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Maryland Single-Member LLC Operating Agreement

Create a Maryland single-member LLC operating agreement with state-specific guidance on Title 4A defaults, the SDAT annual report, and liability protection.

Introduction

A single-member LLC operating agreement is the internal document where you, as the sole owner of a Maryland LLC, set the rules for how your business runs, how profits are handled, and what happens if you bring on a partner or close the business later. Maryland does not require every operating agreement to be in writing, and its Limited Liability Company Act specifically confirms that a single-member operating agreement is not unenforceable just because only one person is a party to it. Still, a signed, written agreement is the clearest evidence, if a court or the IRS ever asks, that you are running a real business rather than treating the LLC as a personal wallet.

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Key Things to Know

  1. 1

    Written form is not required for a Maryland operating agreement in general, and the LLC Act specifically confirms that a single-member operating agreement is enforceable even though only one person is a party to it (Corps. & Ass'ns Section 4A-402).

  2. 2

    Without an operating agreement, Maryland law allocates profits and losses based on the value of each member's capital contribution, not split evenly (Corps. & Ass'ns Section 4A-503).

  3. 3

    A charging order is the exclusive statutory remedy against a member's LLC interest in Maryland, and a court may order foreclosure if distributions under the charging order will not pay the debt within a reasonable time (Corps. & Ass'ns Section 4A-607).

  4. 4

    Maryland LLCs must file a $300 Annual Report with the State Department of Assessments and Taxation (SDAT) every year by April 15, regardless of income or activity level.

  5. 5

    Maryland's LLC Act does not contain its own fiduciary-duty statute. Duties come from common law under Plank v. Cherneski (2020), and can be expanded or restricted in a written operating agreement under the Act's broad freedom-of-contract policy (Corps. & Ass'ns Sections 4A-402, 4A-102).

  6. 6

    The operating agreement itself is not filed with the state. You form the LLC by filing Articles of Organization with SDAT for a $100 fee.

  7. 7

    Maryland does not require an LLC operating agreement to be notarized or witnessed, and the LLC is bound by the agreement even if the LLC itself never separately signs it (Corps. & Ass'ns Section 4A-402).

Key decisions before you file

Before you file a LLC Operating Agreement in Maryland, a few decisions shape the document: which option to choose and what each one means. The LLC Operating Agreement guide walks through them.

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Maryland-Specific Provisions

Use this together with the complete LLC operating agreement template, which covers the standard provisions your agreement also needs: capital contributions, management structure, meetings, transfers, withdrawal, and dissolution. The sections below cover only what is specific to Maryland law.

1. Governing Law

This Agreement shall be governed by and construed in accordance with the laws of the State of Maryland, including the Maryland Limited Liability Company Act, Maryland Code, Corporations and Associations Title 4A.

2. Allocation of Profits and Losses

Unless otherwise stated elsewhere in this Agreement, profits and losses shall be allocated among the Members in proportion to the value of each Member's capital contribution to the Company, and distributions shall be made in proportion to each Member's right to share in profits, as provided by Corporations and Associations Section 4A-503 in the absence of a contrary agreement.

3. Fiduciary Duties

Maryland's Limited Liability Company Act does not itself define the fiduciary duties of a Member or Manager. Under Maryland common law, a Manager, and a Member managing a member-managed Company, owes fiduciary duties to the Company and its Members arising from principles of agency. Consistent with the Act's policy of giving maximum effect to freedom of contract, as stated in Corporations and Associations Section 4A-102(a), those duties are modified by this Agreement only to the extent expressly stated elsewhere in this Agreement. Absent such a modification, the common law duties described above apply in full.

4. Indemnification

The Company may indemnify a Member, Manager, agent, or employee against claims and demands arising from that person's role with the Company, except for an act or failure to act that constitutes willful misconduct or recklessness, and subject to any additional standards or restrictions set forth elsewhere in this Agreement, as provided by Corporations and Associations Section 4A-203(14).

5. Execution

This Agreement is effective as of the date signed below and binds the Company regardless of whether the Company itself separately executes it. Maryland law does not require an LLC operating agreement to be notarized or witnessed to be valid, and this Agreement is not required to be in writing to be effective. It is being executed in writing to provide clear evidence of its terms.

[MEMBER] Signature: _____________________ Date: _____________

Printed Name: _____________________

Maryland Requirements for LLC Operating Agreement

Formation Requirements (Maryland Code, Corporations and Associations § 4A-202)

The LLC has been or will be formed by filing Articles of Organization with the Maryland State Department of Assessments and Taxation in accordance with state law requirements.

Limited Liability Protection (Maryland Code, Corporations and Associations § 4A-301)

Members and managers are not personally liable for the debts, obligations, or liabilities of the LLC, whether arising in contract, tort, or otherwise, solely by reason of being a member or manager (Corps. & Ass'ns Section 4A-301). This protection is tied to the word "solely": it does not shield a member or manager from liability for that person's own conduct, or from a debt the person separately and voluntarily agrees in writing to assume.

Management Structure (Maryland Code, Corporations and Associations § 4A-401)

Maryland's LLC Act reaches its management default through agency law rather than a direct "member-managed by default" statement: each member is an agent of the LLC for purposes of its business, and a member's ordinary-course act binds the LLC, unless the Articles of Organization restrict member authority. Restricting member authority in the Articles (electing manager-managed status) means a member is no longer an agent of the LLC solely by virtue of being a member (Corps. & Ass'ns Section 4A-401).

