How to Start an LLC in Maryland
- Why Start a Business in Maryland?
- 1. Location
- 2. A Caring Community
- 3. Local Government Support
- 4. A Growing Labor Force
- 5. Resources for Small Business Owners
- 6. High Disposable Income
- Why Start an LLC in Maryland?
- Step 1 – Choose a Name
- Step 2 – Reserve your Business Name
- Step 3 – Find a Registered Agent
- Step 4 – Articles of Organization
- Step 5 – Operating Agreement
- Step 6 – EIN
- How Much is it to Start an LLC in Maryland?
Maryland might not be the first state that people think about when they want to start a business, but there are some useful opportunities within the state. And when you want to start a business, then you should consider creating an LLC. So in this article, we will look at how to start an LLC in Maryland.
Why Start a Business in Maryland?
Maryland was rated as the 39th best state to start a business in 2022. While this put it outside of the bottom 10 states, it wasn’t particularly great. And therefore, people tend to think that Maryland is not a great business place. However, some opportunities are great for those looking to start a business in the state. These include:
Close to the capital of the US, Maryland is one of the best locations for those that want to have the benefits of being close to the seat of politics and the large population, but not with the high costs. And the state is often visited by those from the capital, including congressional staff members. These people are usually looking for great small businesses and this can open new opportunities for small business owners.
2. A Caring Community
Maryland has an important philosophy that is about buying from local small businesses. And the community understands that small businesses are the lifeblood of the local community and the economy. Therefore, they are usually very active in their support. Therefore, Maryland businesses can often find support from people they’ve never met before.
3. Local Government Support
The local and the state government teams are well aware that small businesses are important for the local growth of the economy. Therefore, many of them are out to help small businesses to succeed. Therefore, growth for small enterprises can be quick and it can lead to a higher survival rate.
4. A Growing Labor Force
While Maryland was once described as one of the least desirable states to move to, there is certainly evidence against this. Maryland has a growing population, especially those of working age. In addition, unemployment rates have fallen sharply. The skills available are also diverse and highly educated, therefore businesses can find the staff they need to build a strong business.
5. Resources for Small Business Owners
There are numerous opportunities for small business owners to get access to resources that can help them thrive and succeed in a competitive market. There is access to government schemes and access to their services as well. These services include accounting and counseling. There is also easy access for small business owners to get access to venture capitalists for much-needed financing.
6. High Disposable Income
In addition to some of the best workers, there are also some of the best-paid workers in the USA. The typical individual in Maryland has a higher disposable income. Therefore, they have more spending power than the typical American which offers more opportunities.
Here is a table comparing some key economic aspects of Maryland to neighboring states.
|State||LLC Filing Fee||LLC Annual/Biennial Fee||Corporate Tax Rate||Nominal GDP per capita|
|Maryland||$100||$300 (every year)||8.25%||$71,083|
|Pennsylvania||$125||$70 (every 10 years)||9.99%||$64,751|
|Virginia||$100||$50 (every year)||6.00%||$68,483|
|Delaware||$90||$300 (every year)||8.70%||$80,446|
|US Average||$130.38||$89.34 (every year)||5.60%||$64,773.08|
Why Start an LLC in Maryland?
There are numerous reasons why you would want to start your LLC. For one, LLCs have protection. For instance, an LLC has a registered business name that can then not be used by another entity within the state. If another entity does try to use the name, then you have the legal right to take them to court to get them to stop. You might also want to take compensation from them.
Another form of protection that you can get is that you can ensure that your personal and business assets are kept apart. Therefore, if there is a debt on the business, creditors cannot claim personal property to pay off that debt. This protects your house, car, clothes, and other personal objects that other sole proprietors could lose if their business folds.
And this can be pretty important. Many small businesses, in any state, don’t survive throughout the first year or five years.
LLC businesses can also benefit from tax benefits. The tax burden is smaller than a normal corporation. Though you can have corporation tax if you so want. It might be best to speak to a tax expert or accountant to see what would be best for your business.
Another benefit is the access to other services that you can get. Venture capitalists are more likely to invest in businesses that are LLCs than sole proprietors. And it becomes easier to organize the share percentage with an LLC.
You will also be able to get access to a business bank account, which offers you significant business.
How to Start an LLC in Maryland
Here are the instructions that you need to help you start an LLC in Maryland.
Step 1 – Choose a Name
The first thing that you need to do is to create a name for your new business. The name for the LLC does have to follow specific rules and regulations. For example, your business does have to have LLC or Limited Liability Corporation within the name. The name can also not have any forbidden words that are restricted based on industries that are regulated.
The name cannot also be confused with any government organization agent.
A final requirement is that your name should not be taken by another business or business owner. To ensure this, you should do a business name search. You can do this on the Secretary of State's website. The check is free to complete. You might also need to check on social media, Google, and selling platforms.
In addition, you should check for domain authority. A domain name check is also free.
The whole process isn’t long. And you can use a business name generator to help you create a list of potential names for you to use for your new business.
Step 2 – Reserve your Business Name
Now you need to reserve your business name. Unlike with other states, the time you’ve got to reserve your business name is relatively short, at just 30 days. Though the cost is also relatively small, at just $25 per month. The process can be completed on the Secretary of State's website.
Therefore, unlike in other states, there is no time to waste when it comes to registering your LLC.
Step 3 – Find a Registered Agent
Now you need to find a registered agent for your business. The registered agent is an individual or entity that will act on your business’s behalf. They can receive and send information to the right government departments within the state.
The registered agent must be over 18 years old, they need to reside in the state, and be available during normal business hours.
Numerous businesses can act as registered agents for you. Two of the best options include ZenBusiness and IncFile. These companies cannot just act as your registered agent in the state, they can also act as your registered agent in all 50 states of the USA. They can also help you to register your business, help you complete paperwork and remind you of important deadlines.
Step 4 – Articles of Organization
Now you need to register your LLC by submitting the Articles of Organization. The cost of registering the LLC is $100. This is below the national average.
Several details should be included in the articles of organization that include:
- LLC name and address
- The registered agent’s details
- Manager-managed or member-managed
- The signature of the organizer
The process is relatively quick to file and complete.
Step 5 – Operating Agreement
Now you can look at building your operating agreement. This is a mandatory document, but it is also one of the most useful documents that you have. Banks, creditors, and investors will want to see a copy of this document before engaging with you.
The documents will detail who is in control of what aspect of the business.
Step 6 – EIN
The next step is to get an EIN number from the IRS. The free number can be requested from the website with ease. There is no fee and it can take about two weeks for the number to be issued.
The EIN number is essential for businesses that have more than one member or are going to employ people. Banks might also request an EIN for opening a business account. In addition, investors might want to see one before they invest in your business.
How Much is it to Start an LLC in Maryland?
Starting a business in Maryland is not free. However, the costs are relatively low. The business name reservation is just $25 and the filing of documents is just $100.
Final Word: How to Start an LLC in Maryland
Maryland is certainly not the first state people think of when they want to start a business. However, that just means that other potential competitors might stay away. Therefore, you can find there are more opportunities for you. Above are the steps to get started and how to start an LLC in Maryland.