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Maryland Corporation |
Advantages of a Corporation
- Shareholders have limited liability for the corporation's debts or judgments against the corporations.
- Generally, shareholders can only be held accountable for their investment in stock of the company. (Note however, that officers can be held personally liable for their actions, such as the failure to withhold and pay employment taxes.)
- Corporations can raise additional funds through the sale of stock.
- A corporation may deduct the cost of benefits it provides to officers and employees.
- Can elect S Corporation status if certain requirements are met. This election enables company to be taxed similar to a partnership.
- A corporation pays 15% federal income tax on taxable income up to $50,000; 25% tax on income from $50,001 - $75,000; 34% tax on income from $75,001 - $100,000; 39% tax on income from $100,001 - $335,000; and 34% tax on income over $335,000.
- A sole proprietor who filed a federal income tax return under the status of married, filing jointly, would pay 15% federal income tax on taxable income up to $35,800; 28% tax on income from $35,801 to 86,500; and 31% tax on income over $86,501.
- The process of incorporation requires more time and money than other forms of organization.
- Corporations are monitored by federal, state and some local agencies, and as a result may have more paperwork to comply with regulations.
- Incorporating may result in higher overall taxes. Dividends paid to shareholders are not deductible form business income, thus this income can be taxed twice.
Federal Tax Forms for Regular or "C" Corporations
- Form 1120 or 1120-A: Corporation Income Tax Return
- Form 1120-W Estimated Tax for Corporation
- Form 8109-B Deposit Coupon
- Form 4625 Depreciation
The Maryland’s small business assistance program is here to help your small business with environmental permitting and compliance. This free assistance is available to any small business, which means practically any independently owned and operated business with less than 100 employees is eligible.
The Maryland small business assistance program can help with:
- Understanding environmental requirements
- Getting the proper forms
- Filling out permit applications
- Filling out compliance forms
Maryland Corporate Requirements
Director InformationMinimum Number - Not less than three, unless there are only one or two shareholders of record; then the number of directors may be less than three but not less than the number of shareholders.
Residence Requirements - No provision.
Age Requirements - None.
Directors are required to be listed in the articles of incorporation. Officer Information
Officers are not required to be listed in the articles of incorporation.
Stock Information
An increase in shares may cause an increase in initial filing fees. Corporation Records
The stock transfer ledger and the original or a certified copy of the articles of incorporation must be kept at the principal office of the corporation.
Maryland’s Business Tax Climate Ranks 29th
Maryland ranks 29th in the Tax Foundation's State Business Tax Climate Index. The Index compares the states in five areas of taxation that impact business: corporate taxes; individual income taxes; sales taxes; unemployment insurance taxes; and taxes on property, including residential and commercial property. Neighboring states ranked as follows: Delaware (9th), Pennsylvania (22nd), West Virginia (34th) and Virginia (13th).Maryland’s State/Local Tax Burden Slightly Below National Average
For most of the past 14 years, Maryland has consistently had a slightly below average state/local tax burden. Estimated in 2004 at 9.9% of income, Maryland’s state/local tax burden percentage stands at 24th nationally, just below the national average of 10.0%.
Maryland’s Individual Income Tax System
Maryland’s personal income tax system consists of four separate brackets with a top rate of 4.75% kicking in at an income level of $3,000. That top rate ranks 3rd lowest among states levying an individual income tax. Maryland’s 2002 individual income tax collections were $863 per person (ranked 12th highest nationally).
Maryland’s Corporate Income Tax System
Maryland's corporate tax structure consists of a flat rate of 7% on all corporate income. Among states levying corporate income taxes, Maryland's rate ranks 24th highest nationally. In 2004, Maryland's corporate tax collections reached $102 per capita, which ranked the state 15th highest nationally.
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