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TLDR

• As of 2020, Maryland is home to 604,176 small businesses, making up 99.5 percent of all companies, employing almost 50 percent of Maryland employees.
• Before registering your Maryland startup, it’s a good idea to research the market and potential competitors, map out your financing, plan for operations and personnel, and create a business plan.  Founders can consult resources provided by the U.S. Small Business Association, helping them with the planning stage.
• In addition to creating a business plan, before you register your Maryland startup, you must also determine your organization's legal ownership structure.
• When you register in Maryland, you must determine if your startup is domestic or foreign. A domestic entity is an entity originally registered in the State of Maryland. A foreign entity is an entity formed outside of the State of Maryland. 
• After you submit your formation forms, registering your startup with the state, you’ll also need to obtain a federal employer identification number (FEIN) for banking and tax filings. You can also establish your FEIN through Maryland Business Express when registering your business.
• Depending upon your chosen entity for your startup, you will have filing fees due when registering your business. For example, if you register as an LLC, you’ll pay a fee of $100. For stock corporations, you’ll pay $120. However, for foreign stock corporations, you’d pay $170. 
• Additionally, you’ll need to check in with the State of Maryland and your local city and county to see if there are any additional business registrations required, such as a business license.  Founders can check the business licensing requirements on Maryland’s Department of Revenue’s website. For local permits, depending upon your startup, you may need to obtain an alarm permit, a health permit, a building permit, a signage permit, or a zoning permit.
• Maryland offers several programs and certifications, allowing you to showcase the minority ownership of your startup.

Known for the Chesapeake Bay, blue crabs, and the birthplace of the U.S. national anthem, Maryland offers much for its citizens, including its entrepreneurs. As of 2020, Maryland is home to 604,176 small businesses, making up 99.5 percent of all companies, employing almost 50 percent of all Maryland employees.

As one of America’s original thirteen colonies, Maryland has always played a pivotal role in U.S. commerce. For example, Maryland is home to a $57.4 billion military industry, representing 17 percent of the state’s commerce and including Walter Reed National Military Medical Center.

Other top industries in Maryland include agribusiness, life sciences, energy and sustainability, and financial services. Maryland is the fourth most innovative state in the nation while coming in number one for employment of PhDs and engineers. Additionally, Maryland is the second most educated state in the union.

If you consider registering your startup in Maryland, this article will walk you through what you need to know.

How to Register a Startup in Maryland

To register your startup in Maryland, you'll need to satisfy several federal, state, and local requirements. However, before registering your Maryland startup, it’s a good idea to research the market and potential competitors, map out your financing, plan for operations and personnel, and create a business plan.  Maryland founders can consult resources provided by the U.S. Small Business Association (SBA), helping them with the planning stage.

Once you’ve identified some of your business’s operation basics, it is then time to register your start-up. Read on to learn more about registering your business in Maryland.

Determine Your Startup’s Entity Structure

In addition to creating a business plan, before you register your Maryland startup, you must also determine your organization's legal ownership structure. According to the SBA, “[t]he business structure you choose influences everything from day-to-day operations to taxes and how much of your personal assets are at risk. Therefore, you should choose a business structure that gives you the right balance of legal protections and benefits.”

Like most legal and tax decisions, it’s best to ask a tax attorney or accountant experienced in Maryland law before deciding on which business entity to choose.

In the State of Maryland, you may organize your startup as a(n):

• Stock Corporation
• Limited Liability Company (LLC)
• General Partnership (GP)
• Limited Partnership (LP)
• Limited Liability Partnership (LLP)
• Religious Corporation
• Close Corporation
• Sole Proprietorship

Your chosen business entity determines the next steps in registering your Maryland startup. For example, suppose you choose an LLC for your business structure. Then, you would file your Articles of Organization with the Secretary of State’s office.

However, if you choose a stock corporation for your startup, then you’d file an Articles of Incorporation.

In Maryland, sole proprietorships or general partnerships “are not legal entities but must still comply with state and local licensing and taxation requirements.”

Identify Your Registered Agent

You’ll also need to select a registered agent. According to SCORE Association, a “registered agent is simply a person or entity appointed to accept service of process and official mail on your business’ behalf.” You can designate an individual or an entity as your registered agent. Further, your entity itself can serve as the registered agent.

Every registered entity in Maryland must have a registered agent. It is not optional.

Submit Your Formation Forms

When you register in Maryland, you must first determine if your startup is domestic or foreign. A domestic entity is an entity originally registered in the State of Maryland. A foreign entity is an entity formed outside of the State of Maryland. 

