Creating a limited liability company in Maryland can be a complex process, but the benefits afforded by an LLC are often essential for a healthy, long-lasting business. This is because an LLC protects individual owners from business debts, meaning that creditors cannot pursue personal assets in pursuing owed funds. In a sole proprietorship or general partnership, personal assets are vulnerable to collection.
Parties wishing to form an LLC in Maryland must first submitted completed Articles of Organization and a $100 filing fee to the Maryland Department of Assessments and Taxation. They must also select an agent to accept legal papers on their behalf in the event the LLC is sued. While this can be nearly any Maryland citizen or entity, it is generally advisable to appoint a qualified attorney to this post, providing the essential advantage of quality legal expertise. A lawyer can also keep your organization paperwork organized and help you ensure that have access to any important documents when needed.
Because an LLC is a separate entity from its owner, it is important to avoid commingling business and personal funds. Owners should establish a business bank account to house their company's assets. They can then pay themselves with the contents of that account, which keeps their own assets separate from the LLC. While commingling funds is not necessarily expressly forbidden, doing so can make it difficult to establish that the business and its owners are separate legal entities.
Likewise, LLC owners must make sure they file both personal and corporate tax returns. Even if the company fails to earn any revenue during the course of a year, a business that fails to file a timely tax return will likely lose LLC status in its home state. This eliminates the benefits associated with LLC and opens owners to liability and other drawbacks.
Source: ActiveFilings, "Mistakes to Avoid when Forming an LLC," June 1, 2012