prepared by Arden Law Firm’s experienced & licensed real estate attorney(s). Our lawyers are licensed in Maryland only.
Curious if a limited liability company is right for your business? We love helping start-ups at Arden Law - contact us to see if our lawyer can help answer your questions.
As the name implies, a Limited Liability Company limits the liablity of the business owners for business operations. A Limited Liability Company doesn’t mean you can never be sued, but it does help protect personal assets (home, etc.) from business claims. Very generally speaking, a properly set up LLC should insulate the owner’s other assets from attack.
There are a few important formation steps for a new LLC. Among the most basic:
Filing ARTICLES OF ORGANIZATION (Articles tend to be VERY limited in information, they usually give little more than the business name and address and the name of a Resident Agent. Articles don’t say anything about who owns or controls your company!
Creating an OPERATING AGREEMENT (at a minimum an Operating Agreement will say who OWNS and who CONTROLS the Company)
Setting up TAX Accounts. (usually this involves both FEDERAL and STATE filings)
“At the outset, note that "S Corp” is a type of tax structure and not the type of entity.
S-Corp status is elected AFTER you form an entity by filing with the IRS a form 2553 indicating that your business wishes to be taxed as such. The general order follows:
Form entity by filing Articles
Create Bylaws or Operating Agreement
Hold Organizational Meeting
File IRS Form 2553 (within 2 months and 15 days after the start of the new company’s tax year)
Note that a S-Corp can not have any foreign non-resident owners and is limited to a maximum of 100 shareholders.
Before choosing a tax structure you may want to familiarize yourself with the different ways your entity can be structured for tax purposes.
A Corporation is formed by filing Articles with the State. This is just one piece of the normal start-up process. Generally, to start a corporation you’ll do the following:
File Articles of Organization
Hold Organizational Meeting, elect Directors, Officers (and issue stock as applicable)
Make Tax Elections and Set up Tax Accounts
A: the Resident Agent is some responsible person or business (if a person, they must be over 18) who can get important papers for your Company and receive formal service of process. The Resident Agent can be anyone located in the State of Maryland. Some businesses list an Owner, while others prefer the privacy of designating an Agent who is not an owner (e.g., a corporate resident agent or the Company’s attorney).
A: No. At time of this writing, Maryland does not offer series LLCs (a series LLC allows for one “umbrella” LLC and other LLCs under the umbrella without needing to go through the formation process for each)
A: Maryland now allows for entity “Conversions” which allows you to switch the home state of an established business to Maryland. One of the cool features of conversion is that you can change a Corporation to an LLC or vice-versa.
Maryland has made efforts to make it easier for small businesses to get started. (in MD business registrations are done through the State Department of Assessments and Taxation, Corporations Divions). Keep in mind that filing artilces with the State is only the START - the Articles give the barest of details and don’t even identify any owners! Most businesses will need at minimum tax set up, an EIN and an Operating Agreement. Generally the following steps:
Sit down and talk with counsel
Register entity with the State of Maryland by filing Articles of Organization (or Articles of Incorporation)
Register trade names (if applicable)
Create Operating Agreement or Bylaws
Get Taxpayer Identification Number (EIN)
Hold Organizational Meeting, issue member certificates (or stock)
Set up withholding and other tax accounts.
Arden Law provides a comprehensive start-up package for small businesses looking to register in Maryland starting at $750 plus government filing fees. Our pacakge includes an attorney consultation to discuss your business plans and goals and the following for a flat fee:
Articles of Organization (drafting and filing with SDAT)
Organizational Meeting with Attorney Present
EIN for business
Company Binder with Member Certificate
Trade name registration
$0 - Free
No Cost 5-10 Min Phone Call
or email exchange with Attorney.
Private consultation (1 - 1.5 hours) with experienced Managing Attorney. In Person, Virtual or Over the Phone.Schedule
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