How to Dissolve an LLC in Maryland

Termination of an LLC is not something that should be taken lightly. If not done properly, the LLC dissolution can have many complications and unexpected outcomes, including unwanted taxes or legal troubles. So don't miss out and wind up your business through the proper channel.

How to Dissolve an LLC in Maryland

Why Dissolve an LLC

No one wants to deal with business issues that no longer exist. We are sure, you also do not want to be held back by anything related to your LLC, that you do not want to continue.

Therefore, formally dissolving an LLC online is important for the following reasons:

  • No More Obligations to Pay LLC Annual Fees and Taxes
  • You Will Not be a Defaulter of any State or Fedral Agency
  • No Surprises With Lawsuits for Unpaid Debts

How to Dissolve an LLC in Maryland | Step by Step Guide

We know wrapping things up is more difficult than starting a new venture. Your level of enthusiasm is not the same while terminating your Limited Liability Company (LLC) compared to the energy you once had when you conceptualized an innovative business idea and materialized in the form of your LLC.

But, some things in life are inevitable. Even terminating your LLC is your voluntary decision, it still feels heavier to carry out the last few duties. Well, we can relate to your feeling.

This is why, in this LLC dissolution guide, we tried to make things simpler and easy for you in 5 simple steps. 

  1. Decide to Dissolve your LLC
  2. Get an Expert Advice
  3. Resolve Your Financial Obligation
  4. File Maryland Article od Dissolution
  5. Some Important Closings Related to Maryland LLC

Keep on reading to learn the whole process of LLC termination in simple and concise steps.

Step #1

Decide to Dissolve your LLC

If your LLC dissolution is voluntary, the LLC owners must make the decision to dissolve their LLC according to the guidelines drafted in the LLC articles of organization

Remember to document the final decision with a written agreement. To do so:

  • Hold a meeting of LLC members
  • Take a vote with LLC members to terminate the LLC
  • Determining the formal date of dissolution
  • Through the LLC's meeting minutes, record the LLC dissolution vote 

Follow Your LLC Operating Agreement

An LLC operating agreement is the document that contains the information from an LLC's day-to-day operation to the termination of an LLC. Most Maryland LLCs outline all the steps for LLC dissolution. While terminating your LLC, follow the guidelines stated in your Maryland LLC operating agreement.

In case you had not defined the LLC dissolution process in your Maryland LLC operating agreement, you must consult the Maryland Secretary of state for further instructions.

Step #2

Get an Expert Advice

Terminating an LLC is a delicate and multi-step process. It is highly recommended that you seek professional help. Depending on your LLC's personalized needs, expert advice may come from accountants, bankers, lawyers, the IRS, business brokers, tax experts, auctioneers, etc.

If you have been running your business in a compliant manner, you may not need all the professionals to dissolve your LLC. Hiring any of the famous LLC services online will suffice you. 

LLC services such as IncFile or LegalZoom take care of everything related to closing your business. You can pick a package satisfying your LLC needs, and there you go.  

Step #3

Resolve financial obligations

Although the state of Maryland does not require you to obtain tax clearance before dissolving your LLC, it is important to resolve any outstanding tax and other financial obligations before filing the Certificate of Dissolution with your state.

Failure to resolve these issues will result in penalties and interest assessed by state and federal tax agencies. If your LLC owes back taxes to the IRS or any other state agency, you will receive a Notice of Federal Tax Lien or a Notice of State Tax Lien. 

Once the IRS places a tax lien on your LLC's property, it can be very difficult to get the tax lien released. To avoid all such stress and headache, you should resolve all the financial obligations on your Maryland LLC. Some common Maryland LLC financial obligations are listed below:

Maryland LLC Taxes

While filing income tax returns, check the box that indicates the document is a final return. Many state revenue agencies in Maryland require additional filings for sales tax.

If your LLC has employees, you may risk personal liability if you fail to obligate your payroll tax responsibilities. Inform your Maryland state and federal tax agencies that your business is closing. Moreover, notify them that you will cease to file an employer's quarterly tax form and unemployment returns.

Business Debts

Notify all creditors and lenders of your LLC of your dissolution and settle the remaining debt. Moreover, contact the business associates who owe payment to you or to whom you owe a payment.

In case you can not pay your debts, you should consider filing for bankruptcy. It's recommended to discuss with your attorney, accountant, and insurers to ensure that everything is accounted for. 

Step #4

File Maryland Articles of Dissolution

Maryland Articles of Cancellation are the legal documents that you file with the Maryland State Department of Assessments and Taxation to dissolve your LLC voluntarily. 

Once the LLC Articles of Cancellation have been filed and processed by the concerned authority, your LLC will be officially dissolved and no longer legally exist.

Dissolve a Domestic LLC in Maryland

You can file the Maryland Domestic LLC Articles of Cancellation with the Maryland State Department of Assessments and Taxation online or by downloading the form.

Complete the Articles of Cancellation form, sign the document, and send it to the Maryland State Department of Assessments and Taxation at the address given below:

Mailing Address:
State Department of Assessments and Taxation
Charter Division
301 W. Preston Street; 8th Floor
Baltimore, MD 21201-2395

Cost of Domestic LLC DissolutionIn Maryland

Maryland Domestic LLC Articles of Cancellation Fee is $0 for non-expedited processing or $50 for expedited processing of10 business days.

This fee is payable to the State Department of Assessments and Taxation and can be paid through credit card, check, or money order.

Dissolve a Foreign LLC in Maryland

File Maryland Foreign LLC certificate of cancelation with the Maryland State Department of Assessments and Taxation online or by downloading the form given below:

Complete the certificate of cancelation, sign the document, and send it to the Maryland State Department of Assessments and Taxation at the address given below:

Mailing Address:
State Department of Assessments and Taxation
Charter Division
301 W. Preston Street; 8th Floor
Baltimore, MD 21201-2395

Cost of Foreign LLC DissolutionIn Maryland

Maryland Foreign LLC Certificate of Cancellation Fee is $0 for non-expedited processing or $50 for expedited processing of10 business days.

