How Much Does an LLC Cost in Maryland?

Before you can open your business in any state, you have to choose a business structure. A Maryland limited liability company (LLC) is a common choice for small businesses. LLCs offer the same limited liability benefits as corporations but with more management flexibility. In other words, an LLC is a separate entity from its owner under state and federal law and, therefore, is less liable for business debts than the owner of a sole proprietorship.

Maryland LLC taxes also offer more flexible filing options, which can allow small businesses to avoid certain types of taxation, making it a cost-effective business structure. That said, there are some upfront costs to consider before forming a new business, such as state filing fees, licenses, and an operating agreement.

How much is the Maryland LLC formation filing fee?

The formation filing document for Maryland LLCs—and foreign LLCs registering in Maryland—is called articles of organization. You can choose to file this document in person with the Maryland State Department of Assessments and Taxation, by mail, or through the Maryland Business Express by making an online account. If you choose to file online, there's a $3 eCheck fee and a 3% PayPal fee. This fee is related to services by a third party contracted by the Maryland Department of Information Technology (DoIT).

Once you've filed your articles of organization, Maryland law requires you to file for a federal tax ID (or EIN), which is also necessary to file federal and state tax returns, hire employees, or open a business bank account. Fortunately, this is a free service that the Internal Revenue Service provides any business and you can apply for it online.

How much do LLC articles of organization cost in Maryland?

To file articles of organization, the base filing fee is $100. The standard wait time for a regular filing is 6 to 8 weeks. If you're in a hurry to establish your business and need your application reviewed faster, you can pay either an additional $325 same-day review fee, or an additional $50 expedited review fee, which takes 7 to 10 business days to process.

How much is the Maryland Statement of Information fee?

If you've decided to register your LLC through the Business Express LLC formation service, filing your annual Statement of Information online will be simple and quick. In Maryland, this document is called an annual report and costs $300 to file.

As a side note, you'll need to file an annual personal property tax return in addition to the annual report, but luckily, there's no filing fee for this document.

How much does a registered agent cost in Maryland?

Maryland law requires all legitimate businesses, including LLCs, to appoint a registered agent. A registered agent is an individual or entity who acts as your business' legal representative with the state and must have a physical address in Maryland, keep regular business hours at that address, and accept legal mail and correspondence from the state on behalf of your business.

There's no set Maryland registered agent fee. In fact, you can be your own registered agent for no cost. However, many business owners find it easier to delegate those tedious but vitally important tasks to a third party.

The cost of registered agent services varies based on the organization or individual who you work with. LegalZoom’s registered agent services cost $249/year and include the following benefits:

• Timely alerts when we receive important mail for you
• Documents scanned and uploaded for digital access from anywhere
• Email reminders about annual report deadlines through the Compliance Calendar
• Unlimited cloud storage for all your business documents
• All paperwork needed to switch RAs completed for you, plus state fees covered

How much does a Maryland seller’s permit cost?

A seller's permit essentially authorizes a business to sell goods and services within its resident jurisdiction. The main purpose of this permit is to enable your business to collect sales tax on transactions in your state. For this reason, it's also called a "sales tax permit" or "sales tax license."

The rules and terminology for a sale's tax license vary by state and sometimes even by county. To sell goods and collect sales tax in Maryland, you need to acquire a trader's license from your local Clerk of the Circuit Court and open a sales tax account.

Trader's license fees are based on the wholesale value of your retail inventory. Based on your inventory, a trader's license fee ranges from $15 to $800 or up to $2,125 in Baltimore City.

How much do local business licenses cost in Maryland?

Most businesses need a special license to operate in Maryland. However, the prices vary based on the type of business you run. Local business license costs range from as little as $0 for a Residential Child Care program to as much as $250,000 for a Cemetery Permit.

Luckily, Maryland business licenses are relatively easy to request through the Maryland OneStop portal. Once you have a license, it's valid from May 1 through April 30 of the following year and must be renewed by May 1 of each year.

How much is the annual LLC fee in Maryland?

There's no one annual fee other than the Maryland annual report fee, which is $300, and the annual personal property tax return, which is free. However, other annual fees include your trader's license—or any other relevant licenses and permits—and other annual service fees, such as registered agent service fees, web hosting, or domain name fees.

How much does business insurance cost in Maryland?

There are several types of commercial insurance available in Maryland, and which insurance you choose will depend on the size, number of employees, and industry of your LLC. That said, Maryland requires all businesses to obtain workers' compensation for their employees. LLCs file through the Maryland Workers' Compensation Commission's CompHub.

