In business, location is everything.
And Maryland is an industry hot spot due to its strategic position near New York City, Philadelphia, Baltimore, and Washington, D.C.
But the Old Line State has more than just a great location; it’s also a hotbed of innovation with an educated workforce from various fields, including healthcare, technology, biotechnology, and finance.
Maryland is also the 19th most populous state, with 53% of its inhabitants of prime working age.
CNBC’s Top State For Business Rankings scored Maryland State as:
Here’s what the Maryland Chamber of Commerce says about starting a business in Maryland:
“Businesses are what drives our economy and what helps communities thrive. We must advocate for and create a more favorable environment that attracts businesses and helps them be successful.”
From choosing a viable idea, licenses, and permits to hiring staff, taxes, and insurance, here’s everything you need to start a business in Maryland.
So it is no wonder that many people looking to start their own business, choose Maryland as their home base.
Here are the steps to follow when starting a business in Maryland:
Do you have a business idea in mind?
Perhaps you’ve already chosen one; if so, does it align with your interests, enthusiasm, and skill sets?
I ask because running a business is a 24/7 job!
And while your skills matter, your interest will keep you reliable, and your enthusiasm will excite and motivate you day in and day out.
Illustrator and lettering artist Jessica Hische gives this advice about the work we should do:
“The work you do while you procrastinate is probably the work you should do for the rest of your life.”
Don’t rush your decision; take your time when exploring potential business ideas, and when you have one in mind, research and validate it to confirm the profits are worth your investment.
Validating your business idea removes any romantic notions of running your new venture and replaces them with cold, hard figures.
Here’s where you crunch the numbers (and put your Shark Tank investor hat on) to determine whether your business idea is financially viable or just a pipe dream.
Begin by calculating your set-up and running costs, both fixed and variable, then estimate when you’ll begin to earn a profit and how much, and put these figures on a monthly balance sheet (excel works excellent for this) to see if your idea is worth your investment of time and money.
Once you’re sure the numbers add up, confirm whether your idea fulfills an unmet need, its likelihood of success based on your community’s interests, and if there’s room for another brand.
And you do those using a business plan.
Before you invest, test your idea using a business plan that researches your marketplace, target audience, and competitors. Your plan also calculates your financial projections, contains your marketing plan, defines your sales objectives, and outlines the strategies you’ll use to achieve them.
The type of business plan you’ll need (2 exist, traditional and one-page) and the level of detail it’ll contain depends on your chosen marketplace, business structure, and whether you’ll require external funding.
Remember, your business plan is as unique as you are, and there isn`t a one-size-fits-all solution.
However, most business plans have these key sections:
Once you have this information, you can create your marketing plan.
You can easily create your business plan using our free template and guide.
Your location requirements often depend on your business idea.
For instance, many freelancers work from home, and a landscaping service can operate using a commercial lockup. However, aspiring restaurant owners or retail entrepreneurs require a high footfall location with a passing trade and adequate parking.
Whatever your business idea, calculate your location costs, including the rent, utilities, equipment, and insurance, to ensure you can afford the overheads, then add them to your business plan financial section.
But besides the cost, you must choose a location that suits your business type, is convenient for your target audience, where they expect to find it, and complies with local zoning laws!
All US states have laws controlling what businesses operate where, including parking requirements, signage, waste disposal, etc.
You must confirm your location has the zoning approval your business needs before you operate by reviewing local ordinances or contacting your town/city zoning or planning department.
Every business needs an online presence so prospects can review their products/services, read testimonials, book appointments, or buy what you`re selling.
To create a successful online presence, you might need:
A well-chosen business name is essential for conveying your brand’s purpose (what you sell or offer), grabbing your target audience’s attention, and connecting with their emotions.
Your business name should also suit your niche, be available as a domain on your social media platforms, and be free from trademark restrictions.
Once you have a name, ensure it complies with Maryland’s business naming rules:
Any Maryland business can apply to use a Doing Business As (a catchy tradename, which is especially helpful for sole proprietors and general partnerships who use the owner’s names) by filing an Application for Trade Name with the Maryland Department of Assessments and Taxation.
The fee is $25; you must renew it every 5 years.
You’ll also need a business name when forming a business structure; I’ll explain next:
Okay, you’ve chosen a business idea and have a catchy name; your next step is deciding which business structure you’ll use to run it under.
Take your time deciding because your chosen structure determines how you register and run your business, pay taxes, hire employees, and more!
Pro Tip:
Many small business owners choose the LLC structure because it’s easy to form, provides liability protection, enables you to hire employees, get a business bank account, and uses the simple pass-through tax structure.
All the above structures use the pass-through tax structure, which avoids corporate taxes (double taxation) by directing all profits to the owners/shareholders, who report them on their tax returns.
Entrepreneurs who choose a separate business structure like an LLC, LLP, or S corporation must register it with Maryland’s Department of Assessments & Taxation.
The registration steps (and whether you must take them because not all business types do) depend on your structure.
Once you confirm your registration needs, you can use Maryland Business Express.
Okay, let’s see if you must register your business:
Bookkeeping isn’t every small business owner’s favorite pastime, but as your startup’s financial health depends on it, you must master the skill or pay someone else to do it.
Two ways to ease your bookkeeping duties are opening a business bank and credit card account, as they enable you to separate your personal and business finances, simplify tracking your debits and credits (what you earn and spend), and control your cash flow.
Legal entities like LLCs and corporations need business bank accounts to separate their personal and business finances to maintain their liability protection.
While non-legal entities like sole proprietors and general partnerships don’t have this liability issue, business accounts create a business credit history, which can help you get more favorable business loans.