This fee is payable to the State Department of Assessments and Taxation and can be paid through credit card, check, or money order.

Step #5

Step 5: Some Important Closings Related to Maryland LLC

Close your EIN

LLCs are required to contact the IRS (Internal Revenue Service) to close their Employer Identification Number (EIN) account. The IRS cannot cancel your EIN account, but you notify the agency that you no longer plan to use that EIN in the future by closing your EIN account.

When closing a business as an LLC, the IRS provides a checklist of typical tax actions to take. Make sure you fulfill all the requirements. 

Close Your Business and Tax Accounts

While operating as Maryland LLC, you would have various tax accounts maintained by different departments within the state of Maryland. Some of the common taxes that an LLC may owe are:

  • Sales & Use Tax
  • Employee Withholding Tax
  • Unemployment Insurance Tax
  • State Income Tax
  • Local Taxes

Simply filing a final return to the concerned tax agency usually means closing your tax accounts. However, you may need other official paperwork to close some accounts. Contact the concerned tax agency to close your tax account.

It is also important to close your business bank account and cancel your credit cards to avoid any financial or legal trouble in the future. 

Cancel Licenses, Permits, Professional Registrations, and Business Names

After terminating your Maryland LLC, it is crucial to cancel all licenses and permits that you will no longer need. Doing this will protect your reputation and finances.

Trade name, Assumed Name, or Doing Business As (DBA) is a business name other than your own name that you registered with the state or local government for rebranding, branching out into new services, products, or brands, or franchising purposes, etc. 

If you have registered a Maryland assumed name, you must cancel that business name registration with your local government.

Winding Up | Things to Do After Dissolving your Maryland LLC

After the dissolution, your LLC continues to exist to take care of certain final matters. These matters are known as “winding up” the business. To handle winding up your LLC, you are required to designate one or more LLC members or LLC managers.

Maryland's LLC Act outlines the following key winding up tasks:

  • As a going concern for a reasonable time, preserving the LLC's business or property
  • Prosecuting and defending all civil, criminal, or administrative proceedings and actions 
  • Discharging LLC liabilities
  • Settling all LLC disputes by arbitration or mediation 
  • Transferring and disposing of LLC property
  • Paying off debts to creditors and lenders
  • Distribution of the remaining LLC assets among LLC members.

Involuntary Maryland LLC Dissolutions

The state of Maryland can cause an LLC LLC to be involuntarily dissolved. There are several reasons for involuntary LLC dissolution and mostly revolve around significant mistakes made by LLC members. Some of the reasons are:

  • If LLC is fraudulently formed in the first place 
  • LLC did not appoint a registered agent let the registered agent lapse
  • If LLC failed to file the proper forms to change the registered agent
  • If LLC abused the privilege to operate a business in Maryland
  • If LLC did not pay taxes, annual reports
  • If LLC fails to operate in Maryland state-compliant manner  

It is advisable not to operate your LLC in a manner leading to the state dissolving it against your will. The penalties and legal consequences are steeper than you might imagine. 

For instance, your LLC cannot operate in Maryland ever again after the involuntary dissolution. You would need to create an LLC again from the start, which would cost you time, money, and mental peace.

If you continue to operate a non-compliant LLC in Maryland, you could open yourself up to all sorts of legal issues. Therefore, when it comes to following the state rules and regulations, be mindful and stay compliant.

FAQs on How to Dissolve an LLC in Maryland

How do I dissolve my LLC in Maryland?

To dissolve your LLC in Maryland, you are required to file a signed Articles of Cancellation form with the Maryland Department of Assessments and Taxation. Meanwhile, you can proceed with the winding-up process of your LLC.

How do I close a business in Maryland?

To dissolve a business in Maryland you need to follow the following steps:

  1. Hold a meeting of business owners and record a resolution to Dissolve the Maryland business.
  2. Resolve all the finacial obligations
  3. File cancelation certificates with the state
  4. Clear up any business debts
  5. Distribute the remaining assets among business owners
  6. Close all business bank accounts
  7. Cancell all the business licences and certificates that you no longer wish to use

How long does it take to dissolve a business in Maryland?

Processing of articles of cancellation usually takes approximately 4-6 weeks. The expedited process allows you to get your documents processed within 10 business days for a fee of $50.

Is it hard to dissolve an LLC?

Dissolving a business seems hard at the start. However, this is the best practice to avoid future penalties, liabilities, and lawsuits which are harder to deal with. How to dissolve an LLC guide made the LLC dissolution simple and straightforward. Follow the guide and shut the doors of lawsuits or penalties forever.

Why would you dissolve an LLC?

No one wants to deal with business issues that no longer exist. Therefore, formally dissolving an LLC is important for the following reasons:

  • No More Obligations to Pay LLC Annual Fees and Taxes
  • You Will Not be a Defaulter of any State or Fedral Agency
  • No Surprises With Lawsuits for Unpaid Debts

What is the difference between dissolution and termination?

The terms LLC termination and LLC dissolution are often used interchangeably but have distinct legal meanings. When an entity ceases to legally exist, it is called termination of the entity. On the other hand, dissolution is the winding up of the affairs of the entity before the termination of the entity.

How much does it cost to dissolve an LLC?

Maryland Foreign LLC Certificate of cancelation Fee or domestic LLC Articles of the cancellation fee is $0 for regular filings and $50 for expedited filings. This fee is payable to the Department of Assessments and Taxation and can be paid through credit card, check, or money order.

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