Many small businesses and self-employed individuals are unsure of their annual tax filing requirements or if they even have to file a tax return at all. So, we wrote this blog to help you learn more about Maryland LLC tax filing requirements and how to efficiently and effectively file your business tax returns each year.
Keep reading to learn more and please reach out with any questions.
Is My LLC Have to File a Maryland Tax Return?
Yes. Maryland LLCs are required to file both state and federal taxes. However, LLCs are “pass-through” tax entities, so the individual LLC members must pay these income taxes, rather than the LLCs themselves. This means LLC owners are required to pay sales, self-employment, and maybe even payroll taxes to the state and IRS.
Here are the taxes LLCs are required to pay in Maryland:
- Federal and state income taxes on all profits (minus federal allowances and deductions)
- Maryland sales tax on products sold
- Payroll taxes on employee salaries
- Self-employment taxes on business profits
- And others, depending on your unique circumstances
How Will My Maryland LLC Be Taxed?
The State of Maryland requires LLC owners to file an annual personal property return (PPR), which is also referred to as an annual report by the Department of Assessments & Taxation (DAT). You cannot complete this form online, but you can download it here and should mail it by April 15 each year. If you need, you can require a filing extension.
If your LLC has employees, you’ll also need to pay employer taxes to the federal and state governments. You can visit the State of Maryland’s Comptroller website to learn how you can register your LLC and pay related taxes. Currently, Maryland’s state tax rate ranges from 2-5.75% based on the income you earn from your LLC.
In some cases, LLC owners would rather have their businesses be treated as a corporation, since the tax rate is a flat 8.25% of net income. In this case, the company files a separate tax return and pays any liabilities through the business rather than individual owner(s). To have your LLC treated as a corporation, you must complete IRS Form 2553.
What If My LLC Does Business Outside of Maryland?
If your LLC conducts business outside of the state, you might need to register your company in each of these states as well as Maryland. Every state has their own set of guidelines, though. For example, some states require registration for hiring employees from that state or conducting marketing and advertising operations within that state. So, you’ll want to speak with an experienced tax attorney to ensure you’re properly registered wherever you do business.
How Do Sales and Use Taxes Impact LLCs?
That depends on what sort of business you operate and what you sell. If you sell tangible goods (or even certain types of services) to Maryland customers, you will need to collect, file, and pay sales tax by completing Form 202 and delivering payment to the Maryland comptroller.
How Can I Reduce My Self-Employment Taxes?
Currently, the self-employment tax rate is 15.3%. Thankfully, you can deduct your business expenses from your income to reduce your self-employment taxes.
The best way to reduce your Maryland self-employment taxes is to file as an S Corporation rather than an LLC. Doing so allows you to declare some of your income as salary, distributions, or withdrawals. In order to file as an S Corporation, you’ll need to complete the IRS Form 2553.
S.H. Block Tax Services Is Here to Help With Your LLC Tax Returns
Filing a tax return for LLC owners can be extremely complicated. Working with proven and experienced tax professionals is the best way to ensure an efficient and optimal LLC tax filing.
To learn more about S.H. Block Tax Services and how we can help you streamline your LLC tax return, please call or complete this brief form. Our team of attorneys, enrolled agents, and bookkeepers have decades of experience and the skill and knowledge you need to minimize your tax liabilities.
Reach out today to start the process!
The content provided here is for informational purposes only and should not be construed as legal advice on any subject.