Organization.
- Upon approval of the business, additional expenses you may incur include licenses and permits, registered agent service, taxes, annual reports, and other documents.
- LLCs in Maryland can opt for corporate taxation, subjecting them to the state's 8.25% corporate income tax, according to the Maryland Department of Taxation.
- I noted that my clients’ LLCs in Maryland were subject to detailed reporting but the state provides a supportive business climate.
Cost to Start an LLC in Maryland
Before an LLC can legally do business in the state, there are mandatory costs and optional expenses that should be covered.
1. LLC Formation Filing Fee ($100 - Mandatory)
To properly register your Maryland LLC, you must submit a registration application of your Articles of Organization, and a $100 filing fee must be filed to the Maryland Secretary of State.
If you process your request online, the SOS will accept it within 7 business days of receiving it if you pay an extra $50. If you apply by mail, ordinary processing may take 6-8 weeks.
Fortunately, I was able to avail of the 3-hour rush filing option for online submissions which cost $325. Other options include a 2-hour expedited service for mail applications that amounts to $425 [1].
2. Registered Agent Fee ($80-$300 – Optional)
In Maryland, you can act as your own registered agent or select a trusted friend to take up the role for $0.
However, this means that you must meet all the registered agent requirements for being of legal age, having a Maryland physical address, and being in the office throughout business hours.
Alternatively, you can hire a Maryland registered agent service and pay an average yearly fee of $80 to $300.
3. Name Reservation Fee ($25 - Optional)
As per Section 505 of the Maryland Corporations and Associations Code, an LLC owner can reserve a business name for an exclusive 30 days.
To obtain and reserve a company name, Maryland costs $25 for regular processing and $20 for expedited processing.
Through my experience, I learned that most filings are delayed because a few of my clients use a name that’s already registered with the state.
Before filing, ensure that your preferred name is available and it complies with state guidelines.
Expenses Following the Approval of Your LLC
Apart from paying the basic fees for filing your incorporation documents, here are other Maryland LLC costs and fees.
1. Business License (Depending on the Line of Business - Mandatory)
Depending on the nature of the business, specific licenses and permits may be required before your LLC can operate in the state. The cost will vary depending on the type of industry.
To illustrate, I had a client who was required to obtain a license to open an insurance business. The amount to be paid ranged between $54 to $1,000.
2. Annual Reports ($300 - Mandatory)
To maintain good standing with the SOS and be able to conduct business in the state, all Maryland LLCs are required to submit an annual registration.
The LLC annual report fee is $300. I advise clients to file on time to prevent late charges.
"In Maryland, an annual report outlining business activities and gross sales within the state must be submitted by April 15th."
- Jon Morgan, CEO, Co-Founder & Editor-in-Chief of Venture Smarter
3. Taxes (Depending on Income Bracket - Mandatory)
By default, all Maryland LLCs are pass-through entities; the firm needs to submit the members' income taxes.
However, LLCs must pay the state income tax rate of 2% for the first $1000 of business income and a maximum of 5.75% for a business income threshold exceeding 250,000.
Also, because LLCs in Maryland offer flexible taxation systems, you can select your Maryland LLC to be taxed similarly to a corporation. In this case, you'll be liable for paying m Maryland's 8.25% corporate income tax, according to the Maryland Department of Taxation [2].
4. Operating Agreement ($100 - $200 - Optional, but Recommended)
A Maryland LLC operating agreement specifies the terms governing the limited liability company, its interests, activities, and management, as well as the sections governing the rights and obligations of its members.
You can write a Maryland LLC operating agreement for yourself for free or employ an online formation service to do it for you for $100 to $200.
For clients who have budget to spare, I advise them to hire a lawyer to draft the document to ensure its validity.
5. DBA ($25 - Optional)
A trade name or a Doing Business As (DBA) refers to any name that a company employs that isn't its legal name.
Submit a trade name applied to the Maryland Secretary of State website, which costs $25 or $50 for expedited processing. Checks are sent to the Department of Assessments and Taxation in Maryland.
6. Certificate Of Status ($20 - Optional but Recommended)
The Maryland state department must receive $20 for the certificate of good status, and you can add another $20 for expedited processing.
Once the business is operational, I remind clients the importance of acquiring a Certificate of Status. It is necessary for pursuing potential investors and acquiring loans.
7. Maryland Certified Document Copies ($20 + $1 - Optional but Recommended)
A certified copy of a legal document attests to the truthfulness of the official records you have submitted to the Maryland Secretary of State.
A certified copy costs $20 plus $1 for each additional page in Maryland. You can also pay an additional $20 for expedited processing.
When filing these documents, there's a service fee of 3% for card and PayPal payments and $3 for checks, according to the Maryland Business Express fee schedule [3].
8. Employer Identification Number ($0 - Optional but Recommended)
The Internal Revenue Service issues each firm with an EIN, which also serves as your corporate security number. Through their website, Maryland LLC owners can apply for a free EIN.
Alternatively, an EIN will cost you between $50 and $100 if you choose a professional agency.
FAQs
Is There A Penalty For Paying My Taxes Late In Maryland?
There is a penalty for paying your taxes late in Maryland. You will be charged a penalty ranging from 10% to 25% of the amount due.
What Payment Methods Can I Use To Pay Maryland’s State Fees For Filing My LLC?
The payment methods you can use to pay Maryland’s state fees for filing your LLC include checks, money order, debit or credit cards.
How Much Do I Have To Pay To Reinstate My Maryland LLC?
You have to pay $100 to reinstate your Maryland LLC, this fee covers the Certificate for Reinstatement. Any taxes owed should also be paid.
References:
- https://dat.maryland.gov/Pages/sdatforms.aspx
- https://www.marylandtaxes.gov/business/income/tax-information.php
- https://egov.maryland.gov/BusinessExpress/Payment/FeesSchedule
