Need help forming a limited liability company or Maryland corporation? We have several legal documents online which can help you to properly incorporate your business entity, including:
- Articles of Incorporation for a Maryland corporation
- Shareholders Agreement for a Maryland corporation
We also have bundles for certain documents typically purchased together, and we can help you file your executed documents with SDAT if you add the filing fee at checkout for your document.
How is a corporation different than a limited liability company? A corporation and a limited liability company achieve some of the same objectives, in that both business entities will shield all of the owners (“shareholders” for corporations, “members” for LLC’s) from personal liability, unless an owner specifically agrees to be personally liable (for example, by signing a personal guarantee for a debt of the corporation or company). In addition, both of these business entities are governed by some private agreement – for LLC’s there is an operating agreement; for corporations there is a shareholders agreement. However, corporations require more formalities to maintain their charter. While either entity can become forfeit for failure to pay a tax or file a return, corporations are required by statute to hold some form of annual meeting under Md. Corp. & Assocs. Code Ann. § 2-501, and corporations are required to have certain officers and at least one director under §§ 2-402 and 2-412, among other differences.
Corporations are also, generally, taxed differently, in that the corporation itself must pay taxes on its earnings, and then shareholders are required to pay personal taxes on their income generated as shareholders from the corporation. LLC’s pass through taxes to the members, so the members report their share of the profit or loss of the business on their personal income tax returns.
There are other considerations for deciding to form a corporation rather than an LLC. Give us a call to discuss your options.