Workers' comp covers medical bills for work injuries and illnesses, as well as disability benefits to injured workers. Rates vary from year to year and are based on the reason for compensation. In 2024, Temporary Total Disability rates were two-thirds of the employee’s average weekly wage. However, they can't exceed 100% of the state average or $1,456.

Despite having limited liability as an LLC, it's wise to also consider general liability insurance. This insurance protects your business from potential lawsuits, property damage, or even injury to your company's reputation caused by slander or misleading advertising. Quotes depend on factors such as the type of business you have and the risks generally associated with that business. Generally, they range from an average of $25 to $75 per month for small businesses.

What is the Maryland franchise tax?

Franchise tax in Maryland is 2% of gross receipts but only applies to public service companies such as gas, electric, and telephone businesses for the privilege of doing business in the state. If your business doesn't offer one of these services, you don't have to worry about franchise tax.

However, there are other important tax considerations for an LLC in Maryland. Both federal and local taxes treat LLCs as either a corporation, partnership, or as part of the owner’s tax return, depending on how you want to file. If you choose to file as a C corp rather than a pass-through entity, corporate income tax is 8.25% for businesses in Maryland.

Pass-through entities pay at a graduated rate that peaks at 5.75% personal income tax of over $300,000 for joint filers or $250,000 for single filers as long as they're domestic. In Maryland, foreign LLC pass-through taxes can match corporate rates at up to 8.25%.

In addition to income tax, Maryland has a Sales and Use Tax of up to 6% for liability on goods and 9% for liability on alcoholic beverages.

Other Maryland fees and business costs you might encounter

In addition to these basic fees, there are some other optional fees that are important to consider for any LLC formation process.

Operating agreement

Forming an LLC operating agreement is not a requirement in Maryland. However, it's smart to have a fully formed operating agreement on hand should other institutions request one.

An LLC operating agreement is a contract document that outlines financial and functional decisions within your business, including rules, regulations, and provisions. A business law attorney can help you draft an operating agreement. LegalZoom’s operating agreement services start at $99.

Certificate of Status

A Certificate of Status—also called a certificate of good standing—validates that your business exists and is in good standing with your local jurisdiction. Banks or investors may ask for this document when determining whether to provide you with funds or a loan.

You can order a Certificate of Status through your Maryland Business Express account for a $20 processing fee or an additional $20 for expedited service. Just as with the Articles of Organization, there's a $3 eCheck fee and a 3% PayPal fee.

Name reservation

Business names in Maryland must be distinct from all other businesses registered in the state. If you've conducted a Maryland business name search and found that your ideal name is available but you're not quite ready to officially register your business, it's wise to file a name reservation for $25, or an additional $20 for expedited service.

What is the total cost to start an LLC in Maryland?

So, how much does it cost to start an LLC in Maryland? Without including operating costs, legal and accounting fees, or annual fees, the upfront cost of starting an LLC in Maryland ranges from $700 to $8,000 depending on the type(s) of business license(s) your LLC needs and other unique factors. An experienced business attorney can guide you through the establishment process to help you gather documents and ensure state compliance.

If you want to simplify the process of starting your business, LegalZoom’s LLC formation service provides you with all the tools you need to get started in one place, including personalized advice from an experienced attorney.

FAQs

Does it cost more to register a foreign LLC in Maryland?

Technically, no, the registration fee for both a foreign and domestic LLC in Maryland is the same. That said, there are additional fees for foreign LLCs to establish their business and keep it operating in Maryland that domestic businesses don't face.

For example, out-of-state construction businesses working in Maryland must obtain a special license for a $60 fee in Baltimore City and a $50 fee in all other counties in Maryland. Additionally, foreign LLC members have to pay higher personal income taxes than domestic businesses.

Can you get grants to help cover the cost of starting a business in Maryland?

Yes! The Maryland Department of Housing and Community Development offers up to $10 million in small business and community development grants. These grants aim to support small businesses through start up or expansion funds with the goal of creating jobs and increasing local economic activity.

There's also the Advantage Maryland (also known as MEDAAF), which funds conditional grants, loans, and investments to eligible businesses, as well as federal funding opportunities that the USA funding applications offer to small businesses every year.

What’s the cheapest way to start an LLC in Maryland?

That depends. There are several ways to cut corners and start your business DIY, but that might not be the cheaper option in the long run. Instead, working with a legal service like LegalZoom to jump-start your LLC with the guidance of an experienced attorney can ultimately be more cost-effective than paying to fix mistakes or rectify noncompliance.