How to Dissolve a Business in Maryland: LLC and Corporation Guide

Unemployment insurance accounts with the Maryland Department of Labor

If your business ever had employees, you likely have a UI tax account with the Maryland Department of Labor's Division of Unemployment Insurance. To close it, contact the Division directly using one of the options below.

• Online: Use the Maryland Unemployment Insurance Portal (BEACON) for Employers. From the left menu, select "Account Maintenance," then "Inactivate Employer Account," and follow the prompts.
• Phone: Call the Employer Call Center at (410) 949-0033 or (800) 492-5524 (Monday–Friday, 8:00 a.m.–4:30 p.m.).
• Email: dluiemployerassistance_labor@maryland.gov

Contribution reports must be filed quarterly even if no wages were paid. The obligation ends only when the Division issues a letter verifying that your UI account is closed.

If an employer carries delinquent debt to the Division, the Legal Services and Collections Unit may request SDAT to forfeit the corporate charter and may seek to enforce personal liability against responsible officers and owners, particularly after charter forfeiture. Charter forfeiture typically occurs in October each year for employers delinquent across multiple quarters. 

For a corporation, charter forfeiture means the corporation is dissolved by operation of law and ceases to exist as a legal entity. For an LLC, forfeiture means the LLC loses its right to do business and to use its name but continues to exist as a legal entity for defense purposes. Clear any outstanding UI balance before you dissolve.

State and local licenses and permits

• Alcohol, tobacco, and cannabis licenses: Contact the Maryland Alcohol, Tobacco, and Cannabis Commission (ATCC) at atcc.licensing@maryland.gov or (443) 300-6990. Closure of alcohol and non-retail tobacco licenses, previously handled by the Comptroller, now routes through the ATCC.
• Professional licenses: Contact the relevant Maryland licensing board directly to request cancellation or surrender. Most professional boards (real estate, contractors, cosmetology, health occupations, and others) are administered by the Maryland Department of Labor's Division of Occupational and Professional Licensing.
• Local business licenses: Most Maryland counties and Baltimore City issue local business licenses (traders' licenses, restaurant licenses, and similar) through the Clerk of the Circuit Court for each jurisdiction. Maryland's State License Bureau administers and tracks 21 categories of these locally-issued licenses on behalf of the clerks. Contact the Clerk of the Circuit Court for the county where your business operates to confirm cancellation requirements, which often include a written request, final inspection, or both.

Active licenses generate renewal notices, unpaid fees, and compliance obligations that keep accumulating after the business closes. Close each one explicitly and keep confirmation records.

Do you need to notify the IRS when you close your business?

Yes. You must file a final federal tax return for the year your business closes and check the "final return" box on that return.

If you're dissolving a corporation, file Form 966 (Corporate Dissolution or Liquidation) within 30 days of the date the corporation adopts a resolution or plan to dissolve, and attach a certified copy of that resolution or plan. For a broader overview of how to dissolve a corporation and the federal obligations involved, the general steps apply across states even when Maryland's specific forms differ.

Additional federal obligations include the following:

• Making final payroll tax deposits
• Filing final Form 941 (or Form 944 for annual filers) with the "final return" box checked
• Filing a final Form 940 for FUTA, with box "d" checked in the Type of Return section
• Attaching a statement to your final Form 941 or 944 listing the name and address of the person who will keep the payroll records
• Issuing final W-2s to employees by the due date of your final Form 941 or 944, and final 1099-NECs to contractors who received $600 or more during the year
• Filing Form W-3 with the SSA to transmit the W-2s, and Form 1096 to transmit any paper Forms 1099 to the IRS

The IRS does not cancel EINs—once assigned, the EIN remains the permanent federal identifier for the entity. But you can close your IRS business account by writing a letter that includes the complete legal name of the entity, the EIN, the business mailing address, and the reason you want to close the account. 

The IRS cannot close the account until all required returns have been filed and all taxes owed have been paid. Once those conditions are met, the IRS will process the closure and mark the account so future filings are not expected.

