Tuesday, February 22, 2011

Keeping your Maryland entity in "good standing"

After you file your incorporation or certificate of organization of your Maryland corporation, LLC or other entity, there is one major requirement to keep it in "good standing." This is the filing of the Annual Property Tax form and the payment of the fee. Even if you don't own any personal property in this entity, you must file this form and pay $300 to the State Department of Assessments and Taxation in order to keep your company alive.  I have found that many companies lose their corporate status inadvertently through failure to file this form, because they never got or simply didn't get it filed.

Here are a few tips to keep your entity in "good standing":
(1) If you serve as your own "registered agent", make sure that you file a change of address form when you move your residence or office. Often these forms are not forwarded and this may cause you to fail to get the proper form. While the form is available online, it is generally mailed to each company in active status during February and this will remind you to get this filed.
(2) If you use someone else to be your "registered agent", make sure that they file the form annually. My office serves as a resident agent for many of my clients and we charge a nominal fee to do so.
(3) If your entity gets a notice that its charter has been "forfeited", you still generally have 60 days to get the form filed with no penalty.

Remember that your company cannot file a lawsuit or open a bank account or do many other things if your corporate or LLC status is not "active".  Losing your charter also can cause you problems if the entity gets sued, as the creditor may attempt to reach your personal assets. If you do lose your corporate status, you can regain it by filing all missing tax forms plus a "Certificate of Reinstatement" and paying all unpaid taxes plus a $100 reinstatement fee.

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