The key to making the most of Maryland corporation and partnership law is the decision to incorporate your business. A corporation affects your ability to gain capital, controls the amount of debt you assume and determines your tax obligations. However, these advantages must be balanced against the additional taxes your business will incur.

Maryland partnership law makes a partnership subject only to personal income tax, unlike a corporation. On the other hand, business partners may be held responsible for business debts.

There are several options for forming a company under Maryland corporate law. These include:

1. Maryland incorporation as a profit or non-profit corporation. An S corporation (S-corp) is taxed under Subchapter S of the Internal Revenue Code which generally does not include income taxes.

2. A Maryland limited liability company (LLC). This is a hybrid business entity that shares the characteristics of both a corporation and partnership. It pays incomes taxes and is more suitable for a small business with one owner.

3. A Maryland limited partnership. This type of partnership has limited partners in addition to general partners.

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Determine the type of corporation that best suits your business under Maryland corporation laws

The most important factors to consider are the personal liability obligations and tax implications. You should also familiarize yourself with the operating requirements and reporting regulations.

I recommend: The Maryland Department of Assessments and Taxation has specific forms and instructions for starting each type of new business in Maryland. Businessnameusa.com summarizes the difference between an incorporation and a DBA (Doing Business As).

Find an attorney that specializes in MD incorporation

Incorporating in Maryland must comply with the disclosure, operating and reporting requirements. Maryland corporation law specifies these requirements in detail.

I recommend: Richard B. Schreibstein in Columbia specializes in corporate law and has specific experience in forming businesses. Miller, Miller & Canby in Rockville includes corporate law in its practice areas including business formation.

Seek out sites to help you perform Maryland corporation registration

You must file the registration forms and pay the associated fees as required by Maryland corporation law in order to perform Maryland LLC registration. You may also need to file Articles of Incorporation, depending on the type of corporation you decide to register.

I recommend: Jumptree provides a checklist specifically for incorporating in Maryland and also provides information on the different business entities. IncorporationNation specifically discusses the advantages of incorporating in Maryland and also describes how to create each business type.

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• •  Maryland corporation law requires annual fees and filings to maintain your corporation. Corporations are automatically C-corps unless they specifically register as S-corps with the primary difference being the way they are taxed. One person may frequently hold more than one position in these corporations and many if not all shareholders are also directors in a small corporation.

If you'd like to start a business in Maryland, you must understand the basics of Maryland corporation law. The structure of your Maryland corporation will be instrumental in the success of your business; it will affect your tax treatment, filing requirements, funding potential, and liability obligations.

The ownership plans for your business entity will help determine how to incorporate in Maryland. A traditional corporation is useful to raise money with investors, or to allow ownership to employees in the form of shares. However, Maryland corporate law requires complex ongoing paperwork, and will tax your business income on the corporate and the shareholder levels.

Registration under Maryland LLC laws, on the other hand, is less complicated. Taxation occurs only on one level, which may be an important benefit to your company. The structure is more simple, and can require only two people to incorporate. Under Maryland partnership law, a partnership is appropriate for business ventures that have a limited time frame, or a small number of people involved. Taxation benefits are similar to a Maryland LLC, in that there is no double taxation. The drawbacks include increased exposure to liability for the actions of the partnership.

The options available under Maryland corporate law are:

1. A business corporation (stock or non-stock).

2. Limited liability corporation (LLC).

3. Limited Liability Partnership (LLP).

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Choose what works under Maryland corporate law

Corporation or Partnership? The decision depends on your long-term goals for the business. Ownership is easier to divide in a corporation, while partnerships are not well suited for growth or sale, and do not offer stocks. Taxation is different for both types of entities. And, finally, Maryland corporation registration, including Maryland partnership law, requires varying filing paperwork and fees.

I recommend: FindLaw will guide you through picking the entity structure that works for you. If you need further advice, find a Maryland attorney.

Make your Maryland corporation a reality

Maryland corporate law requires filing certain forms, as well as submitting fees. The filing may include an Article of Incorporation, or, for Maryland LLC registration, Articles of Organization. Fees will vary depending on the structure. Unlike many states, filing documents for a Maryland corporation must be submitted via mail or fax. Processing time is generally 6-8 weeks.

I recommend: Find the appropriate business entity form at the Department of Assessments and Taxation. Confirm the fee required by checking the fee schedule. Complete this checklist to make sure you've completed all necessary steps.

Know the details of Maryland corporate law

You are required to abide by all Maryland rules and regulations with regard to Maryland incorporation, so review the related statutes carefully.

I recommend: Review the Corporation and Associations Article of Maryland corporation law to understand your obligations when incorporating in Maryland. Consult a Maryland business attorney for further advice, if you have questions.

