To form a corporation in Maryland, you need to take the steps set forth below. You can also use Nolo's Online Corporation service, which will form a corporation for you with everything you need.
Your corporation's name must contain one or more of the following words (or an abbreviation thereof): "Incorporated," "Corporation," or "Limited."
Your corporation's name must be recognizably different from the names of other business entities already on file with the Maryland Department of Assessments and Taxation. Names may be checked for availability by searching the Maryland business name database. You may reserve a name for 30 days by filing an Application for Reservation of Name with the Secretary of State. The reservation must be filed by mail.
Your corporation is legally created by filing Articles of Incorporation for a Stock Corporation with the Maryland Department of Assessments and Taxation. The articles must include: the name and address of the incorporator; the corporate name; its purpose; the street address of the principal place of business in Maryland; the name and street address of agent for service of process; the number of shares the corporation is authorized to issue and the par value; the number and names of the initial directors; and the consent of the resident agent.
The articles may be filed online or by mail. The basic filing fee is $100 plus a $20 organization and capitalization fee for a total of $120, unless the aggregate par value of the stock exceeds $100,000 or, if no par value stock is used, the corporation has authority to issue more than 5,000 shares. If stock exceeds these amounts, call 410-767-1340 for the fee. There is an additional $50 expedited fee and 3% service fee for online filings.
Every Maryland corporation must have an agent for service of process in the state. This is an individual or corporation that agrees to accept legal papers on the corporation's behalf if it is sued. The agent must be either an adult citizen of Maryland or another existing Maryland corporation. The registered agent must have a physical street address in Maryland. The agent should agree to accept service of process on your corporation's behalf prior to designation.
Set up a corporate records book in which you keep all of your corporation's important papers, including minutes of director and shareholder meetings, stock certificates, and stock certificate stubs. Keep your corporate records book at the principal office of your corporation. You can use a three-ring binder as the corporate records book or you can order a special corporate records kit through a corporate kit supplier.
Bylaws are an internal corporate document that set out the basic ground rules for operating your corporation. They are not filed with the state. Your corporation is not legally required to have corporate bylaws, but you should adopt them because they (1) establish your corporation's operating rules, and (2) help show banks, creditors, the IRS, and others that your corporation is legitimate. For corporate bylaw forms, see Nolo’s website or Incorporate Your Business, by Anthony Mancuso (Nolo). Corporate kits also typically contain sample bylaws.
The first meeting of the corporation's board of directors should be held at which the directors can appoint corporate officers, adopt bylaws, select a corporate bank, authorize issuance of shares of stock, set the corporation's fiscal year, and adopt an official stock certificate form and corporate seal. The directors' actions must be recorded in corporate minutes prepared by the incorporator or any of the directors. Additionally, if the corporation will be an S corporation, the directors should approve the election of S corporation status. For corporate meeting minute forms, see Nolo’s website or refer to Incorporate Your Business, by Anthony Mancuso (Nolo).
Issue stock to each shareholder. Although not legally required in most states, small corporations usually issue paper stock certificates. Enter each shareholder's name and contact information in the corporation’s stock transfer ledger.
A share of stock in your corporation is classified as a security under state and federal securities laws that regulate the offer and sale of corporate stock. However, the federal government and all states exempt most small corporations from these laws. For example, federal law exempts "private offerings": a non-advertised sale to a limited number of people (generally 35 or fewer). Most states have enacted their own versions of this SEC exemption. Visit your state securities office website for information about your state's securities laws. Links to all such offices can be found at the Contact Your Regulator web page of the North American Securities Administrators Association.
All corporations doing business in Maryland must file an Annual Report with the Maryland Department of Assessments and Taxation Personal Property Division. The report is due by April 15 each year and the annual filing fee is $300 (the fee does not include any state tax liability of the corporation).
If your business owns, leases, or uses personal property in Maryland or has a trader’s license with a local government unit, you must also file a Personal Property Tax Return. Both reports can be filed online or by mail.
Additional tax and regulatory requirements apply to your corporation. These include:
EIN: Your corporation must obtain a federal employer identification number (EIN). You may obtain an EIN by completing an online application on the IRS website. There is no filing fee.
S Corporation Filing: If the corporation wants to elect S corporation status for tax purposes, it must submit Form 2553 Election by a Small Business Corporation (signed by all the shareholders. The election should be filed within two months and 15 days after the beginning of the corporation's first tax year. See the IRS S Corporation Fact Sheet for details.
Business Licenses: Depending on its type of business and where it is located, your corporation may need to obtain other local and state business licenses.
All corporations organized outside of Maryland must register with the Maryland Department of Assessments and Taxation to do business in Maryland. Foreign corporations must appoint a registered agent for service of process physically located in Maryland. To register, file a Foreign Corporation Qualification application. The form may be filed online or by mail. The filing fee is $100.