How to Dissolve an LLC in Maryland: A Simple Guide

Thinking about closing your Maryland LLC? The process involves a few key steps to wrap up your business affairs the right way.

To dissolve an LLC in Maryland, you’ll need to vote on dissolution with your members, file Articles of Cancellation with the state, and take care of any remaining tax and legal obligations.

Dissolving your LLC isn’t just paperwork—it’s about closing a chapter in your business life. Maryland law requires specific steps to cancel an LLC legally, including keeping a resident agent during the process and making sure all members are on board.

The state also expects you to settle any outstanding obligations before your LLC is officially terminated.

You can handle the dissolution process online using the Maryland Business Express website. There, you’ll look up your LLC and follow the cancellation steps.

Keep in mind, your LLC can also dissolve automatically if it has no members for 90 days in a row or if all members agree to end it.

Key Takeaways

• Member voting, filing Articles of Cancellation, and keeping a resident agent are all required for proper dissolution.
• You’ll need to settle all tax obligations and debts before Maryland will officially terminate your LLC.
• Maryland Business Express lets you dissolve your LLC online, which honestly makes things easier for most business owners.

Save the Hassle and Get Bizee to Do It For You

As you can see, there is considerable work in doing a dissolution and in the interests of ensuring it is done correctly, many people use a service like Bizee to do the dissolution. It is quick, easy and comparatively cheap.

Preparing to Dissolve an LLC in Maryland

Before you file the Articles of Cancellation with Maryland’s Department of Assessments and Taxation, you have a few prep steps to handle. Getting these out of the way helps avoid legal headaches down the line.

Reviewing the Operating Agreement

Start by reviewing your LLC’s operating agreement. This document usually spells out how to dissolve the company.

The operating agreement might include:

• Voting thresholds for approving dissolution
• How to distribute any leftover assets
• Timeline for winding down
• How to notify stakeholders

If you don’t have an operating agreement, Maryland law says you need a majority vote from members to dissolve. In a single-member LLC, the owner can decide alone.

Document everything you do to follow the operating agreement. Keeping records now can save you from future headaches if anyone questions how you handled the dissolution.

Securing Member Approval

Maryland law requires LLC members to formally approve dissolution. Usually, this means holding a meeting and voting on the proposal.

Make sure to:

• Send written notice to all members about the meeting
• Document the voting process and results
• Record meeting minutes reflecting the decision
• Get signed resolutions from approving members

The required approval depends on your operating agreement, but it’s typically a majority vote. For multi-member LLCs, get signatures from everyone who approves.

Make sure all members understand the consequences of dissolving, including tax issues and possible liabilities. Good documentation here helps prevent disputes later.

Resolving Outstanding Debts and Obligations

Before you file for dissolution, take care of any outstanding financial obligations. This means settling debts, finishing contracts, and resolving lawsuits if there are any.

Address things like:

• Loans and credit accounts
• Vendor and supplier contracts
• Employee wages and benefits
• Leases and equipment rentals
• State and federal taxes

List all creditors and let them know you’re dissolving the LLC. Maryland law says you must pay or make arrangements for all known debts before splitting up any assets.

If you skip this step, you could end up personally liable for the debts. Get written confirmation that debts are paid and keep these records for at least three years after closing the business.

Filing the Articles of Cancellation

The last step to dissolve your Maryland LLC is submitting the right paperwork to the state. Pay attention to the details here to avoid delays.

Completing Required Documentation

Prepare the Articles of Cancellation form. You’ll need your LLC’s exact legal name and the Maryland Department ID Number.

Include information about who authorized the dissolution and the date it was approved. Specify if members or managers made the decision, depending on your LLC’s setup.

Make sure all known creditors get notified before you file. Maryland law requires you to notify creditors by registered mail before submitting your cancellation forms. It’s a crucial legal step.

An authorized person, usually a member or manager, must sign the form.

Submitting the Form to the State Department of Assessments and Taxation

You can submit your Articles of Cancellation to the Maryland State Department of Assessments and Taxation (SDAT) in a few ways.

In-person:

• Go to the SDAT office in Baltimore
• Get immediate processing if you pay the expedited fee

By mail:

• Send it to SDAT’s address
• Allow extra time for processing

Online:

• Use the Maryland Business Express portal
• Create an account if you don’t have one

No matter how you file, keep copies of everything and proof of submission. Once processed, SDAT will send you a confirmation of cancellation.

