Find out how to qualify your LLC to conduct business in Maryland.
If you own a company that was founded in a state other than Maryland, you must qualify or register it in Maryland in order to conduct business there. The requirements for qualifying your international (non-Maryland) limited liability corporation (LLC) to conduct business in Maryland are summarized here.
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What exactly is a Foreign LLC?
If your LLC was founded in another state, it is referred to as a foreign LLC in Maryland. In other words, being foreign does not imply being from another nation. Instead, it signifies that your company was formed under the laws of another state. A domestic LLC, on the other hand, is one that is created in the state in which it operates. This is a prevalent phrase in the United States. An LLC founded in North Dakota, for example, is a foreign LLC in South Dakota.
Making a Living in Maryland
If you are “doing business” in Maryland, you must register your foreign company with the state, according to Maryland’s LLC Act. What exactly does this mean? As with other states, Maryland’s LLC Act does not specify what “doing business” implies with regard to international registrations.
State regulations determining when foreign enterprises must collect state sales tax in their state, on the other hand, give some advice on the subject. To be obligated to collect state sales tax on sales to citizens of a state, a firm must have a physical presence in, or nexus with, that state. In general, physical presence and nexus are synonymous and refer to:
a storage facility in the state
A shop in the state, an office in the state, or a sales representative in the state are all examples of state-based businesses.
Certain exclusions may apply, and the regulations become more convoluted in situations such as Internet sales. However, if you have an office, a shop, a warehouse, or workers in another state, you must register your LLC as a foreign corporation in that state.
Some Activities Are Exempt
Maryland’s LLC Act, like other states’, stipulates some actions that do not constitute doing business in the state. Among the objects mentioned are:
dealing with a lawsuit dealing with internal business affairs such as holding member or manager meetings having a bank account in the state conducting an isolated transaction not part of a series of similar transactions foreclosing mortgages and deeds of trust on property in Maryland as a result of default under a mortgage or deed of trust acquiring title to property in Maryland by foreclosure holding, protecting, renting, maintaining, and obstructing
While the previous two elements imply that having property in Maryland obtained via foreclosure does not constitute conducting business in the state, the LLC Act also indicates that holding income-producing real estate or tangible personal property in Maryland does. Check Section 4A-1009 of the LLC Act for the real legal explanation of each of the elements mentioned above. The Act is a subsection of the Maryland Code’s Corporations and Associations section. LexisNexis maintains a private website where you may obtain the Code.
If your LLC’s sole operation in Maryland is one or more of the things above, you should avoid registering with the state.
Registration of an LLC
To register your foreign company in Maryland, you must submit a LIMITED LIABILITY COMPANY REGISTRATION to the Maryland Department of Assessments and Taxation. The form may be downloaded from the SDAT website or filed online via Maryland Business Express.
To complete the registration, you must give similar information to that required to register an LLC in your home state. However, since each state is different, there may be materials that Maryland requires that you did not need to submit when you initially formed your LLC. In particular, for a Maryland registration, you must provide:
if different, the entire legal name of your LLC in the state where it was formed, the name of your LLC in Maryland
the name of the state in which your LLC was created the date your LLC was formed the address of your LLC’s primary office, which must be a street address
a description of your LLC’s operations in Maryland
the name and Maryland street address of your LLC’s Maryland registered agent (if none is given, SDAT will function as your LLC’s Maryland registered agent)
a declaration indicating if the LLC did business in Maryland previous to submitting the registration (if so, a $200 penalty must be included with the registration)
a written declaration of permission from your Maryland registered agent, and an approved signature.
As stated in the list of requirements, the name of your LLC must be unique from other business organizations already established in Maryland. In order for your registration to be finalized, you must include a $200 penalty if you previously did business in the state without being registered. You must also provide a Certificate of Good Standing or a similar document from the state in which your LLC was created. The filing cost is one hundred dollars.
What Happens If You Don’t Register?
If your LLC does business in Maryland without being registered, it cannot file a lawsuit there. Furthermore, any member and agent of a foreign LLC that conducts business in Maryland without first registering is guilty of a misdemeanor and liable to a $1,000 punishment. However, not being registered does not render any of your LLC’s contracts null and void or prevent your LLC from defending a lawsuit in the state.
Foreign Corporation Registration in Maryland
The regulations and standards for international qualifying in Maryland are identical whether your company is structured as a corporation rather than an LLC. However, you will need to fill out a new application form, Foreign Corporation Qualification. For paperwork, information, and filing procedures for registering a foreign company in Tennessee, visit the SDAT website.