How to Start a Business in Maryland

If you’re ready to start a business in Maryland but aren’t sure where to begin, then you’ve come to the right place.  We cover what goes into a good business plan, financing, and tax and legal requirements so you can hit the ground running.

Begin at the Beginning

Every good business starts with a good business plan.  This includes formulating answers to the following crucial questions:

• What do you want to sell—a physical product or a service?
• How do you intend to sell—online or at a physical location, or both?
• To whom do you intend to sell—that is, who’s your target market?   
• How much are you willing to invest of your own (or your family and friends’) money?
  
• How long will it take to gather all the pieces together in order to launch your business?
• How do you intend to market the business?  What’s your marketing budget?
• How will you scale up your business?

By answering these questions and putting the answers in writing, you’ll have a well-crafted business plan you can present to potential investors and partners.

In addition to showing others you’re serious about starting a business, having clearly defined goals and a plan on how to reach them will give you the direction you need to keep moving forward with your business launch.

If you’re feeling stuck, you can check out the Small Business Administration’s website, which includes sample plan templates to get you started.

Select Your Business Structure

Although it’s not as fun as picking product colors or choosing business cards, figuring out what type of business you have will save headaches and prevent negative tax consequences in the long-run. Forming business entities is highly encouraged because it can also help protect your personal assets.

You have several options when it comes to structuring your business, including:

• Sole proprietorship
• Partnership (LP or LLP)
• Limited Liability Company (LLC)
• Corporations (B, C, S types, Nonprofit)
• Cooperatives (Coops)
• Franchises

Just be aware that setting up your Maryland business under the wrong structure type can have unpleasant legal and tax ramifications.  If you’re unsure how to form a corporation or which entity to select, contact a licensed business attorney for assistance.

Maryland’s official state website offers definitions and examples of the various structure types for more information.

Once you’ve figured out which type of business you have, it’s time to get registered with the state of Maryland.

Get Registered in Maryland

You’ve carved out the legal structure for your business, you’ve got a great plan, and you’re ready to go, right?  Not quite—you can’t legally operate a business in Maryland without first registering with the state. 

This can easily be done online by answering a few simple questions and paying the filing fee, which can cost anywhere from $20-$170, depending on the business structure. 

All business owners who wish to operate in Maryland must also have a principal physical address in the state (not a P.O. Box) that they can use when registering the business.

Once registered, you’re still not quite ready to get down to the details yet—there are a couple of other administrative steps that need to be dealt with first. 

Obtain a Federal Tax ID Number

Nearly every type of Maryland business needs to have a Federal Tax ID number, or FEIN (sometimes EIN) for short.

This will ensure you’re able to pay federal and state taxes, and in some instances, it may be required before you can open a bank account for your business.

While it sounds intimidating, the process to get a FEIN is fairly simple.  In fact, you can obtain a FEIN online through the IRS website.

Not all businesses are required to obtain a FEIN, so you’ll need to determine whether or not this applies to your business.  (The IRS website can help you with this.)

You’re almost ready to welcome customers, but there’s another critical step for Maryland, and that’s making sure you have all the proper tax accounts, permits, and licenses as required by state and/or federal law.

Obtain Maryland Tax Account(s) and Permits/Licenses

Which Maryland tax accounts you’ll need to activate for your business depend on the types of goods and/services you sell and whether or not you’re responsible for collecting sales tax.  A few of the tax accounts you may be required to activate include:

• Motor fuels account
• Sales tax and use tax account
  
• Tobacco tax account
• Alcohol tax account

In addition, depending on the services or products your business offers, you may also be required to obtain special permits or licenses.  These are highly specific, such as the American Eel Permit for any business that sells American eels.

You may have to do a little extra research to determine the tax accounts, licenses, or permits your business is required to have in order to operate in the state of Maryland.

Once you’ve obtained all of the necessary federal and state tax accounts, licenses, and permits, you’re ready to nail down financing or re-examine your financial plan to ensure it’s still accurate.

Financing Your Maryland Business

While this can be an uncomfortable topic for many entrepreneurs, it’s an incredibly important one to tackle before you get too far down the road.

How will you pay for a website, a physical location (if you choose to have one), employees, and inventory?

Unless you’re lucky enough to be able to finance everything you’ll need from your own resources, you may want to consider a small business loan facilitated by the Small Business Administration.  These loans are government-backed, providing an extra measure of security.

The state of Maryland has a special no-interest business loan for members of the military or veterans with disabilities, and the state also offers loan programs for small business owners who choose to locate their businesses near six specific casinos.

Business Essentials

Nowadays, nearly every successful business needs to have a standout website and e-commerce options, and of course, a strong marketing strategy is key—if no one hears about your business, you won’t have any customers no matter how innovative your product is.

You’ll also need a great location if you’ve got a brick-and-mortar storefront.  You may have the best products and the best prices in town, but if no one can find you, customers won’t be pounding down your door.

But what often gets overlooked is a robust and secure point of sale system.  After all, sit doesn’t do much good to get customers in the door (or to your online checkout screen) if you can’t provide them with safe and secure payment methods.

Epos Now offers several great solutions for businesses, including mobile point-of-sale options for both Android and Apple devices, and gives you the freedom to allow for multiple payment types, including Visa, Mastercard, American Express, Apple Pay, and Google Pay, to name a few.

Whether you have the hardware in place already and only need POS software, or you need an entire system, Epos now has you covered. We have been independently rated by US News and World Report as one of the best POS providers in the country.

Finally, you can get down to the brass tacks of running your business, knowing that you’ve got a great business plan, your state and federal legal requirements have been met, your finances are in order, and you’ve got a solid point of sale system in place.  Bring on the customers!