Paying Applicable Fees

There’s a $100 standard filing fee for Articles of Cancellation in Maryland.

If you want expedited service (2-3 business days), that’s $50 extra. Certified copies cost $20 each.

You can pay by:

• Credit card for online filings
• Check or money order by mail
• Cash, check, or credit card in person

Make checks out to “SDAT” or “Maryland State Department of Assessments and Taxation.” Filing fees aren’t refundable, even if your cancellation gets rejected.

Settle any outstanding tax obligations first. If you owe taxes, the Comptroller of Maryland may put a hold on your cancellation until you pay up.

Addressing Final Tax and Legal Requirements

Before you can officially dissolve your LLC, you need to handle all tax obligations and get any required clearances. If you skip this, you might run into trouble later.

Settling State and Federal Taxes

File a final tax return with both Maryland and the IRS. For Maryland, send your last return to the Comptroller of Maryland. Include all income, expenses, and deductions for the final period.

Check with the Comptroller to make sure you don’t have unpaid taxes. Don’t forget to:

• Mark the return as “FINAL”
• Pay any remaining business taxes
• Cancel tax accounts tied to your LLC
• Let the Comptroller know you’re closing the business

For federal taxes, file your final return with the IRS and include Schedule K-1s for all members. The deadline is usually the 15th day of the third month after you close.

Obtaining a Tax Clearance If Needed

Maryland requires a tax clearance certificate before you can finish dissolving your LLC. This certificate proves you’ve paid all required taxes.

Request tax clearance in writing from the Maryland Comptroller’s Office. Include your business name, FEIN, Maryland Central Registration Number, and note that it’s for LLC dissolution.

Processing time for tax clearance varies, but expect 4-6 weeks. Plan ahead so this doesn’t hold up your dissolution.

Once you get your tax clearance certificate, you can file your Articles of Cancellation with the Maryland Department of Assessments and Taxation.

Winding Up Business Affairs in Maryland

Before you officially dissolve your LLC, make sure to wind up business affairs. This means letting everyone with a financial interest know what’s happening and distributing any leftover assets.

Notifying Creditors and Stakeholders

Notify all known creditors about your LLC’s dissolution. Maryland law says you have to send this by registered mail before filing your Articles of Cancellation.

Your notice should include:

• The LLC’s name and contact info
• Info about the dissolution timeline
• A mailing address for claims
• The deadline for submitting claims (usually 120 days)

This step helps protect you from future liability claims. It’s also smart to let vendors, customers, and business partners know you’re closing up shop.

Some business owners even publish a notice in the local paper to reach unknown creditors.

Distributing Remaining Assets to Members

Once you’ve settled all debts, distribute any remaining assets to LLC members. Follow your operating agreement, or if you don’t have one, use ownership percentages.

Create an inventory of all remaining business property before distributing anything. This includes:

• Cash and investments
• Real estate
• Equipment and furniture
• Intellectual property
• Accounts receivable

Document the distribution process carefully. Members should get formal records of what they receive for tax reasons.

If you distribute assets before paying creditors, you could be personally liable. That’s why winding up affairs the right way really matters.

Seeking Professional Help

Dissolving your LLC in Maryland can get tricky fast. Getting expert advice early on might save you headaches and even more money down the road.

Professionals know the ins and outs of legal and tax requirements. They can spot details you might overlook.

An attorney with business law experience can review your dissolution documents. They’ll make sure everything lines up with Maryland laws.

Attorneys also help sort out any lingering legal issues. It’s usually better to have someone double-check things than deal with a mess later.

If taxes stress you out, a certified public accountant (CPA) is a must. They handle the final tax returns and explain any tax consequences you might not expect.

CPAs can walk you through asset distribution and closing out tax accounts. Honestly, it’s a relief to have someone who knows what they’re doing.

Key professionals to consult:

• Business attorney
• CPA or tax advisor
• Business consultant
• LLC formation service

LLC formation services like Bizee can help with dissolution, too. They’ll prepare and file paperwork with the state for you.

Before you make any big moves, try to book a consultation with one or more of these folks. Plenty offer discounted first meetings, so you can get a sense of your next steps without breaking the bank.

Maryland’s Business Express website even recommends talking to a pro when closing a business. Seems like solid advice.

Gather up all your business documents before you meet with anyone. It’ll make the whole process smoother and probably save you some money, too.