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Making the Most of Maryland Corporation and Partnership Law

Protect your assets with a Maryland corporation

By Emmet McMahan
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.

 

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.
Try: 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.
Try: 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.
Try: 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.

 

  • 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.

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