Business Law in Maryland
Forming a company in Maryland takes one filing with the State Department of Assessments and Taxation (SDAT). Keeping it in good standing, and writing the agreements that decide control, is where owners get hurt. We advise Maryland founders and owners on both, through Brandon Northington, who is admitted in Maryland and the District of Columbia.
Below are the Maryland rules that change what you draft and file.
Maryland rules that shape your entity and agreements
Formation and upkeep. Articles of Organization for a Maryland LLC are filed with SDAT, whose fee schedule lists $100 for the articles. Each year every LLC and stock corporation files Form 1, the annual report and personal property return, by April 15, with a $300 filing fee. SDAT's form warns that failure to file results in forfeiture of the Maryland charter or the right to do business in Maryland.
Control. Under Corporations and Associations § 4A-401, each LLC member is an agent of the company and can bind it in the ordinary course unless the articles of organization limit that authority. The initial operating agreement need not be in writing unless the articles require it (§ 4A-402(b)), which leaves many owners with an oral understanding and a statutory default.
Deadlock and exit. A circuit court may dissolve an LLC when it is not reasonably practicable to carry on the business under the articles or operating agreement (§ 4A-903). For a corporation, stockholders with at least 25 percent of the votes can petition on board or stockholder deadlock, and any stockholder can petition where those in control act illegally, oppressively or fraudulently (§ 3-413). A buy-sell clause keeps a court from being your only exit.
Entity Formation and Registration
Choosing between an LLC and a corporation, preparing articles for SDAT, and registering out-of-state companies.
Operating and Shareholder Agreements
Written agreements that replace the statutory defaults on authority, distributions, transfers, deadlock and buyouts.
Annual Compliance and Good Standing
Form 1 filings, good-standing certificates, and reinstatement after forfeiture.
Commercial and Employment Agreements
Vendor and customer contracts, plus restrictive covenants drafted to fit Labor and Employment § 3-716.
What does it cost to form an LLC in Maryland?
SDAT's fee schedule lists $100 for Articles of Organization. Expedited review adds $50 (7 to 10 business days); non-expedited online filings take 6 to 8 weeks. Same-day service costs $325 online or $425 on paper. The annual Form 1 then carries a $300 fee for an LLC.
Do I need a written operating agreement for a Maryland LLC?
Maryland does not require one unless your articles say so, but you should have one. Without it, statutory defaults apply, including that each member is an agent who can bind the company. A written agreement lets you limit authority and set how members are admitted and how they exit.
Are non-compete agreements enforceable in Maryland?
Not for lower-wage workers. Labor and Employment § 3-716 voids a non-compete for employees earning no more than 150 percent of the State minimum wage, for licensed health care workers in direct patient care earning $350,000 or less, and for veterinary practitioners and technicians. Higher-paid health care workers are limited to 1 year and 10 miles. Agreements about client or patient lists and proprietary information are carved out.
What happens if my Maryland business misses the April 15 filing?
A late Form 1 draws a penalty of 1/10 of one percent of the county assessment plus interest, and an entity that does not file receives an estimated assessment of twice the estimated value of its personal property, along with the forfeiture risk SDAT's form describes. We can file late returns and reinstatement documents.
Facing a business law question in Maryland?
The first consultation is confidential, and we respond within one business day. Tell us about the company and what you need drafted or fixed.