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Maryland Business License Basics

Maryland Business License Basics

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Maryland Business License Basics

Starting a small business in Maryland often means registering with several federal, state, and local agencies. Let’s review common Maryland business license registrations so your business starts off right.

Related: Guide to starting a business in Maryland 

Setting Up the Business

Sole proprietorship: In Maryland, a sole proprietorship is an unincorporated business owned by a single individual. The owner has complete control over the business but is personally liable for all debts and obligations. No formal registration is required, making it the simplest and most common form of business structure.

General partnership: A general partnership in Maryland is an unincorporated business owned by two or more individuals who share management responsibilities, profits, and losses. Partners have unlimited personal liability for the partnership’s debts and obligations. No formal registration is required, but a partnership agreement is recommended to outline the partners’ roles and responsibilities

Corporation: A corporation in Maryland is a legal entity separate from its owners, providing the owner’s (shareholders) limited liability protection. Corporations are the most complex business structure to set up and have specific administrative requirements. 

Limited Liability Company (LLC): An LLC in Maryland combines aspects of sole proprietorships and corporations, offering flexibility in management and taxation. Owners, called members, have limited personal liability for the LLC’s debts and obligations, but they aren’t as complex as corporations. 

Related: Comparison of Business Structures

What Licenses Do Maryland Businesses Need?

With the business structure out of the way, we can begin looking at the different types of registrations businesses in Maryland may need. There isn’t a standard business license, as requirements vary depending on where the business is located and what it does. Here is a general overview of the different registrations your business may need.

General Business Licenses

There is no general state of Maryland business license; however, many cities require businesses to be licensed in order to operate. Rules for business registration vary depending on location and the business’s activities. Below are a few cities that have licensing requirements.

  • Baltimore: The Baltimore Department of Finance issues licenses for businesses operating in the City of Baltimore, regulating industries such as antique dealers, bowling alleys, and towing services.
  • Frederick: The main businesses needing a local business license in Frederick are food-related businesses (Health Department) and businesses serving alcohol (Liquor Board).
  • Rockville (Montgomery County): Businesses such as retail stores, dry cleaners, plumbers, and some others will need to register with the Montgomery County Circuit Clerk.
Take the guesswork out of figuring out what licenses and permits are required to start your business with license research packages from Bizee and LegalZoom.

For as little as $99, you can save a lot of time and know your business is in compliance with local, state, and federal requirements. 

Trade Name Registration

While not a business license, it’s common for Sole Proprietorships and Partnerships operating under a legal name that is different from the full name of the owner(s) to register for a Trade Name (also known as a Doing Business As or DBA) with the Maryland Department of Assessments and Taxation.

Building & Zoning Permits

Zoning: In Maryland, zoning laws are regulated by local governments, such as counties and municipalities, so you will want to check with your local zoning office or planning department to ensure your intended use complies with the zoning district. For home-based businesses, review the local zoning ordinance for restrictions on business activities, parking, and employee limitations. Some areas may require a special exception or conditional use permit for certain types of home-based businesses.

Building Permit: A building permit is required for most construction, alterations, or additions to structures in Maryland. To obtain a permit, you will generally submit plans, specifications, and an application to your local building department.

Signage Permit: In Maryland, most local governments regulate the size, location, and type of business signage. Before installing any signs, check with your local zoning office or planning department for specific requirements and to obtain a sign permit.

Sales & Use Tax License

Businesses selling products and certain services will need to register for a Sales & Use Tax License from the Comptroller of Maryland.

Trader’s License

Businesses that sell products in Maryland will need to obtain a Trader’s License from the Clerk of the Circuit Court in the county where the business operates. The Trader’s License can only be obtained after getting a Sales & Use Tax License

The license runs from May 1st to April 30th.

Fees for Trader’s licenses are based on the average commercial inventory that a business owns, which currently range from $15 to a maximum of $800 with the exception of Baltimore City which can be as high as $2,125.

Resale Certificate

Businesses purchasing merchandise to resell usually want to obtain a Maryland Resale Certificate to avoid paying sales tax on merchandise resold to customers.

Occupational License

A variety of occupations in the state are regulated and need to be registered before offering certain services. A few common professions that require licensing in Maryland include; contractors, accountants, landscapers, laundry services, and many more. Additional information, fees, and licensing requirements for professions are available from the Maryland Department of Commerce.

In addition to professional licenses, businesses in industries such as food establishments, daycares, salvage yards, and others require licensing. More information on these licenses is available from the Comptroller of Maryland.

Construction License / Home Improvement Licenses

Construction licenses are required for commercial work, home improvement, and new home construction. More information and applications are issued by the Clerks of the Circuit Court.

Employer Identification Number (EIN)

The Maryland Employer Identification Number (EIN), also known as a Federal Tax Identification Number, is a unique nine-digit number assigned by the Internal Revenue Service (IRS) to businesses operating in Maryland. It is used for tax filing and reporting purposes, similar to how an individual uses a Social Security number. Companies can apply for an EIN through the IRS website or by submitting a paper form.

Next Steps

These are some of the most common business licenses a new business in Maryland will need to register for. Be advised that while it’s a good start, there are so many different licenses that may be needed, double-check with the City Clerk’s Office, Chamber of Commerce, and/or Economic Development office in your area before opening your doors.

Author

  • Greg Bouhl

    With over two decades as an entrepreneur, educator, and business advisor, Greg Bouhl has worked with over 2,000 entrepreneurs to help them start and grow their businesses. Fed up with clients finding and acting on inaccurate and outdated information online, Greg launched StartUp101.com to be a trusted resource for people starting a business.

Maryland Business License Basics

Maryland Business License Basics

4 Responses

  1. Hi Greg,

    What kind of license(s) are needed for a pipe manufacturing company in Baltimore City? Thank you

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