There are several types of fees associated with forming a limited liability company (LLC). Depending on the state you choose to form your LLC in, there are some requirements that must be met. If you want to start a Maryland LLC, here are the most common fees you might incur.
Annual Franchise Tax – This fee is charged annually by each state to companies doing business within that state. In Maryland, it is $1 per $100 of gross income.
Fictitious Name Registration Fee – This is the cost of registering the name of your LLC. You will pay this fee whether or not you use the name.
Business License Fees – These vary depending on where you do business. For example, if you plan to sell products online, you will likely need a seller’s permit.
Additional Business Licenses – Additional licenses are required in certain industries such as insurance, real estate, accounting, etc.
In addition to these fees, you may also be subject to tax penalties if you fail to file your annual report or pay your franchise tax.
Table of Contents
What is a Limited Liability Company (LLC)?
A limited liability company, or LLC, is a business entity that allows its owners to limit their personal liability for the debts and obligations of the company. When an individual owns 100% of a corporation, he/she has unlimited liability for all of the corporation’s debts and obligations. However, when an owner only holds 10%, 20%, 30%, etc., percent ownership in a corporation, his/her liability is limited by law.
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Personal Property Return/Annual Report
The IRS requires businesses to file Form 1040 Schedule C, Personal Income Tax, each year. This form is used to report income earned during the previous tax year. Businesses are required to file a return even if no taxes are owed. If you do owe taxes, you must file a return regardless of whether you want to claim deductions or credits.
If you are self-employed, you must complete a separate personal property return called Form 8849. This form reports the value of assets owned by the taxpayer. Assets include real estate, vehicles, machinery, equipment, furniture, tools, inventory, accounts receivable, prepaid expenses, and cash.
You must file a PPR within 45 days after the end of the calendar year. For example, if you filed your return on April 15, 2018, you had until April 30, 2019, to file your return. However, if you did not receive your W2, you may still file a late PPR.
Fees vary depending on how many assets you own. Fees range from $10-$100 per asset. To find out what filing fees apply to your situation, see Publication 557.
State Business Tax
The state business tax is imposed on every person doing business in New York State. This includes sole proprietorships, partnerships, corporations, limited liability companies, trusts and estates.
This article explains how to calculate the state business tax owed by each type of entity.
Sales and Use Taxes
All retailers selling tangible personal property in Maryland must charge and collect sales and use taxes. Retailers must pay sales tax regardless of where they sell their products or how much revenue they generate from those sales. However, there are exemptions from paying sales tax based on certain factors. These include:
• If you purchase goods wholesale, you do not owe sales tax.
• You do not owe sales tax if you make purchases for resale.
• You do no owe sales tax if you buy supplies used exclusively for manufacturing purposes.
• You do owe sales tax if you purchase equipment used in industrial activities.
• You do NOT owe sales tax if you provide services.
Businesses must charge and collect local sales tax if they operate a place of business in Maryland.
For most states, if you want to do business in multiple states, it helps to register your company in all those states. This way, you’ll avoid having to file multiple sets of annual reports and paying multiple fees each year. But what about states where there are no legal requirements to incorporate? What if you’re just starting out and don’t know whether you’ll ever expand beyond one state? Or maybe you’ve already incorporated in another state, but now you want to open a second location in a different state.
In some cases, registering a corporation in another state doesn’t even involve filing any forms. You might think that if you’re doing business in another state, you’d still have to file taxes in both places. But in some states, you don’t actually have to pay income tax in either place. And in some cases, you don’t even need to set up a separate legal entity in order to establish a business in another state.
So how does this work? Let’s take a look at three examples.
Example #1: New York State
New York requires businesses to register with the Secretary of State’s Office. If you decide to start a business in New York, you’ll need to fill out a simple online application. After submitting the application, you’ll receive a confirmation email containing information about your registration status. If everything goes well, you’ll receive a Certificate of Incorporation within 10 days.
If you choose to operate your business in New York without incorporating, you’ll need to file quarterly sales tax returns. However, you won’t need to pay any taxes unless your business earns $100,000 or more during the calendar year.
You’ll also need to provide proof of insurance if you’re operating a retail store. Businesses that sell products directly to consumers must carry liability insurance. Retailers that sell goods to customers must carry property damage insurance. To obtain this insurance, you’ll need to contact an insurer licensed to write general commercial coverage in New York.
What do I have to do after I file?
After you file your complaint, the Commission will send a letter to the employer. The letter tells the employer that it has been filed and gives them 10 days to respond. If they don’t respond within this time frame, the Commission will issue an order requiring the employer to pay back wages and benefits owed to you. This is called “back pay.” You may also be entitled to interest on the money you are owed.
If the employer doesn’t comply with the Commission’s order, you can ask for a hearing before an administrative law judge (ALJ). At the hearing, both sides present their case and argue about whether or not the employer should have to pay you what you’re asking for. After the hearing, the ALJ issues a decision. If the employer disagrees with the ALJ’s findings and conclusions, it may file exceptions to those findings and conclusions within 20 days of receipt of the ALJ’s decision. The Board then reviews the record de novo and makes its own findings and conclusions based on that review.
Frequently Asked Questions
What do I need to complete the payment process?
Order Business Documents & Certificates of Status Register a New Business, Trade Name or Tax Account Manage Change, Cancel, Revive, and Manage Existing Businesses File Annual Report & Personal Property Tax Returns, Late Penalty Payments Enter your username and password.
How do I file the Annual Report and Personal Property Tax Return?
The simplest and easiest way to file the Annual Report and Personal Property Tax Return is through Maryland Business Express (MBE), SDAT’s award-winning platform for creating a business, making annual filings, and requesting document copies online.
What is the annual filing requirement for business entities in Maryland?
All business entities formed, qualified, or registered to do business in Maryland MUST file an Annual Report and, if they answer ‘Yes’ to either of the following questions, MUST ALSO file a Personal Property Tax Return.
What is a criminal charge?
Note: Under Maryland Criminal Law, a person who files in public records of the Department of Assessments and Taxations a lien or encumbrance against the personal property of another that is based on a false, fictitious or fraudulent statement is guilty of a misdemeanor and subject to imprisonment not exceeding one year or a fine not exceeding $10,000 or both for the first offense.
How do I file a business or personal property tax return?
Nearly all charter and personal property filings can be made online, so please visit Maryland Business Express’ Registrations and Filings Portal to register your business, order business documents, and file annual reports and personal property tax returns.
James Rourke is a business and legal writer. He has written extensively on subjects such as contract law, company law, and intellectual property. His work has been featured in publications such as The Times, The Guardian, and Forbes. When he’s not writing, James enjoys spending time with his family and playing golf.