What else affects your total dissolution cost?

• SDAT filing fees. $0 for non-expedited processing of Articles of Cancellation (LLC) or Articles of Dissolution (corporation). Expedited service costs $50, and same-day rush at SDAT's drop box costs $425.
• Outstanding annual report fees or penalties. SDAT requires corporations to be in "Good Standing" before it accepts a dissolution filing, meaning all required annual reports and personal property tax returns must be filed and all penalties paid. 
• Resident agent fees. Maryland calls the registered agent a "resident agent." The resident agent must remain on file to accept service of process for one year after dissolution and until the entity's affairs are wound up, whichever is later. A commercial agent may charge a continuation fee for that period.
• Creditor notice costs. LLCs must send notice to known creditors by registered mail with return receipt requested. Corporations must mail notice to known creditors and employees. Costs add up if you have many creditors.
• Local license cancellation fees. Some Maryland counties charge final inspection fees or processing fees to cancel local business licenses such as traders' licenses or restaurant licenses. Costs vary by jurisdiction.
• Attorney or accountant fees. Multiple creditors, outstanding litigation, complex tax issues, multiple stock classes, or nonstock corporations with restricted purpose assets are situations where professional help is typically worth the cost.
• Final tax filing costs. Preparing final state and federal returns, final payroll filings (Forms 941/944 and 940), final W-2s and 1099s, and any required IRS forms (including Form 966 for corporations) may require an accountant.

The real cost of not dissolving

Maryland doesn't formally administratively dissolve LLCs the way some other states do. Instead, an LLC that fails to file required annual reports or pay taxes is subject to forfeiture of its right to do business in Maryland and the right to use its name. The LLC continues to exist as a legal entity, but it can't initiate lawsuits or transact business in the state. Annual report fees, late penalties, and any tax balances continue to accrue and must be paid before the LLC can be reinstated.

For corporations, the consequences are more severe. Under Maryland law, charter forfeiture results in the corporation being dissolved by operation of law and ceasing to exist as a legal entity. A forfeited corporation cannot sue or be sued (with limited exceptions) until reinstated, and acts performed during forfeiture may be void. Reinstatement requires filing all missing reports, paying all back fees and penalties, and filing articles of revival for $100.

Either way, forfeiture is far more expensive and complicated than the $0 filing fee it would have cost to close properly. If you prefer to have the paperwork handled for you, LegalZoom’s business dissolution services can prepare and file the correct documents with the state starting at $129 plus filing fees.

How long to keep business records after dissolution

Federal tax records. The IRS generally has three years from the filing date to audit a return, and that extends to six years if you fail to report more than 25% of your gross income. Retain tax returns, supporting schedules, receipts, and financial statements for at least seven years from the date of the final return. The seven year figure isn't a specific IRS rule but a commonly used buffer that covers the six year substantial understatement window plus an extra year. If you never filed a return for a given year, or if you filed a fraudulent return, retain those records indefinitely. The IRS has no statute of limitations in those situations.

Employment records. The IRS requires employers to keep employment tax records for at least four years after the date the tax becomes due or is paid, whichever is later. This includes W-2s, W-4s, payroll journals, and records of tax deposits. Retain Maryland state employment records and Maryland UI contribution records for the same period at minimum.

Property and basis records. Keep records relating to business property (real estate, equipment, vehicles, intangible assets) until the period of limitations expires for the year in which you disposed of the property. If property was distributed to members or shareholders during dissolution rather than sold, retain those records to support the recipients' basis calculations.

Corporate formation and governance documents. Articles of organization or incorporation, operating agreements, bylaws, board and member resolutions, stock ledgers, meeting minutes, and the filed Articles of Cancellation or Articles of Dissolution should be retained indefinitely, or for as long as any potential claim period could run. These documents prove the entity existed, that dissolution was properly authorized, and that assets were distributed in the correct order. They're your primary defense if a creditor, former employee, or government agency raises questions years after dissolution.