To dissolve a limited liability company one has to take up a set of required steps. In Maryland, if you and the members of the LLC want to discontinue business, then it is necessary to dissolve their business legally to avoid any administrative and legal consequences. To dissolve an LLC in Maryland, you are required to submit a complete Article of Dissolution to the Secretary of State. Before submitting the Article of Dissolution, one must follow the operating agreement.
If you have an LLC in Maryland (domestic or foreign) you must have an operating agreement. The first step towards the dissolution of Maryland LLC is to follow the operating agreement. There are some points to be noted before proceeding with the official paperwork. At first, make sure all the members of the LLC are agreed to dissolve the business. Once all the members are ready, their consent should be recorded via voting. After casting their vote in favor of the dissolution, the legal process must be started. Here are the steps to address for dissolving Maryland LLC.
On this page, you’ll learn about the following:
- How to Dissolve an LLC in Maryland
- After Dissolving Your LLC
- Reasons Behind Dissolving Maryland LLC
- Maryland LLC Dissolution Review
How to Dissolve an LLC in Maryland
Dissolution of Maryland LLC requires three broad procedural steps. Having a Maryland LLC Operating agreement, close all the tax accounts, and finally submit the Articles of Dissolution form to the Maryland Secretary of State.
Step 1: Follow Your Maryland LLC Operating Agreement
When you have started an LLC as a business entity, then there is an operating agreement that is formed. There are complete details of how the company will function and grow in that operating agreement, which acts as a comprehensive guide. There is also a dissolution process, which is added to your agreement. The common dissolution steps that almost every LLC follows are:-
First of all, the dissolution vote will take place among the LLC members in the dissolution meeting. If the majority is with the YES, then the process goes into legal proceedings.
- All the dissolution votes will be noted down and recorded with the minutes of the meeting or a consent form.
- After that, a formal date for dissolving the LLC will be decided.
- The next step is counting the LLC assets and dividing them among the stakeholders and members accordingly.
- Finally, the creditors of the business are notified, and the debts of the business are settled.
This is a general process. However, it is strongly recommended to seek professional help to avoid any complications when it comes to terminating an LLC.
Get a Professional Agent Service
When it comes to a limited liability company dissolution, it is important to get professional help. The Maryland registered agent will guide you with everything you need to close your limited liability company. While choosing a registered agent make sure they have a physical street address in the state. A professional service provider helps you to file the Article of Dissolution and close your various tax accounts without any hassle. Below are the best LLC services we strongly recommend for you.
Step 2: Close All Tax Accounts
Every action that an official business takes is legally bound to some minimum business taxes. For that, various accounts, especially business entity tax account, are maintained by the state government with the help of various departments. You should consider all the taxes that you have paid for your LLC’s duration and make a list of them.
You must contact all government entities and clear the amount of outstanding taxes due until the date you have decided for dissolution. All the taxes must be paid in advance so that you don’t face any issues in the further process of shutting down your LLC.
Some of the common taxes that limited liability companies have to pay are:
- Unemployment insurance tax
- Employee withholding tax if your LLC has employees.
- If your LLC is engaged in selling taxable goods then they are liable to pay the sales and use tax.
Most of these taxes are normally filed, but some departments require official paperwork, without which it is impossible for the business to close their accounts. Apart from business taxes, federal taxes, personal income taxes, and franchise taxes are to be considered. For the franchise taxes, a franchise tax form is required.
That is why the LLC owner should go through the sales tax guide and hire an accounting service. If you want to do the accounting yourself or make accounting easy, try FreshBooks.
While dissolving the Maryland LLC, the owner does not require to obtain a tax clearance certificate. However, if you have filed federal taxes, then you must go through the final return option on your IRS form.
The IRS form for the LLC that are classified as partnerships is form 1065, and those LLC’s who have registered themselves as corporate should check IRS form 1120.
Step 3: File Articles of Dissolution
There is a list of dissolution documents that you, as an LLC owner, have to file. Once these articles are filed, the legal existence of the LLC will be over. Like a Maryland Articles of Organization, one has to file Maryland LLC Articles of Dissolution. The dissolution procedure and filing the articles of dissolution form is very easy and is discussed below.
