Maryland - Annual Report & Taxes

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Maryland LLC Annual Report & Taxes

Quick Start Guide
This Quick Start Guide is a brief overview of how to form an LLC in Maryland.

Detailed Lessons:

 

Maryland LLC Costs:
Maryland state fee: $100 (by mail) or $150 (online)
Annual report: $300

Need to save time?
Hire a professional to form your LLC in Maryland:
Northwest ($39 + state fee) or LegalZoom ($149 + state fee)

(check out Northwest vs LegalZoom)


Video Transcript:

The following information is provided for educational purposes only and in no way constitutes legal, tax, or financial advice. For legal, tax, or financial advice specific to your business needs, we encourage you to consult with a licensed attorney and/or CPA in your State. The following information is copyright protected. No part of this lesson may be redistributed, copied, modified or adapted without prior written consent of the author. As we mentioned earlier, there are ongoing requirements for your LLC with the State of Maryland. The first of these requirements is called the Annual Report, and the second requirement is filing your LLC’s income taxes. These can be quited complicated and at the end of this Lesson we will recommend that you get help filing these forms. However, we want to give you an overview, so that you have a basic understanding of the requirements. In most states, the purpose of the Annual Report is to keep the State updated with your LLC’s contact information. However, Maryland does things a little bit differently. Their Annual Report is called the Personal Property Tax Return and it is used to tax personal property owned by the LLC. Personal property includes furniture, machinery, equipment, tools, fixtures, inventory, and anything else that is not real property. Real property refers real eState or land. Another way to think of personal property is anything that is not permanently attached to the ground. In order to file your Personal Property Tax Return, you will first list all of your LLC’s personal property and its estimated value. Then you’ll need to list your LLC’s gross sales, as well as a balance sheet that shows your LLC’s assets and liabilities. Once finalized, you will mail your Personal Property Tax Return to the State along with the Filing Fee. The Filing Fee and your Personal Property Tax Return must be filed every year by April 15th. You may also be charged an additional tax depending on the value of your LLC’s personal property. If your LLC owes additional tax, the county will mail you a bill shortly after April 15th and tell you when this additional payment is due. Below this video, you will find the Filing Fee amount and the accepted forms of payment. If you don’t file your Personal Property Tax Return before the April 15th deadline, the State will eventually dissolve (aka shut down) your LLC. The State takes this requirement seriously, so it’s important that you file your Personal Property Tax Return on time every year. the State will mail you a notice each February reminding you to file by the April 15th deadline. However, we recommend that you keep a repeating reminder on your calendar in case you don’t receive the State’s reminder notice. We know that this information not only sounds confusing, but also sounds like a lot of work. The truth is – it is a lot of work. Determining your personal property depreciable value, commercial inventory, depreciation rates, total gross sales, and creating the balance sheet can be very challenging and complicated. Furthermore, if you make any mistakes, that can create financial issues for you and your business. For this, reason we recommend you hire a tax professional to take care of this for you every year. This segues nicely to the next part of this Lesson. Besides owing tax on your personal property, you are also required to file State income taxes every year. Even if your LLC has no income or you have no business activity, you are still required to file this additional return each year. Again, calculating your tax obligations in Maryland – especially if you have employees – can be complicated and if done improperly, can negatively impact your LLC. Taxes can be challenging and we recommend you can help from a tax professional once your LLC is formed. Hiring a tax professional will not only help you keep your LLC in compliance with the State, but will also give you an advisor to go to for other business questions. Whether your business turns a profit or loses money, you will still need to file tax documents every year. This is not something to be taken lightly. If you want to run a serious business and not get in trouble with the State, you should get assistance in filing your taxes properly. How to Find a CPA or Accountant. A referral from a friend or someone else you trust is usually the best way to find someone to do your taxes. You can also ask co-workers, acquaintances from local clubs organizations, your neighbors, and other business people. You could also ask your Twitter, Facebook, LinkedIn, and other social media friends and maybe find a trusted name from a friend of a friend. It’s as easy as typing in your social media accounts “Hey, I just formed an LLC. Does anyone know a good accountant?” If you can’t get a personal referral, then try doing a search online for “accountant” or “certified public accountant” on Yelp.com or Google.com and looking for someone with a strong track record. You should want someone who’s a good fit for your company, makes you feel comfortable, and is willing to answer all of your questions. It should be someone you like personally as well as professionally. It’s okay to take your time to find the right person. We recommend talking with at least 2-3 people before making your final decision We hope you find a great tax professional. And that concludes this Lesson.

