Business insurance


How to Start a Business in Maryland

May 2, 2023 · 8 minutes to read

Confident cafe owner standing at his coffee shop

At last count, Maryland is home to over 634,000 small businesses. The Old Line State is a great place to set up shop, with many thriving industries and established programs that encourage people to “shop small”. If you want to start a business in MD, there may be no better time to start!

There are several steps necessary to register a business in MD. From research and planning to business insurance and marketing, completing each helps ensure you are operating legally and with the best chance for continued success.

Here are 10 steps to start a business in Maryland:

1. Research and refine your idea

Every business starts with an idea, but some honing may be necessary to help yours thrive. Researching your local market and competitors may be useful. You might identify gaps in the market that could help you decide which products or services you’ll offer. It can also help you set your prices, find ways to stand out from the competition, and determine how you’ll advertise.

2. Write a business plan

A business plan is a blueprint for your small business. It helps guide your decisions and track your success in the early days or years. Business plans typically include an overview of your business and its structure, market research (including on your competitors), financial forecasts and budgets, and marketing strategy.

A business plan may be necessary to apply for a loan or get other funding. You may hire an accountant or small business expert to help you write a business plan.

3. Find funding

Many small business owners look for outside funding to launch their businesses. Bank loans and small business grants are popular sources of money in the U.S. However, you may also seek angel investors, individuals who invest their personal funds into startups, to help you start a business in MD.

4. Choose a legal business structure

Small businesses in Maryland must choose a business structure. Each structure has its own legal and tax obligations. An accountant or lawyer can help you choose the best option for your small business and understand the requirements you will need to meet.

Popular legal business structures for small businesses include:

  • Sole Proprietor – A structure where the business owner is legally the same as their business. This is a single person running a business by themselves. Business taxes can be filed with the sole proprietor’s personal taxes.
  • Partnership – The same as a sole proprietor, except this is two or more people running a business together.
  • Corporation – A more complex structure where the business owner is legally separate from their business. The business owner has some legal protection should things go wrong.
  • Limited Liability Company (LLC) – A legal structure that blends sole proprietorship with a corporation. The business owner has some legal protection (like a corporation) but less complex tax obligations (like a sole proprietor or partnership).

5. Register your business

There are different steps to register a business in MD, depending on the business structure you choose.

Sole proprietors do not need to register special paperwork if they are doing business under their given name (ex: Mary Jones – Accountant). However, if your business has an assumed name (like Free State Mechanics), you must file a trade name application online with the state.

LLCs and Corporations must select a registered agent to receive government communications on the business’ behalf. If you have a physical address in Maryland, you can appoint yourself as the registered agent. However, it may be worthwhile to hire a registered agent to save you time and ensure that applications are processed correctly.

LLCs must also file Articles of Organization with the state, and Corporations are required to file Articles of Incorporation. These can be filed online or by mail for a fee.

6. Get federal and state tax IDs

Businesses with employees that meet other specific criteria must apply for an EIN (Employer Identification Number) from the IRS. This number helps ID your business, but it is also necessary to open bank accounts, process payroll, and file business taxes.

An EIN is optional for sole proprietors but mandatory for LLCs and Corporations.

Maryland businesses must also register with the state’s Comptroller of Treasury. This step is necessary to file state business taxes, withhold payroll taxes, and collect different types of sales tax.

7. Open business bank accounts

You may be required to have a separate bank account for your business, particularly if you form an LLC or Corporation. However, you may want to keep your business and personal finances apart even if you are operating as a sole proprietor.

Separate bank accounts make it easier to track your business revenue and spending. You might have a clearer picture of how your business is doing and find it easier to file your taxes each year.

8. Apply for licenses and permits

Many small businesses need a business license to work in Maryland. Licenses are often required to work in certain industries or occupations. For example, an architect license granted by the Maryland Department of Labor is required to do architectural design in the state.

Statewide permits may also be necessary to perform specific activities. These are often tied to health and safety, such as construction permits or disposal of toxic materials.

You may also need licenses or permits to work in certain cities. For example, a Baltimore city business license may be required to do certain types of work within city limits.

9. Consider business insurance

Many business owners choose different types of business insurance to protect themselves, their employees, and their businesses. Some insurance may be necessary for certain types of businesses.

Whether you’re a shop owner, managing a restaurant, or running a home-based business in Maryland, you may want to consider coverage such as:

  • Errors and Omission / E&O insurance – Maryland professional service providers may be required to have this type of coverage to get or renew their professional license.
  • General Liability insurance – You may need this coverage to work with specific clients and lease commercial space for your business.
  • Workers’ Compensation insuranceThis coverage is required in Maryland if you have one or more employees.
  • Business Owner’s Policy / BOP – You may decide to get a BOP to help you handle unexpected bills caused by equipment failure, interruptions to your operations, and other common risks.

10. Market your business

Attracting customers is an ongoing step for any small business. Without consistent sales, it will be hard to manage cash flow and keep your business running. A marketing plan can help you reach potential customers and convert these leads into sales.

There are many ways to market a business. You will likely use a combination of different methods, such as:

  • Designing a unique brand, including your business logo, fonts, colors, images, and tone of voice
  • Building a website for your business
  • Creating social media accounts on relevant platforms
  • Listing your business on Google Maps, other search engines, and online directories
  • Running ads on social media, websites, radio or TV
  • Running print ads in trade publications, magazines, and newspapers or on flyers and billboards

Building on your success

We hope the above steps help you understand how to start a business in Maryland. With time and hard work, you can grow a small business in Baltimore, Annapolis, or elsewhere in The Old Line State. You’ll soon be part of MD’s thriving small business landscape!

How BizInsure helps small business in Maryland

Looking for business insurance options to protect your Maryland small business? BizInsure has got you covered!

BizInsure are insurance experts, helping small business owners across the country find the coverage they need at a great price. Compare policies from top-rated insurers online and get covered in minutes. Your proof of insurance will even be sent straight to your inbox.

Get free, no-obligation quotes for General Liability, Business Owner’s Policy, Workers’ Compensation and E&O insurance for Maryland businesses today and save—start now

*As with any insurance, coverage will be subject to the terms, conditions and exclusions contained in the policy wording. The information contained on this web page is general only and should not be relied upon as advice.
**This information is a general guide only and does not take into account your objectives, financial situation or needs. Always check with your local licensing board when getting or renewing your electrician’s license to ensure you are meeting their current licensing requirements.
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