Maryland keeps its filing fee reasonable, then makes up for it with one of the steeper annual fees in the country: a $300 report due every year no matter how the business performed. The steps below cover what starting a business in Maryland actually involves in 2026.
1. Which business structure fits you?
There are four basic structures to choose from, and the right one depends on how much liability protection and paperwork you're willing to take on.
- Sole proprietorship, the default if you file nothing: you and the business are legally identical, and you carry all the liability.
- Partnership, which spreads that same liability across two or more people running the business jointly.
- LLC, Maryland's most common small-business entity, drawing a legal line between your personal assets and the business's debts.
- Corporation, S-corp or C-corp, which layers on more formality and paperwork, usually once investors or multiple shareholders are involved.
For more on how these compare, read our guide on choosing a business structure.
Unlike most states, Maryland handles business filings through the State Department of Assessments and Taxation (SDAT) rather than a Secretary of State. LLCs and corporations register there; sole proprietorships and general partnerships don't.
2. Register your business
Forming an LLC
Maryland LLCs form by filing Articles of Organization with SDAT through the Maryland Business Express portal. Standard processing costs $100 and takes roughly 7 to 10 business days; paying $150 instead gets it expedited.
Maryland calls its version of the registered agent a "resident agent," but the requirement is the same: a physical in-state address, available during business hours. If you live in Maryland yourself, you can take on the role; otherwise a commercial service handles it.
Maryland doesn't require an operating agreement by statute, but writing one, particularly with more than one member, gives you something concrete to point to when decisions or profit splits come up.
Sole proprietorships and DBAs
Sole proprietors have nothing to file in the way of Articles of Organization. A trade name, though, gets registered with SDAT for a small fee, a state-level filing rather than the county-level process common elsewhere.
3. Get an EIN
The IRS hands out EINs free of charge, and the online form takes about 15 minutes to complete. Banks want one before they'll open a business account, and you'll need one to hire employees or file most business tax returns, single-member LLCs included.
4. Check licenses and permits
There's no catch-all statewide license in Maryland. Instead it 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. More detail lives in our guides on professional licensing by industry and zoning laws for home businesses.
5. Understand Maryland taxes
At the state level, Maryland's personal income tax climbs progressively from 2% to 5.75%. Every one of the state's 23 counties, plus Baltimore City, then tacks on a local income tax of its own, somewhere between 2.25% and 3.20%. Where you live ends up mattering as much as what you earn.
Sales tax is a uniform 6% across Maryland, with no local add-ons allowed anywhere. Alcohol carries its own separate 9% rate.
6. Stay compliant
Maryland requires every business entity, LLCs included, to file what's technically called the Annual Report and Personal Property Return with SDAT by April 15. The base fee runs $300, high compared to most states, though participating in MarylandSaves, the state's auto-IRA program, waives it automatically. LLCs holding over $20,000 in Maryland personal property, at original cost, also fill out the property tax section. A missed deadline brings a $100 penalty on top of 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, for businesses participating in MarylandSaves, the state's auto-IRA retirement program.
How much does it cost to form an LLC in Maryland?
$100 for standard processing, running 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%.
All fees and rates cited reflect Maryland State Department of Assessments and Taxation and Comptroller guidance as of 2026, subject to change, so verify before you file. This is not legal or tax advice; a Maryland-licensed attorney or CPA should weigh in on your specific circumstances.