Forming An LLP in Maryland

LLP is short for Limited Liability Partnership.

An LLP is an alternative business that blends the features of a private company and a conventional partnership.

In other words, LLP offers limited liability status to its partners and offers the flexibility of internal arrangement through a covenant between partners.

Who can form an LLP?

Any entrepreneur desirous of carrying on a lawful business can form an LLP. However, the main business groups are:

• SMEs or Small and Medium Enterprises
• Venture capitals
• Joint Ventures
• Professionals (Examples: Lawyers, company secretaries, etc.)

If you are thinking of starting an LLP in MD, you must keep the following things in mind.

1. Register the LLP

If you are starting an LLP in MD, an application must be submitted to the registrar with the following information:

• Name of the planned LLP
• Description of the business
• Address of the LLP office
• Name and details of the LLP agent. You must keep in mind that every LLP in Maryland must have a resident agent. The task of the resident agent is to accept your legal documents on behalf of the LLP.
• If you are planning to form an LLP for any professional practice then the application form must accompany an approval letter by the authorities concerned.

2. Prepare a partnership agreement

It is not mandatory to have an LLP agreement in MD. Nevertheless a partnership agreement is strongly recommended.  In this manner you will put the partnership terms and conditions in black and white to protect your business.

If you and your partners do not explicate your rights and responsibilities, you will be badly prepared to settle disputes.

“A partnership agreement has allowed me to structure my relationship with my partners in a manner that tailors my business”, says an SME owner.

3. Get a federal Employer Identification Number

A federal Employer Identification Number or EIN is a must because you are a separate legal entity from your partners. You need it even if there are no employees in your LLP.

4. Register with the Comptroller of Maryland

If you are starting a business for selling goods and collecting sales tax then it becomes compulsory for you to register with Comptroller of Maryland.

5. Get a business license

Depending on the nature of your business and the type of goods/services you propose to sell, you will be required to obtain local or state business license.

The above requirements broadly are governed by the state law.