Starting a business in Maryland is a significant step towards financial independence and professional growth. However, navigating the registration requirements can be complex and time-consuming. Aspiring business owners can quickly find themselves lost in a maze of paperwork, unsure of which forms to file or which agencies to approach.
Our guide cuts through the confusion and offers a clear roadmap for registering your business in Maryland.
Related: Starting A Business In Maryland Checklist
Step 1: Choose a Business Structure
The first step of registering a new business in Maryland is selecting a business structure (also called a business entity). This is how a business is legally structured to conduct business activities. The four most common types of business entities are sole proprietorships, general partnerships, corporations, and Limited Liability Companies (LLCs). Each entity type has its own advantages and disadvantages for business owners in Maryland.
Related: Comparison of Business Structures
Sole Proprietorship
The most basic and least expensive form of business entity is the sole proprietorship. They provide the owner with complete control over the business but also leave them personally liable for any debts or liabilities incurred by the business.
Related: How to Start a Maryland Sole Proprietorship
General Partnership
General partnerships are similar to sole proprietorships but involve two or more people who share ownership and management responsibilities. While easy to set up, the downside is that each partner is personally liable for any debts or liabilities incurred by the partnership.
There is no formal registration to create a sole proprietorship or partnership in Maryland; however, if the business will operate under a different business name than the owners, the name will need to be registered.
Corporations
Corporations offer limited liability protection to their shareholders (owners), meaning that their personal assets are protected from any debts or liabilities incurred by the corporation. Corporations also have a more complex management structure than other entities, with a board of directors (which can be a single shareholder), issuing shares of the company, appointing a Maryland registered agent, and more.
Related: How to Form a Maryland Corporation
Limited Liability Companies
A Limited Liability Company (LLC) combines aspects of sole proprietorships, partnerships, and corporations by providing limited liability protection while allowing for flexible management structures. Compared to corporations, LLCs are easier to set up and maintain.
Related: How to Form a Maryland LLC
Step 2: Select a Business Name
Choosing a business name is a relatively straightforward process for sole proprietors and general partnerships in Maryland. If you plan to operate under a name different from the owner(s) full first and last name, you’ll need to file a Maryland Trade Name Application with the Maryland Department of Assessments and Taxation.
For example, if John Smith wants to run a landscaping business called “Green Thumb Landscaping” as a sole proprietor, he would need to register this trade name.
These names must be unique within Maryland. To verify if a name is available, do a Maryland business name search with the Maryland State Department of Assessments & Taxation.
Corporations and LLCs select their names during the formation process. Their name will need to be unique and and the name search will keep from having the formation paperwork delayed.
Step 3: Federal Employer Identification Number (FEIN)
A Federal Employer Identification Number (FEIN) is a unique nine-digit identifier issued by the Internal Revenue Service (IRS) for businesses. It functions similarly to a Social Security number, except for your company, allowing the IRS to track your business’s tax reporting.
You’ll need an FEIN if:
- Your business has employees
- You’re operating as a corporation, partnership, or multi-member LLC
Sole proprietorships or single-member LLCs without employees can use the owner’s Social Security number instead of a FEIN for tax purposes. However, they can register for one if they want.
Obtaining a FEIN is a straightforward, no-cost process. The fastest method is to apply online through the IRS website, which usually takes just a few minutes. Alternatively, you can submit your application by mail or fax using Form SS-4.
Step 4: Professional Licensing
Some occupations in Maryland require professional licensing before you can legally offer certain services. The Maryland Department of Labor oversees most professional licensing through various boards and commissions. Some examples include:
- Accountants: Maryland Board of Public Accountancy
- Contractors: Maryland Home Improvement Commission
- Real Estate Agents: Maryland Real Estate Commission
- Cosmetologists: Maryland Board of Cosmetologists
Each board has specific requirements for education, experience, and examinations. Fees and renewal periods vary by profession.
To determine if your occupation requires a license and to find the appropriate licensing board, visit the Maryland Department of Labor website. They provide a comprehensive list of regulated professions and direct links to the respective licensing boards.
