Limited Liability Company (LLC)

An LLC is formed when Articles of Organization are filed with the applicable state agency, in Maryland, that would be the State Department of Assessments and Taxation. Like a Corporation, an LLC is also treated like a person for legal purposes. An LLC is owned by its Members and is usually managed informally, i.e. without a Board of Directors or meetings where Members vote on various issues. Members generally have no statutory personal liability for business obligations or debts. For tax purposes, profits and losses are passed through to Members and this income is taxed on the personal level, unless the LLC files a form with the IRS designating a different tax status. Otherwise, there is no additional tax on business profits.