Tips & Tactics

Helpful advice for making the most of this Guide

• •  Conduct a Maryland corporation search before committing to your business name. Maryland corporate law does not allow 2 businesses to incorporate under the same name in Maryland.

Maryland corporation and partnership law education and training will teach you how to create business entities such as a Maryland incorporation or limited liability company (LLC). It is especially important for attorneys who specialize in corporation and partnership law to understand the tax implications for a Maryland LLC and corporation.

The requirements needed to practice Maryland corporate law is determined by the state and may depend on the specific type of corporation law you wish to practice. A legal education in corporate law has three general phases:

1. The practice of Maryland partnership law requires a law degree. Practicing attorneys will generally require a Juris Doctor (J.D.) degree from a law school approved by the state of Maryland.
2. An aspiring lawyer will need to pass a bar exam that is administered by the state. A background check will also be performed along with a character and fitness evaluation.
3. The lawyer must apply to Maryland’s licensing authority and pay the required fees. The admittee then takes an oath to comply the rules regarding the practice of law in Maryland.
   

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Complete the formal education needed to learn about Maryland corporation laws

There are a variety of universities in Maryland that grant J.D. degrees recognized by the state of Maryland. The required courses must be updated to keep up with changes in corporate law.

I recommend: The University of Maryland School of Law is fully accredited by the American Bar Association and offers a range of J.D. programs. The University of Baltimore School of Law is a public law school that allows part-time study.

Gain admission to the bar in order to form an LLC in Maryland

As a Maryland corporate lawyer, your clients will frequently wish to form a corporation or partnership with their business. Maryland has specific bar exam requirements and also allows lawyers licensed in other states to practice law in Maryland through reciprocity agreements.

I recommend: AmeriBar Bar Review summarizes the requirements for passing the bar in Maryland. PTEX provides study aids for bar exams and also offers an overview of the scoring process for the Maryland Bar.

Obtain the additional requirements needed to practice Maryland LLC laws

Get licensing information necessary for a career in Maryland corporation law. An attorney in Maryland must also meet that state's continuing education requirements in order to renew a license to practice law.

I recommend: The State Board of Law Examiners provides complete information on getting admitted to the Maryland Bar. Business License Information System provides a overview of the attorney certification process in Maryland.

Tips & Tactics

Helpful advice for making the most of this Guide

• •  Consider a Master of Laws (LLM) degree as a means of distinguishing yourself from other attorneys who practice Maryland partnership law. An LLM is a postgraduate law degree that generally requires an additional year of study at a law school. Graduates from regional schools frequently obtain an LLM in order to compete with graduates from more highly ranked law schools. This is also an excellent opportunity to begin specializing in corporate law.

The laws governing corporation, partnership formation and business vary by state. Maryland's corporation and partnership laws and regulations are unique to the state. It's important to understand the terminology frequently used in Maryland corporation and partnership law. Understanding these key terms will ensure that your participation in a partnership or formation of a partnership in Maryland will follow all relevant laws and be beneficial to your business.

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Limited partnership

Under Maryland law, a limited partnership is a partnership in which a general partner is in charge of managerial decisions and responsible for any incurred debts. All other partners are considered to have limited partnership that releases them from liability and debt responsibility, but also prevents them from making managerial decisions independently.

I recommend: MedLawPlus explains the benefits and restrictions of a limited partnership in Maryland.

Articles of incorporation

Articles of incorporation, also called articles of organization, are a list of details about your corporation or partnership including its tax status, size, function and mission purpose.

I recommend: The Maryland Department of Assessment and Taxation offers an articles of incorporation form to show you this step of the corporation process.

Maryland modified income

The Maryland modified income is a Maryland corporation's taxable income after the application of the state's 8.25% tax. Most corporations and partnerships are required to file a Maryland modified income, but some nonprofit organizations are exempt.

I recommend: The Comptroller of Maryland explains the Maryland modified income and why it's part of Maryland corporate and partnership law.

Real Estate Investment Trust (REIT)

A Real Estate Investment Trust (REIT) is a corporation that deals mainly in real estate activity and is essentially tax-exempt. Maryland audits these companies and collects taxes from them after payments are made directly to the REIT.

I recommend: This article from the Center for Tax Studies explains how REITs work and what Maryland laws apply to this type of corporation.

Annotated Code of Maryland

The Annotated Code of Maryland is the entire collection of codes, laws and statutes applicable to Maryland corporations and partnership formation.

I recommend: PeoplesLaw.org explains how to find sections of the Annotated Code of Maryland pertaining to corporations and partnerships and how the code is organized.