How to Incorporate in Maryland

by jim on November 26th, 2012

If you do business and you don’t incorporate, either to a corporation or a limited liability company (LLC), you’re opening yourself up to legal liability. When you operate as a sole proprietorship, you and your business are one. There is no separation between the two. You can’t sell your business because it is you (you can sell the business assets though, so all is not lost).

If your business gets going and starts making any kind of money, you’ll want to incorporate. Fortunately, incorporated is easy and you can do it yourself. I incorporated my business on my own by filling out a simple form that I downloaded from the Maryland Department of Assessments & Taxation.

The only downside to doing this is that you’ll need to file a Business Personal Property return each year which comes with a minimum $300 fee.

(the following instructions are for Maryland only, though I suspect your state will be similar)

If you are forming an LLC, you will need to file Articles of Organization with the state. The form is just one single page with straightforward fields. My advice is that, for “(2) The purpose for which the Limited Liability Company is filed is as follows:” put:

To engage in any lawful activity for which a limited liability company may be organized.

In some states, that exact phrase is often printed onto the form!

Next, write a check for $121 to “State Department of Assessments and Taxation” – $100 for the fee to file the Certificate of Organization and then $21 for a certified copy of the Articles of Organization. The certified copy is optional but some banks require it if you want to open a business bank account (which is recommended, to maintain the corporate veil). Keep this certified copy in a safe place.

Then mail it to State Department of Assessments and Taxation, Charter Division, 301 W. Preston Street; 8th Floor, Baltimore, MD 21201-2395 and wait eight+ weeks. You can also fax it to 410-333-7097 but a fax request will expedite it and require an additional $50.

Once you get confirmation, you are officially an LLC! Head over to the IRS to get an Employer Identification Number and you’ll be all set. And remember to file a Business Personal Property return each year.

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