FAQs

 
  • What kind of business entity should I establish?
    • When starting a business you must decide what form of business entity to establish. Financial implications vary based on which form of business structure you use. The four most common forms of business structure are the sole proprietorship, partnership, corporation and limited liability company. Learn more about each here.

      Sole proprietorships or general partnerships require no legal entry formalities except compliance with state and local licensing and taxation requirements. One of these requirements is registering your business so that your business personal property can be properly assessed, and the business can obtain a state or local license if required.

      For legal entities such as corporations, limited liability companies, limited partnerships and limited liability partnerships, Maryland offers several flexible options for organizing business activity. For information about registration requirements for legal entities, contact the State Department of Assessments and Taxation (SDAT) at (410) 767-1340.

  • What are the different types of businesses I can start?
    • Some possibilities include a home-based business, a franchise, buying an existing business, or if you're a foreign business — establishing a branch office.

      Home-Based Business

      More than half of all U.S. businesses are based out of an owner's home, according to the U.S. Small Business Administration. A home-based business is subject to many of the same laws and regulations affecting other businesses, such as zoning regulations and production restrictions. Be sure to consult with an attorney and your local, city and state departments of labor to find out which laws and regulations will affect your business.

      Additional Resource:
      SBA - Home-Based Businesses

      Franchises

      A franchise is a legal and commercial relationship between the owner of a trademark, service mark, trade name, or advertising symbol and an individual or group wishing to use that identification in a business. The franchise governs the method of conducting business between the two parties. Generally, a franchisee sells goods or services supplied by the franchiser or that meet the franchiser's quality standards.

      Additional Resource:
      Franchise Directories and Evaluation

      Buying an Existing Business

      Many find the idea of running a small business appealing, but lose their motivation after dealing with business plans, investors, and legal issues associated with new startups. If you are discouraged by risky undertakings, buying an existing business is often a simpler and safer alternative.

      Additional Resource:
      SBA - Buying A Business

      Establish a Branch Office (Foreign Businesses)

      A foreign business planning to operate in Maryland may establish a branch office by registering or qualifying with the Maryland State Department of Assessments & Taxation. Learn more about all the great reasons to set up a branch office in Maryland.

  • Where can I find good resources to develop a business plan?
    • Planning is critical to successfully starting a business. A business plan generally projects 3-5 years ahead and outlines how the company will grow revenues. Once your business is up and running, you'll need to regularly review and update your plan to manage growth. The U.S. Small Business Administration (SBA) provides detailed topics to create a business plan. The Small Business and Technology Development Center Network and SCORE also provide guidance on creating a business plan.

  • What kind of tax information do I need and where can I find it?
  • Does Maryland have a personal property tax for businesses?
    • Yes, businesses must pay an annual tax based on the value of their personal property (furniture, fixtures, tools, machinery, equipment, etc.). The Department of Assessments and Taxation administers the valuation process while the counties and towns collect the tax based on the location of the property.

      The department automatically registers corporations, limited liability companies, limited partnerships, and limited liability partnerships for this tax when these legal entities form. All other businesses (sole proprietorships, general partnerships) that own or lease personal property or need a business license are required to:

      For information regarding personal property assessments, visit the State Department of Assessments and Taxation (SDAT) Personal Property Division.

  • How do I choose a name for my business?
  • What location options does Maryland offer my business?
  • What if I need additional help with site selection?
    • Maryland has a full network of experienced economic development professionals to help you navigate the site selection process. Services offered by economic developers include:

      • Property selection and site tours to find the right location.
      • Market research on factors such as demographics and workforce availability.
      • Financing options including incentive programs, tax credits and training assistance.
      • Ombudsman services with state and local agencies to ensure a smooth relocation process.

      We have a team of business development specialists to work with your company. Many of these professionals have expertise in industries such as cybersecurity, technology, manufacturing, life sciences and renewable energy. Contact Jayson Knott at 410-767-6978 to be put in touch with one of these specialists.

      Organizations such as the Economic Alliance of Greater Baltimore and the Greater Washington Initiative offer site selection services covering their particular region.

      A statewide network of economic development professionals at the county level offers a variety of services from permit assistance to job training and placement. Visit our County and Regional Economic Development page for a list of county economic development offices.

  • Why are zoning ordinances and regulations important?
    • Zoning laws come into play on every single real estate development, regardless of how big or small, so if you are thinking about buying property or making improvements to property you already own, be sure to understand the zoning restrictions before you commit to anything. One zoning use is typically not compatible with another. For example, a commercial building usually cannot be constructed on property that's zoned for residential uses.

      Additional resources:
      Local Departments of Planning
      Small Business Notes - Zoning

  • What are some financing basics?
    • There are two primary types of financing: equity financing and debt financing. Unfortunately, there is no such thing as "free" government or grant money to help you start your business. Family members, friends and former associates are all potential sources, especially when capital requirements are smaller.

