How to start a Maryland corporation

It might seem like a lot at first, but once you understand the steps, it’s very doable. This guide will walk you through everything you need to know to start your Maryland corporation.

How to start a corporation in Maryland

Incorporating means registering your business as a corporation so the law sees it as its own entity, separate from you. Each state has its own rules for how to do this, so the process can seem confusing. Let’s go through each step: 

1. Choose a name for your Maryland corporation

Your corporation’s name should be unique and make a statement about your business. Make sure it complies with the following Maryland requirements:

• Your name must Include "Corporation," "Incorporated," "Limited," "Inc.," "Corp." or "Ltd."
• Don't use a deceptive name. Don't name your Maryland corporation "Joe's Hotdogs" if you're selling automobiles.
• Your name should not be deceptively similar to that of an existing business name in Maryland. A corporation's name must be distinguishable from all other recorded entities in the state. Make sure your name meets this requirement by conducting a name search online at the Maryland State Department of Assessments and Taxation.

Need help coming up with a business name for your corporation? Try the Rocket Copilot™ AI Business Name Generator, a free tool to help you brainstorm business names and get started registering your corporation.

2. Decide between a Maryland S-Corp and C-Corp tax designation

There are similarities between a Maryland S-Corp and a C-Corp regarding personal liability, management, structure, and compliance. The differences, however, come down to the following:

• Ownership Rules: A C-Corp can have unlimited shareholders and unlimited stock classes. An S-Corp is restricted to a maximum number of shareholders, usually 100, and only one class of stock.
• Taxes: A C-Corp is taxed separately. It pays taxes at the corporate level, and individual dividends to shareholders can also be taxed. S-Corps are considered "pass-through" tax entities. This means that no taxes are paid at the corporate level. Instead, taxes are paid individually by the owners.
• Documents: An S-Corp must file IRS Form 2553 to gain S-Corp status.

3. Appoint directors and shareholders for your Maryland corporation

Each state has its own personnel requirements for incorporating. In Maryland, personnel must be at least 18 years of age, but incorporators are not required to reside in Maryland. They are entitled to receive mail and notice in any jurisdiction, even in foreign countries. The same is true for directors. Maryland allows single-director corporations.

State the number of your corporation's directors in either your Bylaws or your business's Articles of Incorporation. 

4. Choose a Registered Agent

A Registered Agent is the person or business responsible for receiving tax, legal, and government documents during regular business hours. It's important that every business has one. You can either serve as your own registered agent (if you have a Maryland address) or choose one to do that service for you (if you are not located in Maryland or would like an extra layer of privacy).

5. File your Articles of Incorporation with the state of Maryland

Once you have a business name and registered agent, you can register your business as a Maryland corporation with the state by filing your Articles of Incorporation. This document may be referred to informally as a corporation's "Articles," or in other states, it may be called a "Certificate of Organization," "Certificate of Filing," or "Certificate of Formation."

Maryland requires that corporations file additional documents with their Articles of Incorporation. The Maryland Department of Assessments and Taxation, Personal Property Division has prepared and assembled the forms needed in a booklet. Maryland corporations must complete and file these forms annually. They include:

• Personal property tax return.
• Combination Form 4A, Balance sheet.
• Form 4B, Depreciation schedule.
• Form 4C, Disposal and Transfer Reconciliation.

To make changes after a business's initial incorporation, the Maryland Department of Assessments and Taxation has forms available. These include forms for changing your registered agent and/or principal place of business and an Articles of Amendment form for amending the charter of a Maryland corporation in specific ways.

Maryland also requires corporations to file Annual Reports. The state charges a filing fee for these reports.

6. Get an Employer Identification Number (EIN)

Before opening your doors for business, apply to the IRS for an employer identification number, or EIN. All corporations with employees in Maryland must have an EIN. An EIN is similar to your Social Security number, but it's for businesses. You'll also need an EIN to open your corporate bank account.

Congratulations! After you have completed all these steps, you have formed your Maryland corporation.

What to do after incorporating in Maryland

Maryland requires corporations to create certain records, such as Bylaws and Corporate Minutes, to maintain corporate status. It's recommended that you keep these documents regardless of whether Maryland technically and officially requires them. They help protect the legality of your corporate status. We have all the Bylaws and Meeting Minutes requirements for Maryland.

Still have questions? Learn more about how to start your own business with Rocket Lawyer and get started today!
 

Key takeaways Starting a corporation in Maryland means following state rules, like choosing a unique name, filling out paperwork, and paying fees to make it official. One important choice is deciding how your corporation will be taxed in Maryland, either as an S-Corp or a C-Corp. This affects how the business and owners pay taxes, and the differences between the two change from state to state. After forming the corporation, you must keep records like bylaws and meeting notes to stay in good standing with the state and prove your business is real and operating correctly.

Additional resources

Learning how to enforce a contract is just one step. Explore these additional topics to learn more and take the next steps.

• What is a corporation?
• What is an S-corporation?
• How are corporations taxed?
• How to start a corporation
• How to register a corporation by state