How to start a business in Maryland

Get a federal EIN

Apply free on the IRS website and get the number immediately. You'll need it for the state tax registration, a business bank account, and payroll. Opening a new location? You already have one; the same EIN works in every state.

Sign an operating agreement

This internal document sets out who owns what, how decisions get made, and what happens if an owner leaves. It isn't filed with the state, but banks often ask for it, and it helps protect your liability shield. Single-owner LLCs need one too.

Open a business bank account

Bring your EIN letter, filed formation documents, and operating agreement or bylaws. Keeping business and personal money separate is one of the main things that protects your personal assets.

Check industry licenses and permits

Many businesses need a license or permit before opening, separate from registering the company. Check three levels: the state licensing board for your field, your city or county, and any federal agency that regulates your industry.

• Trades and construction: general contractors, electricians, plumbers, HVAC and roofers usually need a state or local license, and often a bond
• Personal services: salons, barbers, nail and esthetics shops need a shop license plus licensed staff; massage and tattoo studios are licensed too
• Professional services: accounting, engineering, architecture, law, real estate and insurance require state licenses for the people and sometimes the firm
• Child care, elder care and home care need a state facility or agency license and background checks
• Retail with restricted products: alcohol, tobacco and vape, cannabis, firearms (federal FFL), pawn and secondhand dealers
• Auto, transport and logistics: auto dealers and repair shops, towing, movers, and trucks that need a USDOT number
• Money and finance: lenders, mortgage brokers, debt collectors and money transmitters are licensed by the state, often through NMLS
• Local permits for almost everyone: city business license or tax registration, zoning or home occupation permit, sign permit and fire inspection

Decide on S corp tax treatment (optional)

If you want S corp taxation, file IRS Form 2553. The deadline is tight: generally within 2 months and 15 days after the start of the tax year you want it to apply. See Business basics for when it makes sense.

File Articles of Organization with SDAT

File online through Maryland Business Express. Same-day expedited service costs extra.

Name a Maryland resident agent

Maryland calls it a resident agent: a Maryland resident or business with a street address in the state. Use a registered agent service if you have no one local.

Register with the Comptroller (Combined Registration Application)

One online application covers employer withholding, sales and use tax, and other state tax accounts. Unemployment insurance is registered separately with the Department of Labor.

• Withholding, if you'll have Maryland employees
• Sales and use tax license, if you sell taxable goods or services

Withhold county income tax too

Maryland's 23 counties and Baltimore City each add a local income tax, withheld along with state tax based on where the employee lives. Maryland's withholding tables include it, and payroll software handles it if home addresses are correct. Nonresidents who work in Maryland have a special nonresident rate.

Register to collect sales tax

Maryland calls it a Sales and Use Tax License. Register with the Comptroller of Maryland through Combined Registration Application (Maryland Tax Connect) before you make your first taxable sale in Maryland. You'll collect tax from customers and send it to the state.

• State rate: 6%
• Local taxes: No local sales taxes.
• Most services are not taxed, but since July 1, 2025 a 3% tax applies to certain data and IT services (NAICS 518, 519, 5415) and software publishing (NAICS 5132). Digital products, including SaaS bought by individuals, are taxed at 6%.

Buy items you resell tax-free with a resale certificate

Give your supplier Resale certificate (no required form; Comptroller offers a Suggested Blanket Resale Certificate) so you don't pay tax on inventory you'll resell. The buyer must include its Maryland sales and use tax registration number; a blanket certificate stays in force until revoked. Keep certificates your own customers give you, too.

Selling into Maryland from another state? Watch the threshold

Out-of-state sellers must register once sales into Maryland pass $100,000 or 200 transactions (previous or current calendar year), even with no office here.

• Counts gross revenue from goods and taxable services delivered into Maryland, including exempt sales, sales for resale, and marketplace sales. In effect since October 1, 2019.
• Marketplace facilitators must register, collect Maryland tax on every facilitated sale, and file monthly on Form 202F; sellers do not collect on those sales.

Note this Maryland sales tax rule

Special rates apply: 9% alcohol, 11.5% car rentals, and 12% adult-use cannabis (up from 9% on July 1, 2025); the custom software exemption was also repealed July 1, 2025.

Complete Form I-9 and W-4 for each hire

Form I-9 is never mailed to the government. You keep it in your own files and show it only if ICE or the Department of Labor asks for an inspection.

• The employee completes Section 1 by their first day of work
• You review their original documents and complete Section 2 within 3 business days of the start date
• Keep it for 3 years after the hire date or 1 year after employment ends, whichever is later
• Store I-9s together, separate from personnel files, so an inspection doesn't expose other records
• Remote hire? Have an authorized representative check documents in person, or, if you use E-Verify, use the DHS remote video inspection option
• Also collect a federal W-4 for withholding

Post federal workplace notices

Federal posters (minimum wage, EEO, FMLA if you have 50+ employees, and others) go alongside the state ones.