The filing requirements can often be different for domestic and foreign entities. However, for most entities in Maryland, the costs are the same – no matter if the entity is foreign or domestic. For example, foreign stock corporations require a $300 filing fee, while domestic stock corporations require a $300 filing fee.

For foreign LLCs, the filing fee is also $300, the same as domestic LLCs.

Additionally, depending on your chosen entity, you’ll file different forms with Maryland’s Secretary of State. These forms can be downloaded from the Secretary of State’s website.

For example, an LLC Articles of Organization form can be found here. In addition, the Articles of Incorporation for a Close Corporation can be found here.

What to Do Next

After you submit your formation forms, registering your startup with the state, you’ll also need to obtain a federal employer identification number (FEIN) for banking and tax filings. You can also establish your FEIN through Maryland Business Express when registering your business.

Additionally, you’ll need to check in with the State of Maryland and your local city and county to see if there are any additional business registrations required, such as a business license.  

Founders can check the business licensing requirements on Maryland’s Department of Revenue’s website. For local permits, depending upon your startup, you may need to obtain an alarm permit, a health permit, a building permit, a signage permit, or a zoning permit.

Do I Need to Register a Business Name in Maryland?

When you’re ready to register your startup, like other states, Maryland requires you to choose a unique business name, differing from any other registered businesses in the state.

To check your desired business name, you can preliminarily check its availability through Maryland’s Business Express’ Business Name Search or by contacting the Secretary of State.

If you’re not quite ready to register your startup yet, you may reserve your startup’s name for up to 30 days. To do so, you’ll file a Corporate Name Reservation Application with a $25.00 fee. If you’d like this application expedited, then you’ll pay an additional $20.00.

How to File a DBA

Maryland founders can also file for trade names, often referred to as “doing business as” or DBA names. To do so, you would complete a trade name filing, along with a filing fee of $25. If you would like your trade name application expedited, you would pay an additional $50. However, if you want it rushed (e.g., reviewed within three hours), you will pay an additional $425.

If you don’t choose expedited or rushed processing, your application will be reviewed in six to eight weeks.

In Maryland, if your startup regularly transacts business under a different name than your legal name, then you must file for a trade name. This includes sole proprietorships and general partnerships.

How Much Does It Cost to Register a Startup in Maryland?

Depending upon your chosen entity for your Maryland startup, you will have filing fees due when registering your business. For example, if you register as an LLC, you’ll pay a fee of $100. For stock corporations, you’ll pay $120. However, for foreign stock corporations, you’d pay $170. 

Also, depending upon your entity, you may be liable for Maryland’s various taxes, such as the state income taxes for both corporations and limited liability companies, if you have employees, employment taxes, and other business taxes and licenses. To better understand your state tax obligations as a startup, you should consult with an accountant familiar with Maryland tax laws.

Further, after submitting your registration forms, you need to learn about any required State or local licenses, such as a business license. You must also understand what annual registrations and fees are required of your Maryland startups, such as annual reports or sales and use tax, which will differ per entity.

How Do You Register as a Minority-Owned Business in Maryland?

Maryland offers several programs and certifications, allowing you to showcase the minority ownership of your startup. For example, in Maryland, the Department of Transportation is the official certification agency for the Minority Business Enterprise (MBE) Program, the Disadvantaged Business Enterprise (DBE) Program, the Airport Concessions Disadvantaged Business Enterprise (ACDBE) Program, and Small Business Enterprise (SBE) Program.

What Are the Benefits of Locating Your Startup in Maryland?

Maryland has many benefits for founders that want to register their business in Maryland. Here are some key benefits:

• Maryland has a strategic location next to the nation’s capital and along the eastern seaboard.
• Marylanders are very well-educated, with almost 20 percent of Maryland residents having a graduate or professional degree.
• Maryland has 57 accredited two and four-year colleges and universities in addition to 16 community colleges.
• The average Maryland household earns $83,242 a year, the highest median nationally.
• Maryland financially supports businesses through numerous tax credits and incentives as well as funding programs.

What Are the Drawbacks of Locating Your Startup in Maryland?

Like any state, there are some drawbacks to locating your startup in Maryland, although not many. Here are some to consider:

• Maryland has a very high cost of living, which may serve as a barrier for founders. However, average salaries in Maryland tend to offset the higher cost of living expenses.
• Maryland has higher taxes than other states, especially with a higher state corporate income tax rate.

We can help!

At AbstractOps, we help early-stage founders streamline and automate regulatory and legal ops, HR, and finance so you can focus on what matters most—your business. If you're looking for help registering your Maryland startup, we can get your documentation ready, overall shepherding this process to ensure it's done right. Get in touch to learn more! 

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