To form a Maryland corporation, you need to file articles of incorporation with the State Department of Assessments and Taxation (SDAT). Here’s how.
What is a Maryland corporation?
A Maryland corporation is a legal business entity that you can form with the State Department of Assessments and Taxation (SDAT). It exists separately from its owners, called stockholders in Maryland, and offers unique advantages and disadvantages compared to other business structures.
Benefits of a Maryland corporation
- Limited liability. Corporations generally shield stockholder’s assets from company debts and liabilities.
- Credibility. Due to their stricter management requirements, investors, vendors, and clients tend to view corporations as more credible.
- Tax flexibility. Eligible Maryland corporations have the option to elect S corp status for pass-through taxation or file as a corporation and benefit from corporate business deductions and potential self-employment savings.
- Perpetual existence. The corporation continues to exist even if ownership changes.
- Access to capital. Corporations have the ability to issue different classes of stock, which helps to attract investors.
Drawbacks of a Maryland corporation
- Double taxation. Corporations can pay taxes on the same income twice, both at the corporate level and the individual (stockholder) level.
- Less flexibility. Business structures like LLCs and sole proprietorships have more control in terms of how they run their business.
- Complex. After incorporation, there are ongoing fees and requirements.
How do I form a Maryland corporation?
To form a Maryland corporation, file articles of incorporation with the SDAT. You can have us file for you or file yourself through these steps.
Once you’ve incorporated, there are a few more things you need to do to get your business up and running in compliance with state and federal laws.
Step 1: Name your corporation
To file a certificate of incorporation, you need a corporate name that’s available and meets Maryland corporate name requirements:
- Corporate designator. Corporation names must contain one of the words "corporation," "incorporated," "company," or "limited," or an abbreviation of the word.
- Benefit corporation designator. Similarly, the name of a benefit corporation must include the words, “benefit corporation” or an abbreviation of those words.
- Professional corporation designator. The name of a professional corporation must include the word, “chartered,” “professional association,” “professional corporation,” or an abbreviation of the word.
- Transparency. The name can’t imply that its business purpose is different from the purpose stated in its articles of incorporation.
- Uniqueness. It must be distinguishable (clearly different) from other business names on file with the State Department of Assessments and Taxation.
The easiest way to check if a business name is available is to conduct a Maryland entity search through Maryland Business Express, a website that the SDAT set up to help business owners navigate state filings.
Note: If you’re not ready to file articles yet, you can file a name reservation application to hold the name for 30 days while you prepare. The filing fee is $25.
Step 2: Appoint a Maryland resident agent
Every Maryland corporation must maintain a registered agent, or resident agent, who can receive legal documents and official correspondence on behalf of the corporation. Think of your registered agent as the official point of contact between your business and the state. You appoint your own agent, but they must meet these requirements:
- Is an adult Maryland resident, or a Maryland corporation or LLC
- Has a physical street address in Maryland (not a P.O. box)
- Consents to serve by signing the articles of incorporation
A corporation can’t serve as its own registered agent, but a director or officer of the corporation can. That said, many businesses choose to hire a professional agent for the security and flexibility.
Step 3: Set up stock structure
Maryland law requires you to specify basic information about your corporation's stock structure in the articles of incorporation. You’ll need to state the total number of shares that your corporation will have the authority to issue and the par value per share.
Par value refers to the minimum price shares can sell for, regardless of market value. Keep in mind that the filing fee will increase if the collective value (number of shares x par value) is higher than $100,000. If you choose to list $0 as the par value, the filing fee will increase if you authorize more than 5,000 shares. In this case, you’ll have to contact the SDAT to learn the new fee.
Step 4: Specify incorporators and directors
Your articles also need to name at least one incorporator and one director, but they can be the same person. The role of the incorporator is to form the corporation, while the role of the director is to hold the first organizational meeting and govern the corporation until the first stockholder meeting.
Under Maryland law, neither the incorporator not the director need to be Maryland residents, but they both need to be legal adults. You’re also welcome to create additional requirements for directors in your corporate bylaws.
Step 5: File articles of incorporation and pay the filing fee
Now, you’re ready to officially file your articles! This is the foundational legal document that creates your Maryland corporation. Here’s what you’ll need to include in your articles of incorporation:
- Name and address of the person forming the corporation (incorporator)
- Name of the corporation
- Business purpose (a brief description of your business)
- Principal Maryland office address
- Registered agent’s name and Maryland address
- Number of authorized shares and par value per share
- Name(s) and number of initial director(s)
- Signatures from the incorporator(s) and registered agent
The baseline expense at this stage is $125: $100 filing fee, $20 organization and capitalization fee, and a $5 document return fee. However, it’ll cost more if you go over the stock limits listed above. You can file online through Maryland Business Express (there’s a 3% credit card or paypal fee) or mail a paper copy with a check or money order (no cash) to this address:
State Department of Assessments and Taxation
Charter Division
700 East Pratt Street, Suite 2700
Baltimore, Maryland 21202
Step 6: Hold an organizational meeting and adopt bylaws
Once the SDAT accepts your articles, the director(s) must hold a meeting to do the following:
- Adopt corporate bylaws
- Elect officers (at least three: the president, secretary, and treasurer)
- Issue stock
- Address other initial business matters
Make sure to document every action in meeting minutes.
Corporate bylaws are the internal rules that govern how your corporation operates. While you don’t need to file them with the state, Maryland does require the initial board of directors to adopt bylaws.
Here are some common bylaw provisions:
- Number and duties of officers and directors
- Procedures for conducting meetings
- Voting procedures for shareholders and directors
- Process for electing new directors and officers
- Stock transfer restrictions
- Amendment procedures
LegalZoom offers a service that can help write your bylaws.
