Does Maryland Permit Single LLCs?

By Heather Frances J.D.

Maryland allows business owners to register as limited liability companies, or LLCs, to protect themselves from personal liability. The LLC provides a business structure that is legally separate from the owner's personal assets, somewhat like a corporation. While LLCs can have many members, Maryland, like most other states, also allows single-member LLCs. The liability protection available to single-member LLCs, however, may not be as strong as multiple-member LLCs.

Maryland allows business owners to register as limited liability companies, or LLCs, to protect themselves from personal liability. The LLC provides a business structure that is legally separate from the owner's personal assets, somewhat like a corporation. While LLCs can have many members, Maryland, like most other states, also allows single-member LLCs. The liability protection available to single-member LLCs, however, may not be as strong as multiple-member LLCs.

Operating Agreements Help

Maryland does not require a single-member LLC to have an operating agreement, the document that outlines the responsibilities and rights of each member, or owner, of the company. However, Maryland courts sometimes do not recognize a single-member LLC as a separate legal entity if there is insufficient evidence that the single member treated it like a separate entity. Thus, it can be helpful for the single member to create an operating agreement to further define the LLC as a separate structure. This can decrease the likelihood that a court would hold the single owner personally liable for the business' debts.

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Adding Members

Maryland allows LLCs to add members before the LLC is created, or members can be added afterward in accordance with the LLC's operating agreement. Generally, members can be admitted in any way authorized by the operating agreement, even if they have not contributed any money toward the LLC. Maryland also allows a member to be the sole member of an LLC, even if he did not contribute any money toward the company.

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What Is the Difference in an LLC & Owner/Proprietor?

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