Step 5: Combined Registration Application
The Combined Registration Application in Maryland is a streamlined form that allows businesses to register for multiple tax accounts with the Comptroller of Maryland in a single process. This application simplifies the registration procedure for new businesses by consolidating several tax registrations into one form.
Common reasons to register include businesses that:
- Sell tangible goods or taxable services (for Sales and Use Tax)
- Have employees in Maryland (for Employer Withholding Tax and Unemployment Insurance Tax)
- Operate places of amusement or recreation (for Admissions and Amusement Tax)
- Sell, lease, or rent tires (for Tire Recycling Fee)
- Plan to sell goods at temporary locations like fairs or flea markets (for Transient Vendor License)
The Combined Registration Application can be completed online through the Maryland Business Express website or submitted as a paper form. Online registration is typically faster and provides immediate confirmation.
Step 6: Resale Certificate
A Maryland Resale Certificate allows businesses to purchase inventory for resale without paying sales tax at the time of purchase. Instead, the business collects sales tax from the end consumer when the product is sold.
Who needs a Resale Certificate:
- Retailers
- Wholesalers
- Manufacturers purchasing components for products they will sell
- Service providers who include tangible goods as part of their service
How to obtain: After registering for a Sales & Use Tax License, businesses can apply for a Resale Certificate through the Comptroller of Maryland’s website or by submitting Form COT/ST-1. The certificate is typically valid for five years.
Step 7: Local Licensing
There isn’t a state business license in Maryland, but many counties and municipalities require local business licenses. These licenses help local governments track businesses operating within their jurisdictions and ensure compliance with local regulations. The specific requirements vary widely depending on the location and nature of your business.
Some common local licenses include:
- Traders License: Businesses that sell goods or merchandise to the public, such as retail stores, whether they operate from a physical location or online, will need to register. The Clerk of the Circuit Court issues the Trader’s License in the county where the business is located.
- Food Service Facility License: This is required for restaurants, cafes, and food trucks. It is typically issued by the county health department.
- Liquor License: Necessary for businesses selling alcoholic beverages. Usually managed by the county’s Board of License Commissioners.
- Home Occupation Permit: Often required for home-based businesses and most often handled by the Department of Planning and Zoning.
- Peddler’s or Solicitor’s License: For door-to-door sales or mobile vendors. In Annapolis for example, this is issued by the City Clerk’s office.
- Entertainment License: Required for venues hosting live performances. In Prince George’s County, this is overseen by the Board of License Commissioners.
It’s important to check with your local county and city governments to determine which licenses apply to your specific business.
Step 8: Building & Zoning Permits
When setting up a business location in Maryland, it’s important to understand and comply with local building and zoning regulations before committing to a property purchase or lease. These requirements ensure that your business operates in an appropriate area and meets safety standards.
Zoning Laws: Zoning laws dictate how property in specific areas can be used. They determine where different types of businesses can operate, such as commercial, industrial, or residential zones. Before establishing your business, check with your local zoning department to confirm that your intended use is permitted at the chosen location.
In addition, some areas may have restrictions on home-based businesses. In Baltimore County for instance, home-based businesses must comply with specific zoning regulations regarding parking, signage, and the number of non-resident employees.
Building Permits and Certificate of Occupancy: Building permits are required for new construction, renovations, or changes to existing structures. After completion of work, a Certificate of Occupancy is issued, confirming that the building meets safety codes and zoning requirements for its intended use.
These matters are typically handled by the local Department of Permits, Inspections and Enforcement or a similar agency. For example, in Montgomery County, the Department of Permitting Services oversees both building permits and zoning compliance.
Sign Permits: Many local governments regulate business signage. You may need to obtain a permit before installing any exterior signs for your business.
By researching requirements early in the process of establishing your business location, you can avoid potential delays or legal issues. Always consult with your local planning and zoning department for specific requirements in your area, as they can vary significantly between different Maryland counties and municipalities.
For only $99, you can save a lot of time and know your business complies with local, state, and federal requirements.
