Maryland keeps the filing fee reasonable but makes up for it with one of the higher annual fees in the country, a $300 report every year regardless of how your business did. Here's what it takes to start a business in Maryland in 2026.
1. Which business structure fits you?
Before you file anything, it helps to know what you're actually choosing between.
- Sole proprietorship. No filing required to start, and you and the business are legally the same entity. Simple, but you're personally liable for whatever the business owes.
- Partnership. Two or more people running a business together, with the same liability exposure as a sole proprietorship, just split across partners.
- LLC. The most common structure for small businesses in Maryland. It separates your personal assets from the business's debts and lawsuits.
- Corporation, either S-corp or C-corp. More paperwork and more formality, usually worth it once you're bringing on investors or multiple shareholders.
For a deeper comparison, see our guide on choosing a business structure.
LLCs and corporations register with the Maryland State Department of Assessments and Taxation (SDAT), the agency that handles business filings statewide, rather than a Secretary of State as in most states. Sole proprietorships and general partnerships don't register there.
2. Register your business
Forming an LLC
You form an LLC in Maryland by filing Articles of Organization with SDAT through the Maryland Business Express portal. The filing fee is $100 for standard processing, which typically takes 7 to 10 business days, or $150 for expedited handling.
Every LLC needs a resident agent, Maryland's term for a registered agent, with a physical in-state address, available during business hours. You can act as your own agent if you live in the state, or hire a commercial service.
Maryland doesn't require an operating agreement by law, but it's still worth writing one, particularly for multi-member LLCs, to spell out how decisions and profits get split.
Sole proprietorships and DBAs
Sole proprietorships don't file Articles of Organization. If you're operating under a trade name, you'll register it with SDAT for a small fee, which in Maryland is a state-level filing rather than a county one.
3. Get an EIN
An Employer Identification Number is free straight from the IRS and takes about 15 minutes online. You'll need one to open a business bank account, hire anyone, or file most business tax forms, even if you're a single-member LLC with no employees.
4. Check licenses and permits
Maryland doesn't issue a single general statewide business license either. What you need depends on your industry and county: professional licensing for regulated fields, a trader's license in some counties, and a sales and use tax license from the Comptroller if you sell taxable goods or services. Our guides on professional licensing by industry and zoning laws for home businesses cover more of this.
5. Understand Maryland taxes
Maryland's personal income tax is progressive, from 2% up to 5.75% at the state level, and every one of Maryland's 23 counties plus Baltimore City layers its own local income tax on top, ranging from 2.25% to 3.20%. So your effective rate depends heavily on where you live, not just your income.
Sales tax is a flat 6% statewide, and Maryland doesn't allow any local add-ons, so the rate is identical everywhere in the state. Alcohol is taxed separately at 9%.
6. Stay compliant
Every business entity in Maryland, including LLCs, files an Annual Report (technically the Annual Report and Personal Property Return) with SDAT by April 15 each year. The base fee is $300, one of the higher recurring state fees in the country, though it's automatically waived if your business participates in MarylandSaves, the state's auto-IRA retirement program. If your LLC owns personal property in Maryland over $20,000 in original cost, you'll also complete the personal property tax portion. Miss the deadline and you'll owe a $100 penalty plus possible interest.
Maryland business costs at a glance
| Item | Cost |
|---|---|
| Articles of Organization (LLC) | $100 standard / $150 expedited |
| Annual Report + Personal Property Return (every year, due April 15) | $300 |
| Late filing penalty | $100 |
| Resident agent service (optional) | $100 to $200/year |
| EIN | Free (IRS) |
| State income tax | 2% to 5.75% + county tax 2.25% to 3.20% |
| State sales tax | 6% flat, no local add-on |
Frequently asked questions
How much is Maryland's Annual Report?
A base fee of $300, one of the higher recurring state fees in the country, due April 15 each year.
Is Maryland's Annual Report fee ever waived?
Yes, if your business participates in MarylandSaves, the state's auto-IRA retirement program.
How much does it cost to form an LLC in Maryland?
$100 for standard processing (7 to 10 business days) or $150 for expedited handling.
Does Maryland charge local income tax on top of the state rate?
Yes, every county plus Baltimore City layers its own local income tax, ranging from 2.25% to 3.20%.
Does sales tax vary by county in Maryland?
No, it's a flat 6% statewide with no local add-ons; alcohol is taxed separately at 9%.
Fees and rates above come from the Maryland State Department of Assessments and Taxation and Comptroller of Maryland as of 2026, and they do change over time, so double check before you file. None of this is legal or tax advice. Talk to a Maryland-licensed attorney or CPA about your specific situation.