How to start a business in Maryland

However, if you’re looking for a brief breakdown of the steps to starting a business in Maryland, below is a summarized version.

1. Choose a concept and research your market

One of the first steps involves conceptualizing an idea for your new business – i.e., what do you plan to sell and what challenges will your product or service solve for your customers? At this stage, you need to determine whether there is a ready market for whatever you intend to provide.

The internet is a great place to start your research. It’s also important to talk to friends, family, and co-workers for honest real-world feedback about your concept. If the response isn’t encouraging, you may need to refine your idea before trying to open a business in Maryland.

2. Write a business plan and acquire funding

With limited resources, it’s critical to prioritize where your time, money, and attention go. Having a formal business plan can help direct these resources where they are needed most. If you decide to secure outside funding from banks, investors, friends, or family members, they will also ask to see a business plan before giving any money to startup costs. For steps on how to write a business plan, be sure to check out this article.

3. Research business name availability and start branding

Like most states, Maryland prevents two or more businesses in the same niche from using similar names. Before you buy a domain name, pick out a logo, and start choosing a color palette for your new business, make sure your desired brand name is available.

Fortunately, Maryland makes that easy with its online name availability database. You can also run a similar search for trademarks and patents at the federal level.

4. Choose a business structure for your startup

Every business in Maryland must register with the state, choosing from one of several legal structures, including:

• Sole proprietorship: The owner’s personal assets and liabilities are blended with those of the business. Although this is the simplest structure to set up, it provides the least legal protection in the event of a lawsuit.

• General partnership: Two or more owners form a multi-person venture. Similar to a sole proprietorship, some partnerships provide little to no legal protection. Other partnerships can be formed to provide more liability protection for all parties involved.

• Corporation: This is a popular option for larger or more established companies. Corporations provide the most legal protection of all business structures on this list; however, they are less common among smaller businesses due to the complex setup and ongoing maintenance involved.

• Limited liability company (LLC): This structure provides more legal protection than a sole proprietorship and is easier to set up and maintain than a corporation. As a result, LLCs are favored by many small business owners.

When you’re ready to officially register your chosen legal structure, visit Maryland’s Business Express Filing portal.

5. Obtain an employer identification number

Also known as an EIN, your employer identification number is what the IRS and state agencies use to assess your business’s tax liability every year. However, you’ll also need an EIN to open a business bank account, secure loans, and accept payments.

Starting a business in Maryland (or in any state) is basically impossible without an EIN. Apply for yours right away using this online IRS form.

6. Acquire licenses and permits

Because Maryland regulates certain occupational fields and industries, you may need to secure various types of licenses or permits before officially launching. Doctors and lawyers are obvious examples. That said, hairstylists, restaurant owners, and massage therapists also fall into this category.

Use the state’s OneStop Licensing Portal to determine what regulatory requirements might apply when opening a business in Maryland within your given niche or industry.

7. Know your employer obligations

From payroll to benefits to paid time off, business owners take on numerous legal responsibilities the moment they hire employees. For a more detailed breakdown of steps to starting a business in Maryland with employees, visit the state’s Guide to Wage Payment and Employment Standards.

8. File appropriate federal, state, and local taxes

Filing business taxes is fairly similar to reporting personal income, but there are more steps involved. Amortization, depreciation, and deductions offer more potential opportunities to reduce your tax liability. Hiring a certified public accountant (CPA) or professional tax preparer may be beneficial and can help you save time, prevent costly errors, and minimize your stress.

9. Prepare to accept payments

Whether you plan on operating a physical storefront or an online business, you need a way to more securely accept payments. Clover can help small business owners: 

• Accept all major payment types
• Secure transactions with tokenization and encryption
• Understand and maintain PCI compliance
• Access plug-ins from the Clover App Market
• Leverage omnichannel payment processing – online, in-store, at the curb, or in the field
• Choose the right POS system for your business’s needs readers

You can also take advantage of Clover Rapid Deposit, which gives you access to your funds sooner to better ensure your business has the cash flow it needs.

10. Acquire a business banking account

You will need one (or more) dedicated business banking account to accept payments, process payroll, and pay bills. Even if you choose a sole proprietorship in which assets and liabilities are blended, having separate personal and business bank accounts will help streamline bookkeeping and tax preparation.

11. Initialize marketing strategy and continued business development

Once your new business is officially legal, you’re ready to start marketing to prospective customers.

• Having a written marketing plan will help make it easier to convince potential customers to walk through your door or visit your website.

• Continued business development and customer engagement can help you keep them returning.

Hopefully we were able to provide you with a solid overview of how to start a small business in Maryland. The state offers additional resources to help you get off the ground, including its Open for Business Dashboard and Small Business Portal.

In addition, we’ve published numerous articles covering everything from starting ice cream shops to securing small business loans. To learn more about accepting payments or managing your business with one of our POS systems, contact a Clover Business Consultant today.

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This information is provided for informational purposes only and should not be construed as legal, financial, or tax advice. Readers should contact their attorneys, financial advisors, or tax professionals to obtain advice with respect to any particular matter.