- First of all, the LLC owner(s) has to file the Article of Dissolution. There are multiple methods of filing available, such as file by mail, in-person drop, or/and online filing. To get the application form you need to visit the Secretary of State Website of Maryland state.
- You can follow the filing instruction on the official portal so that the steps for dissolution will be easier to complete.
- In that particular SOS website, the LLC owner has to look for the Domestic LLC Articles of Dissolution page.
- If you want to dissolve Maryland Foreign LLC then look for the Foreign LLC Dissolution process.
- There is a form available on this page, which is the article of dissolution you are looking for. You have to download that pdf form and start filling it.
- You must fill in all the important and legal information in the form, so you should be extra careful.
- After filling in all the important information, you must choose the mode of payment you want to use to pay the LLC dissolution filing fees.
- After filling in every detail, one should submit the form through an official mail address and make a payment.
- It takes 3-5 business days after filing of articles of dissolution if you are filing it by mail or in-person.
Department of Assessments and Taxation
Charter Legal Department
301 W. Preston Street, Rm 801
Baltimore, MD 21201-2392
Online FIling: Maryland Online LLC Dissolution
Filing Fee: $100
The LLC you owned is dissolved, and you are free from all the liabilities linked with the LLC and its taxes. A copy of both original articles and recorded articles should be submitted in front of the probate judge. Now it’s his call that he accepts your expedited dissolutions or not.
Points to Be Noted When Dissolving Maryland LLC
Apart from these three steps, no major dissolution rules are there in Maryland. However, there are some other tasks one has to keep in mind while dissolving an LLC legally.
There are some purposes of LLC that require some attention even after dissolution, known as winding up. The task of winding up includes.
- For a certain period, the property of a business requires preservation.
- If there is any civil case against the LLC, then the owner needs to finish them.
- Settle all the existing disputes of LLC.
- Transfer all the property of LLC to the names of partners.
- Release all the liabilities that the LLC owes to others.
- Rightful distribution of all the assets among members, according to their percentage of partnerships.
Cost of Dissolving LLC
LLC cost in Maryland includes the formation as well as dissolution fees. To dissolve an LLC in Maryland, LLCs have to file an Article of Dissolution. The filing fee is $100. The details are mentioned on the second page of the article dissolution filing form. Following are the ways to pay for the dissolution,
- You can select a payment pick-up option.
- There is an option of direct account transfer through your prepaid accounts.
- LLC owners can also use their Credit cards, providing their complete details and types. Along with that, an original signature is required to authorize the transaction state will make.
After Dissolving Your LLC
After you formally dissolve your LLC, your business name will not be reserved anymore. Any other business entity will be eligible to use your Maryland LLC name immediately after 120 days of dissolving your LLC. On the other hand, if you have a foreign LLC in other states, then you must comply with the SOS of the state after the dissolution of your LLC in Maryland. A registered agent can help you do the needful.
Reasons Behind Dissolving Maryland LLC
There are so many things that we need to know about a business. The business can have a lot of clients, and there can be another with not so many clients. It can happen to two companies that have the same type of business. So at this time, the business with low clients will have to dissolve an LLC in Maryland. The dissolution has to be legal; otherwise, the directors will come under a lot of liability. Here are some of the liabilities,
- The company may seem like it is still in operation and will be liable for taxes.
- Another third party can sue the business and can ask for money in return.
- The shareholders will still ask for the money no matter what the status is.
- Creditors can ask the person for their unpaid debt if there is.
- The assets can lose their value by the time the company dissolves the business.
Top Businesses in Maryland!
It is an important thing that the person ensures the different facts about a business. If someone is going to start an LLC in Maryland, they will need to consider the sector. It is an essential thing, so we have given the information in the following facts!
- Rental and leasing: It is an important thing to know and create a business. But for that, there is a need for a place of business. So it can be bought financially, or rented, or on lease. With this industry, people can make better money, and they can get opportunities too. This industry alone contributes $78.8 billion to the GDP of Maryland, which is the highest amount.
- Government enterprises: It is not just the other sectors that contribute to the GDP. The government enterprises also make a lot of contributions to the economy of the state. For this state, these public enterprises contribute $74.95 billion to the GDP. It is an incredible amount, and it also comes on the second of most in the contribution.
