Elkton, MD asked in Business Formation and Business Law for Maryland

Q: Pros/Cons on transfer of PA domestic corp. to MD. Also, suggest web links in case I have more questions. Thank you!

1 Lawyer Answer
Cedulie Renee Laumann
Cedulie Renee Laumann
  • Crownsville, MD
  • Licensed in Maryland

A: Maryland law now recognizes entity conversions so that one can change an entity formed in another state to a Maryland entity (this could be a corp to a LLC, a corp to a corp, etc.). For more information you could look at the Corporations & Associations article of the Maryland Annotated Code, accessible online for free through either Lexis or Westlaw http://bit.ly/2D5NBa1 or even this site Justia. https://law.justia.com/codes/maryland/2016/

Without knowing the situation, an attorney cannot give pros/cons of forming in any particular entity. Very generally speaking if the entity is doing business solely in MD it would likely benefit from being a MD entity. Oftentimes dual registration gets cumbersome and costly.

The only likely "con" for such a Maryland based business would likely be the initial cost of conversion (legal fees and SDAT filing fees) though in my experience Maryland based businesses who register elsewhere often pay more in ongoing fees. Though the post mentioned PA, it isn't clear why PA was chosen as the place of formation.

Oftentimes in my experience a Maryland business that forms elsewhere winds up paying far more than necessary. For instance, Delaware charges (at last check) a shocking $1,000 for a DE entity to get a certificate of good standing in less than an hour, while in contrast MD charges $40 for an immediate certificate of good standing. Other states may have more reasonable fees but doing business in MD when the entity exists elsewhere tends to rack up dual filings each year and associated cost and effort.

You're encouraged to seek legal counsel with an attorney who can talk with you about your business plans/goals/operations and offer some advice. While I hope this answer gives some guidance it does not offer specific legal advice.

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