How to Dissolve an LLC in Maryland? (Step by Step Guide)

Published by Delina Chantel Yasmeh | Author

Last updated: November 17, 2024

FACT CHECKED by Lou Viveros, Growth & Transition Advisor

Methodology
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If you have an LLC in Maryland that you would like to dissolve, you will need to take the appropriate steps to do so. Voluntary reasons for dissolving an LLC can vary, but it is essential to understand the process before making a decision.

As an experienced business consultant with over a decade of practice with limited liability companies, partnerships, and corporations, I will provide a complete guide on how to dissolve an LLC in Maryland, backed with the necessary research, legal information, and personal experience.

Quick Summary

6 Steps to Dissolving an LLC in Maryland

The steps to dissolving a Maryland LLC must go through a standardized procedure. Each step is critical to follow to ensure that the process is done correctly.

Step 1: Vote to Dissolve the LLC 

Given the significant number of Maryland establishments closing — 15,376 between March 2021 and March 2022, according to the US Small Business Administration — LLC members must be promptly notified about the pending dissolution to ensure a timely and informed vote [1].

They should also be given enough time to make decisions about what they want to do with their ownership interests and investment in the company.

You can notify members by sending a letter or email, holding a dissolution meeting, or publishing a notice in a newspaper.

During the dissolution meeting, the operating agreement will require unanimous consent from the members, but sometimes it can be done with a majority dissolution vote.

Once the members vote and agree, you can officially start the dissolution process.

"If a company lacks a Maryland LLC operating agreement, it is compelled to adhere to the dissolution procedures outlined in Maryland's LLC Act."

-Jon Morgan, Co-Editor & Co-Founder of Venture Smarter

Step 2: Notify Creditors About Your LLC's Dissolution

A Maryland LLC should notify known creditors before 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.

In our experience, we sent advance notices to our creditors which included our business name, mailing address, and the nature of the obligation.

Step 3: File Final Tax Returns and Obtain Tax Clearance

Before we dissolved our Maryland LLC, we made sure to close various tax accounts connected to our LLC including our federal employer identification number, state tax registration, and sales and use tax accounts.

When closing tax accounts you must file final tax returns at the state and federal levels to obtain a clearance certificate.

The 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 before the dissolution.

To obtain our clearance, we submitted a completed Tax Clearance Application to the Maryland Department of Taxation.

We recommend contacting the IRS to cancel the LLC's Employer Identification Number (EIN).

Step 4: File Articles or Certificate of Dissolution

Maryland LLC Articles of Cancellation are available through the Maryland State Department of Assessments and Taxation Charter Legal Department [2].

You will need to include your business name, the formal date of dissolution, the reason for the limited liability company dissolution, the signature of a managing member or authorized representative, and your Maryland resident agent information.

The Department of Assessments and Taxation Charter Legal Department charges $0  when you file Articles of Cancellation. However, like in our case, you must pay $50 if you want expedited services.

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.

Step 5: Distribute Assets

The next step in dissolving an LLC in Maryland is to assess and settle all outstanding debts and liabilities. This involves reviewing financial records and contacting creditors to arrange for payment or negotiation of outstanding balances.

Once debts and liabilities have been settled, the remaining assets can be liquidated.

In our case, we distributed assets among LLC members under their ownership interests as outlined in the LLC's operating agreement.

Step 6: Close All Accounts and Cancel Licenses and Permits

The final phase of LLC dissolution in Maryland involves the closure of all business-related accounts. This includes shutting down bank accounts, credit facilities, and any other financial accounts associated with the LLC.

It's also crucial to formally revoke all business licenses and permits.

This step ensures the LLC no longer holds any legal responsibilities or liabilities associated with these licenses or permits.

During our LLC closure, we made a list of all utilities and service providers (like internet, phone, and electricity) and contacted them to close the accounts. Some required a final meter reading or a closing statement.

We recommend that you schedule these closures to coincide with your final day of business to avoid early termination fees.

FAQs

References:

1. https://advocacy.sba.gov/wp-content/uploads/2023/11/2023-Small-Business-Economic-Profile-MD.pdf
2. https://dat.maryland.gov/SDAT%20Forms/llc-cancel.PDF