Fiduciary Duties (Common Law; Maryland Code, Corporations and Associations §§ 4A-102, 4A-402)

Maryland's LLC Act does not contain its own fiduciary-duty statute. The Maryland Supreme Court (then Court of Appeals) held in Plank v. Cherneski, 469 Md. 548, 231 A.3d 436 (2020), that managing members of an LLC owe common law fiduciary duties to the LLC and its members, arising from agency-law principles. Because the Act gives operating agreements broad authority to regulate the company's affairs and states a policy of maximum effect to freedom of contract (Corps. & Ass'ns Sections 4A-402(a), 4A-102(a)), these common law duties can be expanded, restricted, or otherwise modified by a written operating agreement.

Allocation of Profits and Losses (Maryland Code, Corporations and Associations § 4A-503)

Absent a contrary agreement, Maryland law allocates profits and losses among members in proportion to the value of each member's capital contribution, not split evenly, and distributions are made in proportion to each member's right to share in profits (Corps. & Ass'ns Section 4A-503). The Operating Agreement can set a different split.

Transfer Restrictions (Maryland Code, Corporations and Associations §§ 4A-603, 4A-604)

Only a member's economic interest in the LLC, not membership itself, may be assigned. An assignee does not automatically become a member or gain voting or management rights; admission as a member requires either the method the Operating Agreement provides, unanimous consent of the other members, or (if no members remain) terms the assignee sets (Corps. & Ass'ns Sections 4A-603, 4A-604).

Withdrawal of Members (Maryland Code, Corporations and Associations § 4A-605)

Unless the Operating Agreement provides otherwise, a member may withdraw from the LLC by giving not less than six months' prior written notice to the other members. The Operating Agreement may instead provide that a member may not withdraw, or may otherwise limit a member's ability to withdraw (Corps. & Ass'ns Section 4A-605).

Dissolution Procedures (Maryland Code, Corporations and Associations § 4A-902)

The LLC dissolves upon the earliest of: an event specified in the Articles of Organization or Operating Agreement, unanimous member consent, a judicial dissolution decree, or 90 consecutive days with no members. If the LLC's last member ceases membership by death or incapacity, that member's personal representative or guardian is automatically admitted as a member unless they renounce membership or designate a replacement within 90 days (Corps. & Ass'ns Section 4A-902).

Records and Accounting (Maryland Code, Corporations and Associations § 4A-406)

A member may inspect and copy, for any purpose reasonably related to the member's interest, information about the LLC's business and financial condition, the Articles of Organization and Operating Agreement and any amendments, current member contact information, and the LLC's tax returns, subject to reasonable restrictions the LLC may set and to withholding of genuine trade-secret information (Corps. & Ass'ns Section 4A-406).

Indemnification (Maryland Code, Corporations and Associations § 4A-203(14))

The LLC may indemnify a member, manager, agent, or employee against claims and demands arising from that person's role with the LLC, except for an act or failure to act that constitutes willful misconduct or recklessness, and subject to any standards or restrictions set out in the Articles of Organization or Operating Agreement (Corps. & Ass'ns Section 4A-203(14)).

Amendment Procedures (Maryland Code, Corporations and Associations § 4A-402)

If the Operating Agreement does not state how it may be amended, all members must agree to any amendment. A written amendment is required only if the amendment is adopted without unanimous consent, or if an economic interest has been assigned to a person not yet admitted as a member; in either case a copy must be delivered to each non-consenting member and each unadmitted assignee (Corps. & Ass'ns Section 4A-402).

Frequently Asked Questions

It's the internal document where a Maryland LLC's sole owner sets the rules for running the business and handling profits. Maryland doesn't require it to be written, and the LLC Act specifically confirms a single-member operating agreement is enforceable even though only one person is a party to it.

Not by blanket legal requirement. Corps. & Ass'ns Section 4A-402 allows an operating agreement that isn't in writing. But without a written one, Maryland's default rules apply automatically, including a contribution-based profit split rather than one you'd choose, and a writing is still required for certain non-unanimous amendments.

Maryland's default rules fill the gap. Profits, losses, and distributions get allocated based on the value of each member's capital contribution rather than however you'd choose to split them, which matters most once you bring on a second member and haven't defined your own split (Corps. & Ass'ns Section 4A-503).

It supports that protection, but doesn't guarantee it alone. Maryland law makes a charging order the exclusive creditor remedy against your LLC interest, and a court can order foreclosure if distributions won't satisfy the debt within a reasonable time. Keeping your finances genuinely separate from the LLC's is what keeps that protection meaningful.

Maryland LLCs owe a $300 Annual Report fee to the State Department of Assessments and Taxation, due April 15 every year regardless of income or activity level. That's separate from the one-time $100 fee to file Articles of Organization when you first form the LLC.

No. You file Articles of Organization with the State Department of Assessments and Taxation for a $100 fee to form the LLC, but the operating agreement itself is an internal document. You keep it with your own business records; it's never submitted to the state.

Maryland's LLC Act doesn't define fiduciary duties directly; they come from common law recognized in Plank v. Cherneski (2020). The Act's broad freedom-of-contract policy lets an operating agreement expand or restrict those duties, though the outer limit of what can be eliminated entirely has not been clearly fixed by Maryland courts.