State Processing Times and Fees
Almost every state has standard and expedited processing times for the formation of a corporation. The fees for expedited service are typically higher. Maryland is no exception. Browse the average wait times for both standard and expedited filings.
Maryland charges a corporation filing fee. The "compare pricing" section in our incorporation center shows all state fees in Maryland.
Deciding Between a Maryland S Corp and a C Corp
Because limits on liability, structure, management and compliance documents are virtually the same, deciding between an S Corp and a C Corp in Maryland boils down to the following differences:
- 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.
Every state has certain requirements for corporate personnel. In Maryland, they include the following:
- Age requirement: Personnel must be at least 18 years of age.
- Number of directors: Maryland allows single-director corporations.
- Residency: 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.
Other Requirements for Articles of Incorporation
In addition to personnel requirements, your Maryland Articles of Incorporation must also include the following.
Every Maryland corporation should appoint a registered agent. A registered agent is responsible for receiving tax, legal and government documents on behalf of a corporation during regular business hours. Registered agents must have an address in the state. The address must be a physical street address, not a post office box. The agent must be included in the Articles of Incorporation. It can be a citizen of Maryland or a business in Maryland, but it can't be the corporation itself. We'll help designate a registered agent when you incorporate in Maryland using our services.
The Articles of Incorporation for a Maryland stock corporation must include information about the number of shares of stock the corporation will have authority to issue. The Articles must also include information about the par value of each share of stock. If the aggregate par value--the number of stock shares times the par value--is greater than $100,000, or if more than 5,000 shares of stock without par value are used, then the state's filing fee is higher than the minimum filing fee assessed to corporations. If stock without par value is used, incorporators must insert "$ 0" as the share's par value in their Articles of Incorporation. Stock is required if a corporation seeks to maximize various tax options and benefits.
The Articles of Incorporation for a Maryland stock corporation also require a disclosure about the nature of its business. Maryland suggests one or two sentences at most.
Other Required Paperwork
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 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.
Guidelines for Corporate Names
A corporation's name says a lot about its business. Make sure the name you select meets 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 corporate 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, or call the Department at 410-767-1330 for a non-binding check.
Maryland Corporate Taxes & Reports
Although it's not the most entertaining part of owning a business, you'll have to pay taxes for your new Maryland corporation. Before opening your doors for business, apply to the IRS for an employer identification number, or EIN. An EIN is similar to a Social Security number, but it's for businesses. All corporations that have or will have employees require one. Many larger banks require EINs to open corporate banking accounts as well.
We have more information about the tax structures of Maryland S Corps and C Corps.
Maryland corporations are subject to a tax penalty of 1/10 of 1 percent of the county assessment if they file their annual personal property tax return after the due date of April 16. This is on top of interest charged at the rate of 2 percent of the initial penalty amount for each 30 days or the portion of 30 days that the return is late. Maryland corporations that do not file personal property returns will receive estimated assessments that are twice the estimated value of the business's owned personal property.
Keeping Corporate Records and Ongoing Filing Requirements
Maryland also requires corporations to create certain records, such as bylaws and meeting 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 minutes requirements for Maryland.
Good luck creating your Maryland corporation. We look forward to assisting you in your business endeavor.
This article contains general legal information and does not contain legal advice. Rocket Lawyer is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.