Maryland Business Compliance: What Every Owner Needs to Know in 2024

One of the most common sources of stress — and costly surprises — for Maryland small business owners is compliance. Whether you're just starting out or have been operating for years, staying on top of Maryland's regulatory requirements is non-negotiable. Violations can result in fines, suspension of business privileges, and in some cases, personal liability.

The good news: most compliance issues are entirely preventable when you know what to look for and stay proactive. This guide breaks down the key compliance areas every Maryland business owner needs to understand.

1. Business Registration & Entity Formation

Before you can legally operate a business in Maryland, you need to properly register your business entity with the State Department of Assessments and Taxation (SDAT). The type of entity you choose — sole proprietorship, LLC, partnership, S-Corp, or C-Corp — has significant implications for liability, taxation, and compliance requirements going forward.

Key Registration Requirements:

• Articles of Organization or Incorporation must be filed with SDAT for LLCs and corporations
• Registered Agent: Maryland requires every LLC and corporation to maintain a registered agent with a physical Maryland address
• Annual Reports: Most business entities must file an Annual Report with SDAT by April 15 each year; failure to file can result in forfeiture of your business's good standing
• Trade Name Registration: If you operate under a name other than your legal entity name, you must register a trade name (DBA) with SDAT

2. Business Licenses & Permits

Beyond entity registration, most Maryland businesses require one or more licenses or permits to legally operate. These requirements vary significantly by industry, business type, and location.

State-Level Licenses:

• Trader's License: Required for businesses that buy and sell goods in Maryland, obtainable through your county's Clerk of the Circuit Court
• Professional Licenses: Many professions (contractors, healthcare providers, real estate agents, childcare operators, etc.) require specific state licenses through the relevant Maryland licensing board
• Sales and Use Tax License: If you sell taxable goods or services, you must register with the Comptroller of Maryland to collect and remit sales tax

Baltimore City Specific:

• Baltimore City businesses may require a Business License from the Baltimore City Circuit Court
• Certain home-based businesses require a Home Occupation Permit
• Food service establishments require inspection and permits from Baltimore City Health Department
• Zoning compliance — verify your business use is permitted at your specific address

3. Taxes: What Maryland Business Owners Owe

Maryland businesses are subject to several taxes at the state and local level. Understanding your tax obligations from day one prevents costly surprises and keeps you in good standing with the Comptroller's office.

Key Tax Obligations:

• Maryland Corporate Income Tax: 8.25% on net income for corporations
• Pass-Through Entity Tax: LLCs, partnerships, and S-Corps may elect to pay Maryland's pass-through entity tax, which can have significant benefits for owners
• Sales and Use Tax: Maryland's standard rate is 6%, with higher rates on certain items (alcohol, car rentals, etc.)
• Employer Withholding Tax: If you have employees, you must register and withhold Maryland income tax
• Unemployment Insurance: Employers must register with the Maryland Department of Labor and pay unemployment insurance taxes
• Personal Property Tax: Businesses owning personal property (equipment, inventory, furniture) must file a Personal Property Return annually with SDAT

4. Employment Law Compliance

If your Maryland business has employees, you enter a new layer of compliance obligations. Maryland has several employment laws that are stricter than federal minimums — and violations can be costly.

Critical Maryland Employment Requirements:

• Minimum Wage: Maryland's minimum wage increases annually — verify the current rate for your county, as some (including Baltimore City and Montgomery County) have rates above the state minimum
• Maryland Healthy Working Families Act: Businesses with 15 or more employees must provide paid sick leave; smaller employers must provide unpaid sick leave
• New Hire Reporting: All employers must report new hires to the Maryland New Hire Registry within 20 days of hire
• Workers' Compensation Insurance: Required for virtually all Maryland employers with one or more employees
• I-9 Verification: Federal requirement to verify employment eligibility for all new hires
• Required Postings: Maryland employers must display specific workplace posters covering minimum wage, discrimination, safety, and other topics

5. Data Privacy & Consumer Protection

As more businesses collect customer data, compliance with Maryland's data privacy laws has become increasingly important. The Maryland Online Data Privacy Act (MODPA) establishes requirements for businesses that collect personal data from Maryland consumers.

Businesses that collect, store, or process customer data should review their privacy practices, ensure they have a clear and accurate privacy policy, and understand their obligations if a data breach occurs — including Maryland's data breach notification requirements.

Staying Ahead: A Proactive Compliance Approach

The businesses that handle compliance most effectively aren't those that react to violations — they're those that build compliance into their operations proactively. Here's a simple framework:

• Annual compliance calendar: Map out every filing deadline and renewal date at the start of each year
• Regular license review: Set a reminder to verify that all licenses and permits are current before they expire
• Stay informed: Maryland laws and regulations change. Subscribe to updates from SDAT, the Comptroller's office, and the Maryland Department of Labor
• Work with professionals: A relationship with a Maryland CPA and/or attorney is one of the best investments a small business owner can make

At Crimson Business Consulting, our Legal Insight Consulting service helps Maryland businesses understand their compliance landscape, identify potential gaps, and connect with the right professionals to address them. If you're unsure whether your business is fully compliant, schedule a consultation — it's one of the most valuable conversations you'll have this year.