If you have an LLC in Maryland that you would like to dissolve, you will need to take the appropriate steps in order to do so.
This article will provide a complete guide on how to dissolve an LLC in Maryland, including both voluntary and involuntary dissolution.
Reasons for dissolving an LLC can vary, but it is essential to understand all of your options before making a decision.
Steps to Dissolving a Maryland LLC
A Maryland limited liability company must go through several steps to dissolve. Each step is critical to follow in order to ensure that the process is done correctly.
Step 1: Notify LLC Members
LLC members must know about the dissolution of the company. They should be given enough time to make decisions about what they want to do with their investment in the company.
Steps for notifying members can include sending a letter or email, holding a dissolution meeting, or publishing a notice in a newspaper.
Step 2: Follow the Maryland LLC Operating Agreement
A Maryland LLC operating agreement is a legal document that contains the rules and regulations that govern the company, including how you dissolve it and distribute the LLC assets.
It is important to follow these rules when dissolving an LLC, as they can help to prevent any disputes between LLC members.
Usually, the operating agreement will require unanimous consent from the LLC members, but sometimes it can be done with a majority dissolution vote.
If your company doesn't have a Maryland LLC operating agreement, the dissolution process must follow Maryland's LLC Act.
Step 3: Pay off Debts and Obligations of the Maryland Limited Liability Company
A Maryland LLC should notify known creditors prior to the dissolution. That way, business debts, and obligations can be paid off. A creditor has the right to reasonable notice before any dissolution or transfer of an ownership interest in the LLC.
Advance notice must include your business name, mailing address, and nature of the debt or obligation.
Step 4: Close Business and Tax Accounts
Before you dissolve a Maryland LLC, make sure to close various tax accounts connected to your LLC.
This includes your federal employer identification number, state tax registration, and sales and use tax accounts. You'll also need to cancel any business licenses you may have obtained.
Step 5: Obtain LLC Tax Clearance
Maryland Secretary of State doesn't require Maryland LLCs to obtain tax clearance before the formal process of dissolution ends.
However, it is recommended to settle all outstanding taxes and other tax liabilities prior to the dissolution.
LLCs must pay common taxes, including federal income tax, state income tax, franchise tax, sales and use tax.
To obtain clearance, submit a completed Tax Clearance Application to the Maryland Department of Taxation.
Contact the IRS to cancel the LLC's Employer Identification Number (EIN).
Step 6: File Articles of Cancellation
Maryland LLC Articles of Cancellation are available through the Maryland State Department of Assessments and Taxation Charter Legal Department.
You will need to include your business name, the formal date of dissolution, the reason for LLC dissolution, the signature of a managing member or authorized representative, and your resident agent information.
The Department of Assessments and Taxation Charter Legal Department charges a $100 filing fee for Articles of Cancellation. Checks should be made payable to the Department of Assessments and Taxation.
Once you have filed your Maryland LLC Articles of Cancellation, your business will no longer exist.
Reasons to Dissolve a Maryland LLC
A limited liability company in Maryland can dissolve for a variety of reasons, some of which entail voluntary dissolution while others mean that the state decided to dissolve the business entity due to the loss of good standing.
Voluntary Dissolution of an LLC in Maryland
The LLC's members may initiate voluntary dissolution, or it can happen as a result of an event such as the death of a member.
Involuntary Dissolution of an LLC in Maryland
If the state involuntarily dissolves a company, it's typically because they failed to file an annual personal property return, submit reports or pay taxes.
FAQs
How Do I Dissolve a Foreign LLC in Maryland?
Unlike a domestic Maryland LLC, foreign LLCs have to file a termination or cancellation with the Secretary of State. The filing fee is $25, but you can opt for expedited service at an additional fee.
How Much Does It Cost to Dissolve an LLC in Maryland?
The dissolution form fee is $100. However, if you choose expedited processing, you will be charged an additional $50 for the service.
How Long Does It Take To Dissolve an LLC in Maryland?
Processing the official paperwork usually takes over a month. However, the SOS can process your documentation much faster if you opt for expedited processing.
The expedited processing fee is charged an additional $50, but it will shorten the processing period to one week. The processing period will sometimes depend on the reason for dissolution.
Can I Reopen a Dissolved LLC in Maryland?
You can reinstate a Maryland LLC if your file Articles of Reinstatement with the Maryland SOS and pay all fees associated with reinstatement.
If your LLC is administratively dissolved, you may be able to apply for administrative dissolution relief if certain conditions are met. The filing fee is $100, but keep in mind that you have to hire a resident agent, obtain licenses and permits, and update your company's contact legal information with the state.
What Happens if I Don’t Dissolve My LLC in Maryland?
A business owner in Maryland who doesn't dissolve their LLC could face a number of penalties. The state could fine the business owner, and they may also be required to pay back taxes.
Additionally, the business owner's personal assets could be at risk if they are sued. Tax obligations may also continue, even after the business is closed.
What Is the Reinstatement Deadline in Maryland?
There is no need to include a current annual report if you submit for reinstatement between January 1 and April 15.
The current report is required if you make a filing between April 15 and September 30. Personal property taxes are not required until the reinstatement application is submitted.
How to Dissolve an LLC in Maryland: Conclusion
If you need legal assistance to dissolve your LLC in Maryland, it is best to seek professional help from a law firm.
A qualified lawyer will be able to guide you through the process and ensure that all necessary paperwork is filed correctly.
Working with IncFile can avoid any potential problems and make the dissolution process as smooth as possible.
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