Download or File Online

You can file your Maryland LLC Annual Report and Personal Property Tax Return either online or by mail:

To file online: visit the Business Express page

To file by mail: download forms and instructions

Do I need to file both forms?

All Maryland LLCs must file an Annual Report.

Your Maryland LLC must file a Personal Property Tax Return if either of the following are true:

  • The LLC owns, uses, or leases personal property located in Maryland
  • The LLC has a trader’s license with a local unit of government in Maryland

Note: As of the 2018 filing year, the Annual Report and Personal Property Tax Return are two separate forms. (They used to be together in the same form)

Filing Fee

$300

Due Date

The Annual Report is due by April 15th every year.

References

http://dat.maryland.gov/Pages/sdatforms.aspx
(see “ANNUAL REPORTS AND PERSONAL PROPERTY TAX RETURNS” section about half way down the page)

Next Step

Hire a tax professional to help you prepare your Personal Property Tax Return as well as your state income taxes and any other taxes that apply to your Maryland LLC.

Matt Horwitz
Founder & Educator, LLC University®
Forming an LLC shouldn't be so complicated. Our step-by-step guide will make the process a breeze – and no complex legal jargon! LLC University® teaches people how to form an LLC for free in all 50 states. We hope you find our free guides and resources helpful in your business journey.
Disclaimer: Nothing on this page shall be interpreted as legal or tax advice. Rules and regulations vary by location. They also change over time and are specific to your situation. Furthermore, this comment section is provided so people can share their thoughts and experience. Please consult a licensed professional if you have legal or tax questions.

6 Comments

  1. Rick Wiker January 5, 2017

    I found this series of lessons very informative.
    Thank you Matt!

    reply
    • Matt Horwitz January 5, 2017

      Awesome! I’m glad it was helpful Rick. Let us know if you need anything else :)

      reply
  2. Deb May 27, 2017

    We formed an LLC without knowing all the tax ramifications. We spent over $4k in 2016 researching, testing and creating our products. We made a profit of $256. This will take years to building up to any real money. The $300 Maryland Personal Property Return Report fee isn’t something we can afford. I think we should desolve the llc. What happens when we don’t pay and they desolve the llc. Is there a penalty that will cost more than the $300?

    reply
    • Matt Horwitz May 30, 2017

      Hi Deb, if you’d like to shut down the LLC, do not let the LLC just “sit”. The Maryland Department of Assessments & Taxation will not administratively dissolve the LLC (like most other states), but instead, your Maryland LLC falls into “forfeiture status” and continues to accrue annual fees, late fees, and penalties. The best course of action is to file the Articles of Cancellation (http://www.dat.maryland.gov/SDAT%20Forms/llc-cancel.PDF) and pay the $100 cancellation fee. This will cancel and shut down your LLC. You can only file this by mail (online filing is not available). Once you mail in your Articles of Cancellation and the $100 cancellation fee, the state will process your cancellation and mail you back a confirmation within 4-6 weeks. Alternatively, if needed, you can expedite the cancellation for an additional $50 ($150 total) and the cancellation will be processed and confirmation returned to you within 7-10 business days. Hope this is helpful. Let us know if you have any followup questions.

      reply
  3. Nica January 8, 2019

    Well done! You are helping people gain more knowledge to be confident to start their own business, Thank you!

    reply
    • Matt Horwitz January 8, 2019

      Thank you Nica! And you’re very welcome :)

      reply

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