Many people decide to make their side business official at the turn of the year. Forming a limited liability company (LLC) in Maryland is not complicated, but the rules have shifted in the past two years, and a few steps are easy to miss. Here is what a new Maryland business still needs to do, and one federal filing that most no longer have to worry about.
Step 1: Form the LLC with the state
A Maryland LLC is created by filing Articles of Organization with the Maryland State Department of Assessments and Taxation (SDAT), usually online through Maryland Business Express. You will need:
- A business name that is available and ends with “LLC” or “Limited Liability Company”
- A resident agent with a Maryland address who can receive legal papers for the business
- The business’s principal office address
If you plan to start operations in January, think about the filing date. An LLC formed in late December can owe a Maryland annual report for that year, so for many new owners a January 1 or later start date is simpler.
Step 2: Get an EIN from the IRS
An Employer Identification Number (EIN) is your business’s federal tax ID. You need one to open a business bank account, hire employees, and in most cases file business tax returns. It is free and available online from the IRS. Be careful with websites that charge a fee for this; you do not need them.
Step 3: Write an operating agreement
Maryland does not require you to file an operating agreement, but every LLC should have one. It sets out who owns what, how profits are shared, who can make decisions and what happens if a member leaves. For a single-member LLC, it also helps show that the business is separate from you personally.
Step 4: Register for Maryland taxes if needed
Depending on what the business does, you may need to register with the Comptroller of Maryland for sales and use tax, employer withholding or both. Businesses with employees also need to register for unemployment insurance with the Maryland Department of Labor. Local licenses may apply as well, depending on your industry and location.
What changed: federal beneficial ownership reporting
If you read business news in 2024, you probably heard about the Corporate Transparency Act and the requirement to file a beneficial ownership information (BOI) report with FinCEN, the Treasury Department’s financial crimes bureau. For a while, nearly every new LLC and corporation in the country was expected to file one.
That changed in March 2025, when FinCEN issued a rule removing the requirement for companies formed in the United States and for U.S. citizens and residents. Under that rule, BOI reporting now applies mainly to companies formed under foreign law that register to do business in a U.S. state. For a typical Maryland LLC owned by U.S. persons, there is currently no BOI report to file.
Two cautions. First, rules in this area have changed several times and could change again, so check the current requirements when you form your company. Second, be wary of letters or emails that demand a BOI filing fee. Scammers have used official-sounding notices to target new business owners.
Ongoing Maryland requirement: the annual report
This is the filing new Maryland owners most often forget. Every Maryland LLC, corporation and limited partnership must file an Annual Report and Personal Property Return with SDAT each year, due April 15. There is a filing fee, and it is due even if the business had no income or activity. Missing it leads to penalties and can eventually cause the state to forfeit the company’s right to do business, which can put your liability protection at risk.
Decide how the LLC will be taxed
By default, a single-member LLC is taxed as a sole proprietorship and a multi-member LLC as a partnership. You can also elect to have the LLC taxed as an S corporation, which can reduce self-employment tax once profits reach a certain level, but adds payroll and filing requirements. The right choice depends on your expected profit, how you plan to pay yourself and your long-term goals. It is worth running the numbers before you file your first return.
Set up your books from day one
- Open a separate business bank account and use it only for business
- Choose bookkeeping software and connect your business accounts
- Collect a Form W-9 from every contractor before you pay them
- Keep receipts and a mileage log from the start
- Plan for quarterly estimated tax payments if no tax is withheld from your income
Starting with clean records costs far less than cleaning up a year of mixed personal and business transactions later.
Start your business on the right foot
HAMTOCK Consulting helps new business owners in Silver Spring and across Montgomery County form their LLC, choose the right tax setup, register with the state and set up bookkeeping that is ready for tax season. Learn more about our accounting and bookkeeping and tax planning services.
Book a consultation today: call us at 240-432-2749 or email contact@hamtock.com. We reply to consultation requests within one business day.
This article is general information, not legal or tax advice for your specific situation. Rules are current as of November 2026; talk with us before acting.
