May is Small Business Month, a great time to celebrate the dreamers, doers, and problem-solvers who power our communities. From local shops to growing startups, small businesses help Maryland thrive.
In Maryland, over 99% of all businesses are considered “small.” Small businesses employ close to half of Maryland employees. Business registration in Maryland is brisk. Prospective business owners filed more than 100,000 new business applications in a single year.
If you’ve been thinking about launching your own business, now may be the perfect time to turn the key and get started. Here are practical steps to help you start a small business in Maryland with confidence.
Build your business blueprint
A little planning now can save time, money, and stress later. It also makes business registration faster.
- Write a business plan: Cover what you will sell, the demand for your product or services, and what you know about your customer base. You don’t have to file this with your business registration, but some lenders and investors may require it.
- Choose a name that stands out and feels true to your brand.: Search U.S. trademarks, Maryland businesses, and the internet to confirm the name is available. Avoid names that are easily confused with other names. Optional: Reserve a website domain and social media handles now.
- Choose an address for business registration: Anyone can see your business registration paperwork online. If you work from home, you may want to use a virtual mailbox service or partner with another business, as a physical street address is required for filing.
- Find a resident agent: Most businesses need one to receive legal papers. You can designate a Maryland adult or business (a limited liability company, limited liability partnership, or corporation), or you can hire a service for support.
Choose the business structure that fits your goals
The four most common Maryland business structures are sole proprietorship, general partnership, limited liability company or partnership, and corporation. They differ in several ways.
- Formation process: Every business structure must file some forms for business registration in Maryland. Some structures have optional but important forms, like operating agreements for limited liability companies.
- Business process rules: Corporations must follow strict rules, like holding annual meetings and appointing a board of directors. Sole proprietors have more freedom.
- Taxation and tax prep: Your business structure determines your tax rate, your tax options, and how much it costs to prepare your taxes.
- Personal liability: Owners of limited liability companies and corporations aren’t personally liable for business debts in most cases.
|
Business type |
Who it’s best for |
Setup level |
Tax notes |
|
Sole proprietorship |
One person starting a simple business |
Easy |
Income usually reported on personal tax return |
|
General partnership |
Two or more people starting together |
Moderate |
Income usually passes through to owners |
|
LLC |
Owners who want flexibility and liability protection |
Moderate |
Often flexible tax options |
|
Corporation |
Businesses planning major growth or outside investors |
More involved |
Separate corporate tax rules may apply |
The right fit depends on taxes, liability, and long-term goals. A legal or tax professional can help you decide.
Building a mission-driven organization?
If you’re starting a charitable organization, you might be eligible for nonprofit status. There are pros, cons, and alternatives to registering as a nonprofit.
- Nonprofits may be exempt from federal, state, and local taxes.
- Donors to nonprofit organizations can usually get a tax deduction.
- To get some grants and loans, your organization must be a nonprofit.
- Registering and maintaining a nonprofit requires significant time and money, more than some for-profit businesses.
- Some organizations operate under a fiscal sponsor instead of forming a nonprofit. A fiscal sponsor is a nonprofit that lends its nonprofit status to other organizations.
Register your business and make it official
You’ll need to file forms and pay a fee to complete your small business registration in Maryland. Most businesses need tax ID numbers to pay estimated taxes, file tax returns, open business bank accounts, apply for business licenses, and hire employees.
- Register your business via the Maryland Business Express portal.
- Apply for a free federal employer identification number (EIN or FEIN).
- Once you have the FEIN, apply for Maryland tax accounts.
- Check local rules to see if you need to apply for local tax IDs.
Check off your business license requirements
Depending on the type of business you are starting, you’ll need one or more business licenses.
- Nearly every Maryland business needs state licenses.
- Some business activities require occupational or professional licenses.
- Your city or county might require a license. Here’s Baltimore’s business license list.
Keep your business finances running smoothly with the right support
Separating business and personal finances helps you keep clean tax records, track business finances accurately, and keep your liability protection (if you are an LLC or a corporation).
- Open business bank accounts as soon as you have your tax ID numbers.
- Start saving for taxes right away and consider quarterly estimated tax payments.
- Small businesses may be eligible for special loans, so talk to your bank about available options.
Start your small business with confidence
Starting a business is a big milestone, and you don’t have to navigate it alone. SECU is proud to celebrate small business all year round. We offer small business banking, business lending, and business services like merchant processing, payroll support, and HR solutions.
Explore our small business resources today and let us help you build what’s next.
