When starting a business you must decide what form of business entity to establish. Financial implications vary based on which form of business structure you use. The four most common forms of business structure are the sole proprietorship, partnership, corporation and limited liability company. Learn more about each here.
Sole proprietorships or general partnerships require no legal entry formalities except compliance with state and local licensing and taxation requirements. One of these requirements is registering your business so that your business personal property can be properly assessed, and the business can obtain a state or local license if required.
For legal entities such as corporations, limited liability companies, limited partnerships and limited liability partnerships, Maryland offers several flexible options for organizing business activity. For information about registration requirements for legal entities, contact the State Department of Assessments and Taxation (SDAT) at (410) 767-1340.
Some possibilities include a home-based business, a franchise, buying an existing business, or if you're a foreign business — establishing a branch office.
More than half of all U.S. businesses are based out of an owner's home, according to the U.S. Small Business Administration. A home-based business is subject to many of the same laws and regulations affecting other businesses, such as zoning regulations and production restrictions. Be sure to consult with an attorney and your local, city and state departments of labor to find out which laws and regulations will affect your business.
Additional Resource: SBA - Home-Based Businesses
A franchise is a legal and commercial relationship between the owner of a trademark, service mark, trade name, or advertising symbol and an individual or group wishing to use that identification in a business. The franchise governs the method of conducting business between the two parties. Generally, a franchisee sells goods or services supplied by the franchiser or that meet the franchiser's quality standards. Additional Resource: Franchise Directories and Evaluation
Many find the idea of running a small business appealing, but lose their motivation after dealing with business plans, investors, and legal issues associated with new startups. If you are discouraged by risky undertakings, buying an existing business is often a simpler and safer alternative.
Additional Resource: SBA - Buying A Business
A foreign business planning to operate in Maryland may establish a branch office by registering or qualifying with the Maryland State Department of Assessments & Taxation. Learn more about all the great reasons to set up a branch office in Maryland.
Planning is critical to successfully starting a
business. A business plan generally projects 3-5 years ahead and outlines how the
company will grow revenues. Once your business is up and running, you'll
need to regularly review and update your plan to manage growth. The U.S. Small
Business Administration (SBA) provides detailed
topics to create a business plan. The Small
Business and Technology Development Center Network
and SCORE also
provide guidance on creating a business plan.
New businesses should contact the Internal Revenue Service (IRS) to register for:
A FEIN can also be established when using the Maryland Central Business Licensing and Registration Portal. The IRS provides business kits for three types of businesses: sole proprietorships, partnerships and corporations.
Yes, businesses must pay an annual tax based on the value of their personal property (furniture, fixtures, tools, machinery, equipment, etc.). The Department of Assessments and Taxation administers the valuation process while the counties and towns collect the tax based on the location of the property. The department automatically registers corporations, limited liability companies, limited partnerships, and limited liability partnerships for this tax when these legal entities form. All other businesses (sole proprietorships, general partnerships) that own or lease personal property or need a business license are required to:
For information regarding personal property assessments, visit the State Department of Assessments and Taxation (SDAT) Personal Property Division.
Picking a name for your business requires much more than just creativity and a working knowledge of your target market. Thought must be given to state and local requirements and making sure you don't infringe upon the rights of someone else's business name.
When registering your business through the Maryland Central Business Licensing and Registration Portal, you can search against existing Maryland business names and register a business trade name with the Maryland Department of Assessments and Taxation.
You may also register a trademark with the Secretary of State's office. A trademark is a unique graphic symbol or logo associated with a business, which distinguishes it from another business or person. Click here to learn more about trademarks and do an online trademark search. Additional ResourcesU.S. Patent and Trademark Office - TrademarksU.S. Patent and Trademark Office - Trademarks FAQsTrademarks and Servicemarks – Maryland Secretary of State Trade Name Application – Maryland Department of Assessments & Taxation
Where you locate can be a critical factor to
successfully operating your business. We offer a number of tools for you to
find that perfect place, such as our Maryland Data Explorer, Counties and Regions
map and Maryland Business Properties database. You may also want
to consider the advantages of locating in a business incubator or
research park. Visit our Site Selection page to learn more.
Maryland has a full network of experienced economic development professionals to help you navigate the site selection process. Services offered by economic developers include:
We have a team of business development specialists to work with your company. Many of these professionals have expertise in industries such as cybersecurity, technology, manufacturing, life sciences and renewable energy. Contact Jayson Knott at 410-767-6978 to be put in touch with one of these specialists.Organizations such as the Economic Alliance of Greater Baltimore and the Greater Washington Initiative offer site selection services covering their particular region.