- Professional services: There are many other sectors too, but Maryland is a land of businesses; we can see that. So with the help of these businesses, the state gets growth and better development opportunities. This sector contributes $55.86 billion to the economy and makes it better.
Maryland LLC Dissolution Review
Time needed: 5 minutes.
Here’s a recap of the steps you must follow when dissolving your Maryland LLC. Click on the steps in this list if you want to read the full detail.
- Follow Your Maryland LLC Operating Agreement
Remember that when you started, you created an operating agreement. Use this agreement as a guide in proceeding with the dissolution of your LLC.
- Close All Tax Accounts
Make sure you close all your tax accounts to avoid incurring further costs.
- File Articles of Dissolution
File the article of dissolution to make it known to the state where your LLC operates is that you are indeed no longer in business.
What is the Cost to Dissolve an LLC in Maryland
To dissolve an LLC in Maryland you need to file the Articles of Cancellation with the Maryland Department of Assessments and Taxation via mail, in person or online for $100.
When an LLC is formed in Maryland, the owners may choose to dissolve the business at some point. Dissolving an LLC in Maryland is called “winding up.” Winding up an LLC in Maryland requires filing paperwork, paying any outstanding debts and taxes, and preparing the final tax return for the LLC.
First, the LLC must file a form with the Maryland Department of Assessments and Taxation (SDAT). The form is called the “Application for Resignation of a Domestic Limited Liability Company” and it must be signed by all of the members of the LLC. A filing fee of $30 must accompany the form.
Next, the LLC must pay any outstanding debts, including taxes. The LLC must also prepare a final tax return for the LLC. The LLC must also notify all creditors and claimants of the dissolution of the LLC.
The LLC must also take steps to ensure that the LLC’s assets are properly distributed to the members. All outstanding debts and liabilities must be paid before any assets are distributed. The LLC must also make sure that any remaining assets are distributed to the members according to the terms of the LLC’s agreement.
Finally, the LLC must publish a notice of its dissolution in a newspaper of general circulation in the county where the LLC’s principal office is located. The notice must be published once a week for two consecutive weeks. The cost of publishing the notice will vary depending on the newspaper.
The total cost to dissolve an LLC in Maryland will depend on the number of creditors, the amount of taxes owed, the cost of publishing the notice of dissolution, and any other costs associated with winding up the LLC. Generally speaking, the cost to dissolve an LLC in Maryland should not exceed a few hundred dollars.
In summary, dissolving an LLC in Maryland requires filing paperwork, paying outstanding debts and taxes, preparing a final tax return, notifying creditors and claimants of the dissolution, distributing assets according to the LLC’s agreement, and publishing a notice of dissolution. The total cost to dissolve an LLC in Maryland should not exceed a few hundred dollars.
Yes, in Maryland, there is a fee of $100 to be paid for filing the Articles of Dissolution. Articles of Dissolution must be submitted to the Maryland SOS.
No, there is no requirement of revenue department clearance till the time the SOS of Maryland accepts the dissolution form.
The name will also get deregistered with the dissolution of the LLC. But the name will not be allotted for the next 120 days. After that, if some business wants to name their LLC after the name chosen by you, then it is their choice.
If you have not dissolved your LLC, you are liable for business privilege tax, and if it is not paid on time, you are leveraged with 10% of the amount of tax or $50. After that, the additional penalties will increase by $1 per month. If it goes unpaid for a longer duration, then the chances of seizing your property can also recover the tax.
Yes, if you are dissolving your LLC, you have to pay some amount to the probate judge who was also present during your LLC formation in the probate office. The minimum fee of the judge is $50, which can vary.
Limited liability companies reduce owners’ personal liability. Having an LLC is quite cost-effective. However, if it is required to close down the business, then the dissolution process should be done legally. Get a professional service to get everything done. We hope this article helps you to close your LLC in Maryland. If you have any query do let us know in the comment box.
1 thought on “How to Dissolve an LLC in Maryland | LLC Closing Guide”
My father died in April 2022 with active LLC. He was the only person on the business which currently has little to no value. I am the executor of his estate. What do I do?