Annual Filing Requirements for Maryland LLCs

Learn about the annual report and tax filing obligations for Maryland limited liability companies.

To establish and operate a Maryland limited liability corporation (LLC), you must prepare and submit a number of paperwork with the state. This article discusses the most significant continuing reporting and state tax filing obligations for Maryland limited liability companies.

Return of Personal Property/Annual Report

Each year, the state of Maryland requires you to submit a personal property return (PPR) for your LLC. For Maryland LLCs, the return also functions as an annual report. (The Department of Assessments and Taxation, or DAT, refers to it as a return as well as an annual report.) Form 1 – Personal Property Return must be printed and sent in; it cannot be completed online. The form is available for download on the DAT website.

Each year, you must submit the return by April 15. (An extension request is conceivable.) The price for filing is $300.

State Corporation Tax

Most LLCs are pass-through tax corporations when it comes to income taxes. In other words, the burden for paying federal income taxes is passed via the LLC to the individual LLC members. LLCs do not pay income taxes by default; only its members do. Maryland, on the other hand, requires LLCs to pay income tax on revenue distributed to nonresident members. The tax is paid to the Maryland Comptroller. If you have members who are not Maryland residents in your LLC, you should visit the Comptroller’s website for the most up-to-date tax rates and filings.

Furthermore, the owners of an LLC may elect to have their firm taxed as if it were a corporation. This decision is made by submitting IRS Form 2553 to the IRS. (The form is available on the IRS website.) When an LLC elects to be taxed as a corporation rather than as a pass-through entity, the firm must submit a separate tax return. Maryland, like almost every other state, has a corporate income tax. In Maryland, the tax is normally a flat 8.25% of the state’s allocable net income. This tax must be paid if your LLC is taxed as a corporation. The state corporate tax return (Form 500) is submitted with the Maryland Comptroller.

Employer Taxes in the State

Do you have workers in your LLC? If this is the case, you must pay employer taxes. Some of these taxes are paid to the federal government (the IRS) and are not addressed in this section. (However, it is important to understand that federal employer tax duties begin with getting a federal employer identification number (EIN).) However, Maryland employers must additionally pay state taxes. The Comptroller’s website contains information on registering your LLC and paying these taxes. A thorough guide on Maryland employer withholding may be downloaded at the website. You may also learn more about unemployment insurance (UI) evaluations by visiting the Maryland Department of Labor, Licensing, and Regulation’s website.

Taxes on Sales and Use

If your LLC sells items to Maryland clients, you must collect and remit sales tax. You must submit a state sales and use tax return every year (Form 202). The Comptroller recommends that this be done electronically using the bFile system. You may, however, specifically request printed forms.

Other States Registration

If you want to do business in states other than Maryland, your LLC may need to be registered in any or all of those states. The exact states concerned will determine if you are needed to register: each state has its own regulations for what defines conducting business and whether registration is required. For registration reasons, having a physical presence (a business location) in a state, recruiting personnel in a state, or soliciting business in a state (through telephone, print advertisements, mail, or the Internet) are sometimes considered conducting business. Obtaining a certificate of authority or comparable document is normally required for registration.