A statewide network of economic development professionals at the county level offers a variety of services from permit assistance to job training and placement. Visit our County and Regional Economic Development page for a list of county economic development offices.
Zoning laws come into play on every single real estate development, regardless of how big or small, so if you are thinking about buying property or making improvements to property you already own, be sure to understand the zoning restrictions before you commit to anything. One zoning use is typically not compatible with another. For example, a commercial building usually cannot be constructed on property that's zoned for residential uses.
Additional resources: Local Departments of Planning Small Business Notes - Zoning
There are two primary types of financing: equity financing and debt financing. Unfortunately, there is no such thing as "free" government or grant money to help you start your business. Family members, friends and former associates are all potential sources, especially when capital requirements are smaller.
There are many sources for debt financing: banks, savings and loans, and commercial finance companies. The U.S. Small Business Administration (SBA) can also provide assistance to small businesses by providing credit insurance to small business lenders. They do not lend directly to small businesses.
State and local governments have developed many programs in recent years to encourage the growth of small businesses in recognition of their positive effects on the economy. You should always check with your local economic development agency to see if they have local programs that you can use. Some the state's small business debt financing programs are listed below:
Most small or growth-stage businesses use limited equity financing. As with debt financing, additional equity often comes from non-professional investors such as friends, relatives, employees, customers, or industry colleagues. However, the most common source of professional equity funding comes from venture capitalists. These are institutional risk takers and may be groups of wealthy individuals, government-assisted sources, or major financial institutions. Most specialize in one or a few closely related industries.
If you are a startup or early stage company looking to make your next move, the Maryland Venture Fund invests across the full range of industry sectors including software, communications, cybersecurity and life sciences companies in the areas of healthcare IT, medical devices and diagnostics.
Additional Resource: Borrowing Money for your Business
Yes, however businesses need to be registered and in good standing with the state. Visit our Funding and Incentives section to learn about programs like the Small, Minority, and Women-Owned Small Business Loan Fund (VLT) and Maryland Small Business Development Financing Authority (MSBDFA) loans geared towards small businesses. Other Commerce programs that may benefit small businesses include:
Yes. Here are some state contract certification requirements and opportunities:
eMaryland Marketplace (eMM), the State of Maryland's internet-based procurement system, is a business tool that provides an efficient means to improve vendor's access to State procurement information. eMM provides the means to publish solicitations via the internet to potential bidders, providing equal access to solicitation information and is also the resource for electronic bid submission. In addition, the system allows vendors to obtain bid results online once the due date and time for bid submission has passed.
Maryland workers' comp law requires employers to purchase insurance to pay compensation to employees for work-related injuries, occupational diseases, or deaths, regardless of whether someone is at fault. This non-fault compensation is the employee's exclusive remedy against the employer for work-related injuries; the injured employee may not sue the employer in an attempt to recover greater compensation. The compensation available includes medical and rehabilitation expenses, a percentage of lost wages, and an amount for impairment of earning capacity.
Employers may obtain coverage for their employees in one of three ways:
To learn more, visit the Workers' Compensation Commission website.
When obtaining a license, a license renewal or a loan settlement, you are often required to obtain a "Certificate of Status" (generally called a "good standing" certificate) from the Maryland Department of Assessments and Taxation.
When the Department issues a certificate verifying that a business entity is in "good standing," it means that all documents and fees required by law have been received, and that no other government agency has notified the Department that the entity is delinquent in tax payments.
Click here for easy steps to obtain a Certificate of Status.
Are you looking to start a construction, storage warehouse, or vending machine business? These are just a few of the businesses that require a special license. Visit Maryland’s Business License Information System (BLIS) to find out what licenses and permits you may need for your business. You can also check out the Comptroller of Maryland’s web site for business license information.
Maryland’s Office of International Investment and Trade provides support to Maryland companies planning to enter new foreign markets or advance their export sales in their companies' existing foreign markets.
Visit our Expand to International Markets page for more information about our ExportMD program, or call (410) 767-0685 to learn how to grow your Maryland business overseas. The World Trade Center Institute is another great Maryland resource to learn the international ropes.
From a licensing standpoint, an online business is not all that different than a business that has a physical storefront location. Maryland State agencies regulate certain goods and services that could be offered to the public over the Internet.
The Maryland Office of the Secretary of State provides detailed information on the steps needed to form a non-profit organization. Certain charitable, fraternal, educational and religious organizations in Maryland may be eligible for an exemption from state property tax if non-profit status is approved.
Organizations soliciting charitable contributions in Maryland are generally required to register with the Office of the Secretary of State as a charitable organization. Registration is required before soliciting in Maryland begins and continues on an annual basis.
Click here to learn more.