The Maryland limited liability company (LLC) operating agreement is a legal document that the members use to define how the company will be operated and regulate their mutual relationships within the company.
The LLC's operating agreement, or business operating agreement, also provides the amount each member has contributed to the LLC and determines each member's interest in the company’s profit share based on their contribution.
Is an Operating Agreement Required in Maryland?
No, the operating agreement is not a required document when forming an LLC in Maryland. Although state law doesn’t require parties to create the operating agreement, many still choose to create this document in order to optimize the operation of their business.
4 Main Types of Operating Agreements
This section presents the four most commonly used types of operating agreements in Maryland:
Types of Operating Agreements
Single-member LLC operating agreement: Here, there is only one member establishing an LLC. In that case, the operating agreement must only provide guidelines on how the company will be operated.
Multi-member LLC operating agreement: For this type of operating agreement, there are two or more members to the LLC, and the operating agreement must regulate how the company will be operated and the mutual relationship between the members.
Member-managed LLC operating agreement: Here, the members personally make decisions in the company, and the operating agreement outlines the rights and duties of each member within the company.
Manager-managed LLC operating agreement: Used in situations where the members hire a professional manager to run the company. The operating agreement then outlines the rights and duties of a manager within the company.
Laws and Legal Requirements for LLC Operating Agreements in Maryland
And § 4A–101(q) provides the definition of the operating agreement as follows:
“‘Operating Agreement’ means the agreement of the members and any amendments thereto as to the affairs of a limited liability company and the conduct of its business.”
How to Form a Limited Liability Company (LLC) in Maryland
Below, you can find the easiest way to form a limited liability company in Maryland:
How to Form a LLC in Maryland
#1. Choose a Business Name For Your LLC
Before submitting an application for registering the LLC in Maryland, you should choose a business name for your LLC.
The name cannot be similar to other business names registered in Maryland. To check if your business name is distinguishable from other registered business names, you should conduct a business entity search.
#2. Choose the Type of LLC
When forming a company in Maryland, you can choose between two types of LLCs:
Domestic LLC: A company formed and registered in Maryland.
Foreign LLC: A company formed outside Maryland but registered in Maryland.
#3. Nominate an Agent
Here, you should choose a person who is going to receive official notices and documents from governmental agencies on behalf of the LLC. It can be an individual with a registered address in Maryland or an entity with authorization to conduct business in Maryland.
#4. File the Formation Documents
For domestic LLCs, you must submit the Articles of Organization.
For foreign LLCs, you can also submit the online application or the Foreign Corporation Qualification in hard copy. Foreign LLCs are also required to submit the Certificate of Existence or other similar document from the jurisdiction where the LLC was initially formed.
#5. Pay the Required Fee
When you fill out the registration application, you should also pay the $100 filing fee. If you are submitting your application via mail, you should attach the check to your application documents and send it to the following address:
State Department of Assessments and Taxation, Charter Division, 301 W. Preston Street, 8th Floor, Baltimore, MD 21201-2395
#6. Create your LLC Operating Agreement
After submitting your application, you should create the operating agreement. The document is internal, so you don’t have to register it with any governmental agency.