How to set up an LLC for your rental property in Maryland

If you own or are planning to buy rental property in Maryland, you might be wondering how to protect your personal assets while managing your investment. One popular approach is setting up a limited liability company, or LLC. Many landlords use LLCs to help separate their rental business from personal finances, as LLCs may offer a layer of protection and flexibility.

But how exactly does an LLC work in Maryland? What are the specific steps to set one up? And is it always the best choice for landlords? In this article, we'll walk through how to set up an LLC for a rental property in Maryland, covering state-specific details like fees, filings, and timelines, plus some tips on insurance and compliance to help you make an informed decision.

What an LLC is and what it can protect you from as a Maryland landlord

An LLC is a business structure that combines the liability protection of a corporation with the tax flexibility of a partnership. For Maryland landlords, the main appeal is that an LLC can potentially protect your personal assets—like your home, car, or savings—from lawsuits or debts related to your rental property. So if a tenant sues over an injury on your property, generally only the assets owned by the LLC may be at risk, not your personal belongings.

That said, an LLC is not a magic shield. It won’t protect you from everything. For example, if you personally guarantee a loan or commit fraud, you could still be personally liable. Also, certain claims—like unpaid taxes—can pierce through LLC protections. That’s why it’s important to use your LLC properly and maintain good business practices.

If you want a deep dive on the potential protections an LLC may provide and why landlords often choose them, check out this guide on if landlords should use an LLC.

How to set up an LLC for a rental property in Maryland: step-by-step

Here is a general overview of the process to set up an LLC in Maryland; consult official resources or a professional for personalized guidance. Setting up an LLC in Maryland is a straightforward process, but it has some state-specific rules and steps. Here’s a simple breakdown:

1. Choose a name for your LLC

Your LLC name must include “Limited Liability Company,” “LLC,” or “L.L.C.” It also can’t be the same as another business name already registered in Maryland. You can check name availability on the Maryland Business Express site, run by the Maryland Department of Assessments and Taxation (SDAT).

2. Appoint a resident agent

Maryland requires your LLC to have a resident agent (also called a registered agent), who can receive legal papers on behalf of the company. This person or company must have a physical address in Maryland (P.O. boxes generally aren’t allowed).

3. File articles of organization

The articles of organization are the formal documents that create your LLC. They include basic info like your LLC’s name, address, resident agent, and management structure. You can file these online or by mail with the Maryland SDAT.

4. Pay the LLC filing fee

Maryland charges a filing fee when you submit your articles of organization. More on that in the next section.

5. Create an operating agreement (optional but recommended)

Maryland doesn’t require an operating agreement, but it’s a good idea to have one. This document outlines how your LLC will be managed and how profits and losses are shared among members. It’s especially important if you have partners.

6. Get an EIN from the IRS

Your LLC may need an Employer Identification Number (EIN) for tax purposes—even if you don’t have employees. You can apply for an EIN for free through the IRS website.

7. Register for Maryland state taxes (if needed)

Depending on your rental business, you might have to register for Maryland state taxes, like sales tax if you offer certain services. Check the Maryland Comptroller's website for details.

How much does it cost to set up an LLC in Maryland?

The main cost to set up an LLC in Maryland is the LLC filing fee for the articles of organization. As of 2024, the fee is $100 if you file online or by mail.

Beyond the initial filing fee, Maryland LLCs must pay an annual report fee of $300 each year. This is due by April 15th and helps keep your LLC in good standing. If you miss filing the annual report, you may face penalties or administrative dissolution.

Other potential costs include:

• Registered agent fees if you hire a professional service (usually $100–$300 per year)
• Fees for drafting an operating agreement or legal advice if you choose to use a lawyer
• Business licenses or permits depending on your rental property location

Altogether, budgeting about $500 to $700 for your first year is reasonable when considering setup, registered agent, and compliance costs.

Maryland is definitely one of the pricier states to operate an LLC, so be sure it works in your cash flow calculations before you set one up.

How long does it take to set up an LLC in Maryland?

Many find Maryland’s LLC formation process DIY-friendly. If you file the articles of organization online through the Maryland Business Express portal, approval can happen within 1–2 business days.

Mail filings tend to take longer—usually 7 to 10 business days for processing.

