Maryland Business Corporations
There are all sorts of corporations to help your business get off the ground when it’s time: from nonprofits that accept tax-deductible donations to a limited liability corporation (LLC) formed solely to protect your assets from liability, there are a lot of different types of corporations to fit your business needs. A corporation limits the liability of its owners’ personal assets from the corporation’s debts and lawsuits, as well as provides occasional tax incentives.
Here we’ll take a look at one of the more common types of corporations: LLCs.
LLCs are relatively straightforward and fairly similar across states, though the State of Maryland does have a few requirements that are unique. The first step is to registers with Maryland’s Department of Assessments and Taxation by filing forms, paying the fees and meeting all the requirements as far as naming and formation.
There are fairly well-developed rules regarding the naming of LLCs. For starters, Maryland requires that the term “limited liability company” or the abbreviation “LLC,” “L.L.C.,” “LC” or “L.C.” be in the title. In addition, your name cannot be misleadingly similar to names of other businesses which are already on file in Maryland. These files are kept by the Department of Assessments and Taxation, and you can check the availability of a name by looking through the Maryland business name database.
Once the name is chosen, it is time to file the articles of organization. These articles are filed with the Maryland Department of Assessments and Taxation. The articles will need to include the LLCs purpose, name, address and the name, address and signature of the LLCs registered agent. A registered agent is someone who must be appointed for service of process within the state. This means that there must be someone in the state that a lawsuit can be directed towards if the LLC is sued. In Maryland, this must be a Maryland citizen who is over eighteen or a Maryland corporation. In either case, they must have a physical street address that is located in Maryland.
Although you may want to create an operating agreement for your LLC, it is not actually required. An operating agreement, however, would allow you to structure financial and working relationships that would help suit your business. This would establish the ownership, share of profits and/or losses, rights and responsibilities and exit plans of partners in the business. While this may sound trivial, it will strongly affect the way in which your business is run, and can avoid a difficult and costly court battle to sort out the details later.
While many states will require that you publically publish information about your LLC, however, Maryland does not. Once your LLC is set up, however, you will need to comply with tax law and other regulatory requirements that will affect your corporation throughout the entirety of its existence.
For example, if your LLC has more than one member or you elect to have it taxed as a corporation instead of a sole proprietorship, you will need to get an Employment Identification Number (EIN). In addition, you will need to comply with licensing and other business laws of the state you are in.
“Don’t forget, if you neglect to follow the rules regarding your corporation, the courts may set the corporation aside and hold you as the owner personally liable for debts, lawsuits or other issues arising with the corporation,” said Miguel Palmeiro of the Law Office of Miguel Palmeiro. “Often, these consequences can be voided simply by a clear phrasing in an operating agreement: a clear agreement can settle arguments before they snowball, or guarantee that the court won’t see the LLC as a front for someone acting as a sole proprietor.”
If you have any questions about what corporation is good for your business or nonprofit, or how to go about forming and keeping in compliance with the laws of your corporation, please stop by for a free consultation. The advice is free, and even a brief conversation with a knowledgeable professional can provide a lot of clarity and direction.