Register for Unemployment Insurance (BEACON)

Register with the Maryland Department of Labor through its BEACON system once you pay wages in Maryland.

• 2026 new employer rate: 2.6%
• Taxable wage base: first $8,500 per employee
• Experienced rates range from 0.3% to 7.5%
• Quarterly contribution and wage reports

Register for FAMLI paid family and medical leave

Every employer with Maryland employees must register. An owner or officer must complete the initial registration; a payroll provider can't do it for you.

• Contributions start January 1, 2027: 0.9% of wages up to the Social Security wage base
• Split evenly between employer and employee; employers with fewer than 15 employees don't pay the employer half
• Benefits begin no earlier than January 2028
• Notify employees before deductions start, at hire, and yearly

Buy workers' compensation insurance

Required from your first employee. Buy from a private insurer or Chesapeake Employers' Insurance (the state option), or self-insure with approval. Fines for going without can reach $10,000.

Report each new hire

Report new and rehired employees within 20 days. Online reporting is available.

Check income tax reciprocity

Maryland has reciprocity with Washington DC, Pennsylvania, Virginia, and West Virginia. Residents of those places working in Maryland claim exemption on Form MW507, and you withhold their home state's tax instead. Collect an MW507 from every Maryland employee at hire.

Follow Maryland pay timing rules

Maryland's Wage Payment and Collection Law sets the basics.

• Pay at least twice a month or every two weeks
• Final pay for any departure by the next regular payday
• Overtime after 40 hours a week
• Pay statements must show employer contact details, pay period, hours (non-exempt), rates, gross and net pay, and deductions

Pay at least Maryland minimum wage

$15.00 an hour statewide (workers under 18 may be paid 85%). Tipped cash wage: $3.63. Three counties are higher, effective July 1, 2026:

• Montgomery County: $18.00 (51+ employees), $16.50 (11 to 50), $15.95 (10 or fewer); tipped cash wage $4.00; adjusts for inflation each July 1
• Howard County: $16.00 for all employers
• Prince George's County: $15.30 for all employers

Set up earned sick and safe leave

Under the Healthy Working Families Act:

• 15+ employees: paid leave; 14 or fewer: unpaid leave
• Accrual: 1 hour per 30 worked, up to 40 hours a year
• Use cap 64 hours a year; carryover up to 40 hours
• New hires can be required to wait 106 days before using leave

Join MarylandSaves or certify an exemption

Required for employers in business in Maryland at least 2 years that use automated payroll and don't offer a retirement plan. Already have a 401(k)? Certify the exemption online. Participating or certifying also waives your $300 SDAT annual report fee.

Adopt a harassment policy (training recommended)

Maryland doesn't require harassment training for private employers. A written policy and a yearly refresher are still best practice.

Post Maryland workplace notices

Including the earned sick and safe leave notice, whistleblower law, wage and hour, and unemployment insurance posters, plus FAMLI notices once required.

Check city and county sick leave laws

These local laws apply to employees who work within the city or county, on top of the state rules. Where they differ, follow whichever is more generous to the employee.

• Montgomery County: Employers with 5+ employees must provide paid leave; employers with fewer than 5 provide 32 hours paid plus 24 hours unpaid; employees who regularly work more than 8 hours a week; 1 hour per 30 hours worked; cap 56 hours a year; carryover up to 56 hours, use up to 80 hours a year.

Collect a W-9 before the first payment

The W-9 gives you the contractor's legal name and tax ID for their 1099. Check the classification first: if you control how and when they work, they may legally be an employee.

Send Form 1099-NEC to contractors

File with the IRS and send the contractor a copy by January 31. For payments made in 2026 and later, the reporting threshold is $2,000 per contractor per year (it was $600 before).

Skip the FinCEN BOI report (U.S. companies are exempt)

FinCEN's final rule, effective August 14, 2026, permanently exempts companies formed in the U.S. from beneficial ownership reporting. Ignore letters or emails demanding a BOI filing fee; they're a common scam. Only companies formed outside the U.S. still file.

File the SDAT annual report and personal property return

Every Maryland and foreign entity files yearly, even with no property. An extension for the property portion is available, but the fee is still due April 15. MarylandSaves participants and certified plan sponsors get the fee waived.

File quarterly UI reports and withholding returns

File UI contribution and wage reports in BEACON each quarter, withholding returns on the schedule the Comptroller assigns, and the MW508 annual reconciliation with W-2s by January 31.

File sales tax returns on time

New accounts file quarterly, and the Comptroller may move you to monthly, semiannual, or annual based on tax paid; returns are due the 20th of the month after the period ends. File a zero return if you had no sales; skipping it can bring penalties.