If you want to expedite the process, Maryland offers expedited services for an extra fee, which can reduce turnaround to the same day or next day depending on the option you choose.

What are articles of organization and how to file articles of organization in Maryland

Articles of organization are the official formation document that creates your LLC. In Maryland, these documents include:

• LLC name
• Principal office address
• Resident agent name and address
• Whether the LLC is managed by members or managers

To file articles of organization in Maryland, you can:

• Submit online through the Maryland Business Express
• Mail a completed form to the Maryland Department of Assessments and Taxation (SDAT)

The form is straightforward, and the online portal guides you through each step.

Do I need a lawyer to start an LLC in Maryland?

Many landlords wonder if they need a lawyer to set up an LLC. The good news is you don’t have to hire one. Many find Maryland’s filing process DIY-friendly, especially if you’re forming a simple LLC to hold rental property. However, you may want to consult a qualified attorney if:

• You have multiple partners and want a detailed operating agreement
• You’re concerned about liability and want tailored advice
• You’re combining your rental LLC with other business interests

For most single-property landlords who want to save money, using Maryland’s online filing system and standard operating agreement templates is sufficient to get started.

How to get an EIN for an LLC that owns rental property in Maryland

An EIN (Employer Identification Number) is like a Social Security number for your business. You’ll likely need one to open a bank account, file taxes, and hire employees (if you ever do).

Getting an EIN is free and easy:

1. Go to the IRS EIN application page.
2. Fill out the online form, selecting “LLC” as your business type.
3. Submit the application, and you’ll get your EIN immediately.

Many single-member LLCs that own rental properties obtain an EIN to help separate business and personal finances, but you should verify your specific needs.

Do LLCs need annual reports in Maryland?

Yes. Maryland requires LLCs to file an annual report and pay a $300 fee each year. The annual report keeps your business information current with the state and is due by April 15th.

Failing to file the annual report may result in penalties, loss of good standing, or administrative dissolution of your LLC.

You can file the report online through the Maryland Business Express portal.

S corp vs LLC for Maryland landlords: a quick overview

If you’re weighing your options, you might have heard about an S corporation (S corp) versus an LLC. Both offer liability protection, but they differ in tax treatment and management.

• LLC: Flexible management, pass-through taxation by default, fewer formalities.
• S corp: Pass-through tax status but requires election with the IRS, stricter ownership rules, and more corporate formalities.

Some landlords consider electing S corp status to potentially reduce self-employment taxes, but this gets into complex tax territory. It’s best to discuss your specific situation with a tax professional before making a choice.

LLC vs umbrella insurance for rental property risk management

While an LLC provides legal protection by separating your personal assets from your rental business, it doesn’t cover everything. That’s where insurance comes in.

An umbrella insurance policy adds extra liability coverage beyond your landlord insurance, protecting you from large claims. It covers things like personal injury lawsuits or property damage claims that exceed your standard policy limits.

If you’re wondering how LLC protection stacks up against insurance, this article on LLC vs umbrella insurance breaks down how these tools work together to manage your rental property risks.

When should Maryland landlords use an LLC — and when might it not make sense?

An LLC may be beneficial if:

• You want to protect your personal assets from rental-related liabilities
• You own multiple properties and want to keep them separated
• You’re planning to bring on partners or investors
• You want professional credibility and easier estate planning

That said, for very small landlords with a single property and low risk, the costs and administrative duties of an LLC might outweigh the benefits. Plus, if you don’t keep your LLC in good standing (miss annual reports, mix personal and business funds), you could lose protection.

Always consider your specific situation, and if in doubt, talk to a qualified attorney or tax advisor before moving forward.

Next steps: review your insurance and LLC setup for Maryland rentals

If you decide that setting up an LLC is right for your Maryland rental property, remember it’s only one piece of your risk management strategy. Make sure you have solid landlord insurance in Maryland to cover property damage, liability, and lost rental income.

And if you want to learn more about whether an LLC fits your needs, check out our guide on should landlords use an LLC.

For questions about the business filings themselves, the Maryland Department of Assessments and Taxation is the official resource for LLC formation and compliance.

Finally, to get an EIN, visit the IRS website.

Taking these steps can help you protect your investment and set your Maryland rental business up for success.