      Debt Financing

      There are many sources for debt financing: banks, savings and loans, and commercial finance companies. The U.S. Small Business Administration (SBA) can also provide assistance to small businesses by providing credit insurance to small business lenders.  They do not lend directly to small businesses.

      State and local governments have developed many programs in recent years to encourage the growth of small businesses in recognition of their positive effects on the economy. You should always check with your local economic development agency to see if they have local programs that you can use. Some the state's small business debt financing programs are listed below:

      Equity Financing

      Most small or growth-stage businesses use limited equity financing. As with debt financing, additional equity often comes from non-professional investors such as friends, relatives, employees, customers, or industry colleagues. However, the most common source of professional equity funding comes from venture capitalists. These are institutional risk takers and may be groups of wealthy individuals, government-assisted sources, or major financial institutions. Most specialize in one or a few closely related industries.

      If you are a startup or early stage company looking to make your next move, the Maryland Venture Fund invests across the full range of industry sectors including software, communications, cybersecurity and life sciences companies in the areas of healthcare IT, medical devices and diagnostics.

      Additional Resource:
      Borrowing Money for your Business

  • Does DBED offer any financing programs for new businesses?
  • What resources are available to help me do business with state government?
    • Yes. Here are some state contract certification requirements and opportunities:

      • Minority Business Enterprise Program (MBE)
        Encourages minority-owned firms to participate in the state procurement process. Current MBE law requires agencies to structure their procurements to try to achieve an overall minimum of 25% of the total dollar value of their procurement contracts directly or indirectly from certified MBE firms.
      • Maryland Procurement Technical Assistance Center (PTAP)
        Designed to help small and minority businesses identify, bid and perform on federal government prime and sub-contracts. The center also provides counseling and training services. PTAP is a program of the Maryland Small Business and Technology Development Center Network (SBTDC).
      • Small Business Reserve Program
        Committed to the growth and success of small businesses, which will be able to bid for state contracts without competing with larger, more established companies. Designated agencies will be required to award a minimum of 10 percent of their units' total dollar value of goods, supplies, services, maintenance, construction, construction related, architectural service and engineering service contracts to small businesses.

      eMaryland Marketplace

      eMaryland Marketplace (eMM), the State of Maryland's internet-based procurement system, is a business tool that provides an efficient means to improve vendor's access to State procurement information. eMM provides the means to publish solicitations via the internet to potential bidders, providing equal access to solicitation information and is also the resource for electronic bid submission. In addition, the system allows vendors to obtain bid results online once the due date and time for bid submission has passed.

  • What is Worker’s Compensation Insurance and do I need it?
    • Maryland workers' comp law requires employers to purchase insurance to pay compensation to employees for work-related injuries, occupational diseases, or deaths, regardless of whether someone is at fault. This non-fault compensation is the employee's exclusive remedy against the employer for work-related injuries; the injured employee may not sue the employer in an attempt to recover greater compensation. The compensation available includes medical and rehabilitation expenses, a percentage of lost wages, and an amount for impairment of earning capacity.

      Employers may obtain coverage for their employees in one of three ways:

      • State Accident Fund, a non-profit self-supporting agency of the State of Maryland.
      • Any company authorized to write this coverage in the state. To obtain a directory of licensed insurance companies, visit the Insurance Commissioner's website.
      • Self-insure with the prior permission of the Maryland Workers' Compensation Commission.

      To learn more, visit the Workers' Compensation Commission website.

  • What is a Certificate of Status? How can I get one?
    • When obtaining a license, a license renewal or a loan settlement, you are often required to obtain a "Certificate of Status" (generally called a "good standing" certificate) from the Maryland Department of Assessments and Taxation.  

      When the Department issues a certificate verifying that a business entity is in "good standing," it means that all documents and fees required by law have been received, and that no other government agency has notified the Department that the entity is delinquent in tax payments.

      Click here​ for easy steps to obtain a Certificate of Status.

  • How can I find out what licenses I may need?
  • Where can I learn about importing and exporting?
    • ​Maryland’s Office of International Investment and Trade provides support to Maryland companies planning to enter new foreign markets or advance their export sales in their companies' existing foreign markets. 

      Visit our Expand to International Markets page for more information about our ExportMD program, or call (410) 767-0685 to learn how to grow your Maryland business overseas. The World Trade Center Institute​ is another great Maryland resource to learn the international ropes.​

  • Are there any additional regulations for an online business?
    • ​From a licensing standpoint, an online business is not all that different than a business that has a physical storefront location. Maryland State agencies regulate certain goods and services that could be offered to the public over the Internet.

  • How do I start a non-profit organization in Maryland?
    • The Maryland Office of the Secretary of State provides detailed information on the steps needed to form a non-profit organization. Certain charitable, fraternal, educational and religious organizations in Maryland may be eligible for an exemption from state property tax if non-profit status is approved.  

      ​Organizations soliciting charitable contributions in Maryland are generally required to register with the Office of the Secretary of State as a charitable organization. Registration is required before soliciting in Maryland begins and continues on an annual basis.

      Click here​ to learn more.