To open a business account in Maryland, you must:
Once your accounts are active, you can track your monthly business income and expenditures and, come tax time, consider passing them over to a Maryland accountant who can ensure you comply with your state and federal tax obligations.
Note:
While sole proprietorships and general partnerships aren’t legal entities, they must register for an SDAT Identification Number using the Maryland Business Express portal to open a business bank account.
Financial professionals advise us to have a year’s running costs (in cash) before starting our businesses to cover expenses until we profit.
It’s excellent advice, but not all startups have that cash at hand, and many of us need funding to start our business, let alone run it profit-free for a year!
Fortunately, funding options are available to help us start and run our Maryland businesses:
The Old Line State prides itself on assisting entrepreneurs to start and grow their Maryland businesses by offering many tax credits and grants.
Visit the state’s Department of Commerce website to see what`s available for your business.
The SBA assists entrepreneurs to start and grow businesses throughout the USA by backing certain financial institutions to provide low-interest-rate, long-term loans.
You can see what’s on offer by visiting the SBA Baltimore district office.
Business insurance protects your private assets against personal injury claims, natural catastrophes, theft, and other unforeseen disasters.
Your insurance needs depend on the type of business you start and whether you’ll employ staff.
Consider speaking with an insurance agent about what insurance your business requires, and research combined insurance policies that can reduce your insurance fees.
Common types of business insurance include
Maryland business owners with more than one employee must have workers’ comp insurance to help pay for expenses related to workplace injuries.
Pro tip:
Visit the Maryland Insurance Administration website for further guidance on which insurance policies your new Maryland business requires.
When you start a business in Maryland, you’ll need to apply for licenses and permits relative to your niche, business activity, and location.
While Maryland doesn’t have a state-level general business license, your startup may require a state-level occupational license, trader’s license, and local permits.
Use these resources to see which license and permits your business needs:
To start a business in Maryland and run it legally, you must also comply with state regulatory licenses and permits.
Here’s what you might need:
Pro tip:
To learn which state licenses and permits you need, use the Maryland OneStop portal and register using Maryland Business Express. For local licenses and permits, check your location’s official government website.
When you start a business in Maryland, your first step is registering with the Maryland Department of Assessments and Taxation using the state’s online filing portal.
And if your business needs an employer identification number (EIN), you must first get a Maryland SDAT Identification Number.
Why your business might need an EIN:
You can apply for an EIN online from the IRS website.
Maryland is great for many things, but taxes aren’t one of them. As a result, Tax Foundation.org ranks it 46th in its 2023 State Business Tax Climate Index.
Like many U.S. states, Marland charges a state-graduated individual income tax, corporate tax, sales and use tax (depending on what you sell or provide), and local and city taxes.
The good news is that the Old Line State doesn’t charge LLCs franchise tax, but, unfortunately, it charges an additional $300 annual report filing fee!
Okay, let’s look at those tax rates next:
Pro tax tip:
Businesses in specific industries and locations throughout Maryland state can apply for financial incentives, including tax credits from the Maryland Department of Commerce.
MJ (Michael Jordon) said before the 6th game in the 1998 NBA finals (which he and the Bulls won for the 6th time) –
“It only takes one match to light a fire.”
While MJ landed the game-winning 2-pointer, he didn’t win 6 NBA titles alone.
He had teammates with various skills (like Steve Kerr, Scottie Pippen, and Dennis Rodman) by his side.
But hiring staff is about more than finding the perfect team; it also means complying with employment regulations.
So, let’s look at Maryland’s next:
Maryland employers must comply with state and federal obligations when hiring employees.
For instance:
All US states have federal payroll laws, but some states further protect employee rights, and Maryland is one of them.
And as an employer, it`s your job to comply with all Marland payroll regulations.
To ensure you do, check out the links below for further information:
Like to avoid Maryland employee costs and regulations?
If so, hiring contractors could be the answer!
Only some startups can afford full-time employees, but most need people with specific skills to run and grow their businesses.
Here’s where contractors (and online freelancers) can help you achieve your business goals.
For example, you could hire an SEO consultant to improve your website’s organic listing, a social media marketing wizard to create and run your Instagram or Facebook campaigns, or an accountant to assist with payroll and quarterly taxes.
And the best bit is you only hire contractors when needed, saving you the cost of full-time employees!
Let’s finish with the questions aspiring entrepreneurs ask when starting a business in Maryland.
Filing an article of organization in person or by mail costs $100; you can expedite the process online for $155. Maryland LLCs must also pay a $300 annual report fee.
Processing times to start a business in Maryland take around 4 weeks.
Maryland doesn’t have a state business license, but most startups need a local license issued by their county clerk’s office.
Business licenses range from $20 to $800, depending on your chosen industry.
Yes, you need a seller’s permit in Maryland if you sell certain taxable goods, services, or properties to Maryland citizens.
You can register a foreign LLC in Maryland by filing with the Maryland State Department of Assessments and Taxation and paying a $100 fee.
You can appoint yourself as a registered agent once you’re over 18 and have a physical Maryland address that’s open during working hours.
And that’s how to start a business in Maryland.
We chose the steps in this post because they cover everything you need to start your new business.
But one other thing is essential when becoming an entrepreneur.
I’ll let Jeff Bezos explain:
“All of my best decisions in business and in life have been made with heart, intuition, guts, … not analysis…it turns out in life that your most important decisions are always made with instinct and intuition.”
I guess the takeaway is to trust yourself.
Good luck.
This portion of our website is for informational purposes only. Tailor Brands is not a law firm, and none of the information on this website constitutes or is intended to convey legal advice. All statements, opinions, recommendations, and conclusions are solely the expression of the author and provided on an as-is basis. Accordingly, Tailor Brands is not responsible for the information and/or its accuracy or completeness.
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