Step 7: Obtain an employer identification number (EIN) and open a business bank account
You'll need to obtain an EIN for your corporation to file taxes each year and hire employees. This number acts as your federal tax ID number and allows the Internal Revenue Service (IRS) to identify your company for tax purposes.
You can apply for an EIN directly through the IRS website, or LegalZoom can handle the process for you.
It’s also highly important to open a business bank account to maintain your limited liability status and protect your personal assets. A separate business bank account will also help ensure your business keeps proper financial records.
Here’s what you’ll need:
- Certificate of incorporation
- EIN
- Corporate bylaws
- Board resolution authorizing account opening
- Identification for authorized signers
Maryland corporate tax and licensing requirements
Now that the corporation exists, you can register for federal and state taxes and obtain any necessary licenses and permits. These actions help ensure your business operates in compliance with the law.
State business taxes
State taxes are handled by the Maryland Comptroller. Fortunately, they offer a combined registration application that includes sales and use tax, unemployment insurance, and employer’s withholding tax to help simplify the registration process.
Here are some of the main Maryland business taxes to be aware of.
- Maryland corporate income tax (8.25%)
- Sales and use tax (generally 6%)
- Employer withholding tax
- Unemployment insurance (7.5% standard rate)
- Workers' compensation
- Personal property tax
Local business licenses
Most Maryland businesses will need some type of license or permit. For example, businesses that buy and resell goods will need a trader’s license, and individuals in certain professions will need an occupational license.
The Maryland One Stop Portal is a helpful resource for state organizational and occupational licenses. But, make sure to also check your local municipality’s website or contact them directly to see if there are any local licenses or permits that your business needs.
How do I keep a Maryland corporation in good standing?
There are two main filings that your corporation will need to keep up with to maintain ongoing compliance in Maryland.
Annual report
All businesses, foreign or domestic, that have registered in Maryland must file an annual report. The report is due by April 15, or the following Monday if that date falls on a weekend, every year. It asks basic questions about your business, including its name, mailing address, ID numbers, and total gross sales.
Most businesses can file their annual report online through Maryland Business Express. The filing fee for corporations is $300 plus a 3% credit card or paypal fee.
Personal property return
The personal property return is for businesses that own, lease, or use personal property in Maryland or that hold a Maryland trader's license. This report asks questions about your business’ property, including on any equipment, inventory, office supplies, and non-farming livestock that your corporation owns. You file the personal property tax return with the annual report for no additional fee.
Start your Maryland corporation with LegalZoom
There's a reason more than four million businesses have chosen LegalZoom to help them get off the ground. Our incorporation services offer a simplified way to form your Maryland corporation.
Here are some of the perks:
- Streamlined process. LegalZoom combines technology and expertise to take the guesswork (and paperwork) out of business formation. Our online process can help you file your certificate of incorporation in minutes.
- Expert support. All of our corporation formation packages include consultations with a LegalZoom small business specialist and a tax specialist from 1-800Accountant.
- A full suite of services. Beyond just incorporation services, LegalZoom can handle an array of business filings. We also provide year-round compliance management, bookkeeping tools, dedicated business attorneys, registered agent services, and trademark registration.
FAQs about Maryland corporations
How much does it cost to form a Maryland corporation?
Maryland incorporation costs vary based on factors like your corporation's stock structure and how you file. That said, there are some basic costs that every corporation will face.
Here are some of the state filing fees.
- Articles of incorporation: $120 minimum fee
- Name reservation: $25 for 30-day reservation
- Rush processing: $325 (online) or $425 (in person)
- Certificate of status: $20
There’s also a 3% credit card or paypal fee.
How long does it take to form a Maryland corporation?
Standard processing by mail is six to eight weeks, expedited processing takes seven to 10 business days, or you can order a same-day review for $325 online or $425 in person. Online submissions tend to process faster.
What is the difference between a Maryland corporation and LLC?
A Maryland corporation provides stronger liability protection, but requires a more formal structure. An LLC offers greater operational flexibility and pass-through taxation, but fewer opportunities to raise capital through investments. Corporations are better suited for businesses seeking investment or planning to go public, while LLCs work well for smaller businesses preferring simplified management and tax treatment.
Can a nonresident form a Maryland corporation?
Yes, nonresidents can form Maryland corporations. However, the corporation must maintain a registered agent with a Maryland address, and certain business activities may require additional licensing or registration regardless of the owner's residency.
What is a nonstock corporation in Maryland?
A nonstock corporation is typically a nonprofit that doesn’t issue stock certificates. Instead of shareholders, nonstock corporations have members. These entities often exist for charitable, educational, religious, or other nonprofit purposes and may qualify for tax-exempt status.
How do I change my corporation's name or registered agent?
To change your corporation's name, file articles of amendment with SDAT along with a $100 fee. For registered agent changes, file a resolution to change resident agent for a $25 fee. Both of these fees include a 3% charge to use a credit card or PayPal.
Note that if you decide to change to LegalZoom’s registered agent service, we cover the registered agent resolution paperwork and filing fee for you.
Do I need a Maryland address to incorporate?
While incorporators and directors don't need Maryland addresses, your corporation must maintain a registered agent with a Maryland street address. The principal office may be located outside Maryland, but you must designate a Maryland registered agent.
Can I serve as my own registered agent?
If you're a Maryland resident over 18 years old, you can serve as your own registered agent. However, you must maintain a Maryland street address and be available during business hours to receive legal documents. Many businesses prefer professional registered agent services for reliability and privacy.
Jane Haskins, Esq., contributed to this article.
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