Top 25 FAQs About Doing Business in Maryland
This collection of Frequently Asked Questions (FAQs) can be a valuable resource if you need a quick answer to a question about starting or operating a business in Maryland. From general business issues to business taxes, employer withholding, business licenses, required reporting, alcohol, and EFTs, here are the top 25 FAQs about doing business in Maryland:
GENERAL BUSINESS QUESTIONS:
What Types Of Business Structures Are Allowed In Maryland?
Maryland allows multiple types of business structures. If you have an informal business that is not incorporated and is not a separate entity from you, you have a sole proprietorship. A partnership is another business structure that is not incorporated, but it has multiple owners. Limited liability corporations protect the personal assets of the owners without the strict maintenance requirements and tax treatment of corporations. Corporations are more formal than LLCs and have shareholders as owners. There are several variations on the types of limited liability and general corporations allowed in Maryland. Also, nonprofit organizations typically promote a social cause and are not taxed. Nonprofits do not have shareholders; instead, they answer to a board and exist on donations.
Do I Need To Get A Permit Or License?
Federal, state, and local government regulations control whether you need to get one or more business permits or licenses. For most companies, your type of industry will have its own requirements that might not apply to other sectors. For example, before you can legally sell real estate or insurance, you will have to have the applicable license.
Do I Need To Register My Business In Maryland?
The registration requirements vary based on the type of business structure you select for your company. Many sole proprietorships are not registered, but LLCs and corporations must register.
Do I Need A Website For My Business?
Very few businesses can stay viable without an online presence, if for no other reason than to provide a way for potential customers to find their location, telephone number, and store hours. Many companies find it useful, if not necessary for survival, to also have social media accounts.
How Can I Get Funding For My Business?
In America, we have a variety of ways to fund the American dream of owning one’s own business. Many people start out using their own savings and existing income stream to pay the startup expenses for their company. Often, family and friends provide small loans. Other options include things like small business grants and small business loans.
BUSINESS TAXES FAQs
What Is The Taxable Price Of An Item?
Sales taxes get imposed on the entire price of an item, including bartering. Usually, there are no taxes on installation, delivery services, interest payments, or professional services, as long as those things get specified separately.
Does Sales Tax Apply To Store Coupons?
No, a store coupon is not part of the taxable price if the vendor does not get reimbursement from a different source. When a vendor can get reimbursement for manufacturers’ coupons, on the other hand, those amounts get included in the taxable price.
Does The Cost Of An Extended Warranty Get Taxed?
If extended warranties, insurance, or similar agreements must be part of the purchase, then they are taxable. If the items are optional, they are not taxable.
Are Any Types Of Labor Charges Taxed?
Yes. Even if the customer provides the materials, fabrication and assembly labor charges are taxable. Restoration or repair labor is not taxable.
What Are The Steps To Getting A Resale Certificate?
There is no official required form for a retail certificate in Maryland. You create the statement and give it to your supplier, using your sales and use tax license information.
Do I Need A Tax ID Number To Give The Vendor When I Buy Items To Resell?
Yes, you must have a sales and use tax license if you make purchases of products that you resell as tangible personal property or incorporate into an item you will sell as tangible personal property.
How Do I Know If A Purchaser Like A Charity Is Exempt From Taxes?
The purchaser must show you a copy of its tax exemption certificate issued by the Maryland Comptroller’s office. Write down the exemption number and its expiration date on your copy of the invoice. Exemption certificates from non-Maryland jurisdictions are not acceptable.
EMPLOYER WITHHOLDING FAQs
What Are The Due Dates For Employer Withholding Reports In Maryland?
The due dates depend on the amount of tax withheld. You might have to file your MW506 form on an accelerated, monthly, quarterly, seasonal, or annual basis.
How Do I Get Coupons For My Withholding Tax Payments?
Contact the Maryland Taxpayer Service Division.
Can I Pay My Business Taxes Online?
Yes, you can pay your Maryland business taxes on the Maryland Comptroller’s website.
BUSINESS LICENSES FAQs
What Types Of Businesses In Maryland Require A License?
Many businesses in Maryland need one or more licenses. Your local Clerk of Court issues these licenses. Contact your local Clerk of Court.
Do I Have To Pay Any Delinquencies Of The Previous Owner Of The Business I Now Own?
No.
ALCOHOL LICENSING AND TAXES FAQs
How Much Is The Sales And Use Tax For Sales Of Alcoholic Beverages In Maryland?
The rate for alcoholic beverages is 9 percent, unlike other items, which get taxed at 6 percent.
How Can I Get A One-Day Liquor License?
Contact your County Liquor Board.
What Are The Regulations For “Happy Hour” Promotions?
These rules vary by county. Contact your County Liquor Board.
What Kinds Of Items Get Taxed At The 9% Tax Rate?
The definition of sales of alcoholic beverages in Maryland for tax purposes includes beer, wine, distilled spirits, cocktails, and any beverage containing alcohol. Frozen cocktails, coffee drinks, and gelatin shots get taxed at the 9 percent rate if they contain alcohol.
Does Every Item That Contains Any Alcohol Get Taxed At The 9% Tax Rate?
No. Cooking wine; cooking sherry; vanilla, rum, and similar extracts; and other products that are not intended for beverage purposes do not fall within the 9 percent tax rate.
EFT FAQs
What Does EFT Mean?
EFT is short for Electronic Funds Transfer. Maryland allows you to pay your corporate tax, state withholding tax, and motor fuel tax payments by EFT.
Can I File My EFT Application Online?
No. You must mail or fax your EFT application to the EFT Program in Maryland.
Business Reporting FAQs
Do I Have To File A Business Information Report?
The reporting requirement that Maryland required businesses to file starting in 2007 no longer exists for tax years of 2011 and later.
This brief overview covers only a few of the many topics that people doing business in Maryland need to know. For expert advice on starting and operating a business in Maryland, talk to Steve Thienel today.
