As someone who has a plan to set up a company, you must know the process and cons before making a decision. It should be done to ensure that you make the right decision for your company. Besides, it is also useful to help you anticipate the issues and to prevent them from occurring. For example, you are from Maryland and you have a plan to set a limited liability company or LLC in your state. One of the things that you must find out before setting up one is the benefits of LLC. Find out the benefits of LLC in Maryland below.
About LLC
LLC stands for the limited liability company. This one is described as a kind of business entity that makes it possible for the owners of the business to get benefits of the taxation of a sole proprietorship as well as the liability of a corporation.
The limited liability company or LLC offers the best thing for every business owner. It makes the tax process simpler while at the same time making the assets, debts, and liabilities separated from your own. There will be no need for you to hold liable for company debts or other responsibilities. On top of that, you can enjoy the ease of combining the profits from your business with the money that you earn for tax purposes.
Benefits of LLC in Maryland
There are a lot of benefits of LLC in Maryland. Here are some of them:
- It is easy to separate and limit your personal liability from your business liability and debts.
- Filing only costs $100.
- There is no franchise tax.
- Tax filing is easy and there are also potential advantages for tax treatment.
- Filing, management, compliance, regulation, and administration are quick and simple.
Forming a LLC in Maryland
There are several steps to follow to form a LLC in Maryland, including:
- The first thing that you need to do is to conduct a Maryland LLC search because the name must be unique and you are not allowed to choose a name that has been used by others. In order to find out whether or not your desired name has been used by others, you can use tools. One of the most popular tools to use for those in Maryland is the one found in the Maryland Business Express online portal.
- After making sure that your desired name is available for use, now provide an official business address for your LLC. It should be done because every single LLC in Maryland must have a street address, does not matter if it is an office building, a home, or any other physical location. Keep in mind that it is fine if it is located outside the state. However, it is not allowed if it is a P.O. Box.
- In the next step, choose a registered agent. A registered agent refers to a person who gets official legal and tax correspondence and is responsible for filing reports with the Maryland SDAT (State Department of Assessments and Taxation). Remember that it is a must for every LLC in Maryland to have a registered agent who is also known as a resident agent. A registered agent or a resident agent can be you or another manager in the business or a resident agent service. If the registered agent is a person, that individual should live and have a physical address in Maryland. Apart from that, the person also has to be there during the business hours in order to receive documents on behalf of the company.
- Once you have collected all the information for your LLC in Maryland, then you have to file your Articles of Organization with the Maryland DAT via their portal called Maryland Business Express. Doing so means creating your LLC. Talking about filling the Articles of Organization, there are a few options to choose from, including filing it via the online system provided by the Maryland SDAT, sending a mail in a form to the Maryland SDAT, and having an assistant to do it on your behalf. If you want to send the file by mail, the mailing address is Maryland Department of Assessments and Taxation 301 W. Preston Street Baltimore, MD 21201. For your information, the feeling fee in Maryland is $100. Do not forget to file a certified copy of your Articles of Organization with the state. Another thing to take note is that you only have to file it once. However, every year you have to file an annual report.
- After that, you should get an EIN or Employer Identification Number from the Internal Revenue Service. This one is important to identify your business to the IRS. This number will be used when filing and paying taxes or when submitting payroll information and payments for your employees. Besides, it is also needed to open a business bank account. In case you are wondering where to get this kind of number, get it from the IRS.
- Finally, you should create an operating agreement. Operating agreement is something like a sort of instruction manual. In this one, there should be an explanation on how to run your business, how the business is divided among members, how to make the decisions, and how to act if a member of the company leaves. Actually, there is no legal rule to have an operating agreement in Maryland. However, it is recommended to have one as an effort to protect your business just in case there are changes and events in the future.
Bottom Line
In conclusion, there are several benefits of LLC in Maryland. The list includes there is no franchise tax, it has a low filing cost of $100, it is easy to file the tax and there are potential benefits for tax treatment, separating and limiting your liability from your business liability and debts is easy and filing, management, compliance, regulation, and administration are quick and simple. Not only the benefits, but you should also consider the disadvantages of LLC in Maryland. If you are fine with everything and ready to set up a business, you can follow the guide to form an LLC in Maryland above.
A bookworm and researcher especially related to law and citizenship education. I spend time every day in front of the internet and the campus library.
