This article provides three key state business startup requirements for self-employed sole proprietors and general partners who run residential house cleaning businesses. Information from the Secretary of State, the Comptroller of Maryland and selected city and county government sources were used to research this article.
Be aware that sole proprietor and general partner startup requirements in this state are always changing. Some requirements even vary from county to county. It is important that you call or visit your local county or city government to find out local requirements for residential house cleaning businesses and home-based businesses. This article is not intended to be exhaustive or a substitute for qualified legal or tax advice.
Business Name Registration
Sole proprietors and general partners who want a business name that does not include the owner(s) full names (for example, Janice Smith’s Cleaning Service or Martha Harris and Tom Graham’s Maid Service) need to find out whether the name they want to use is available in the state of Maryland. It is important to remember that the name must be different from any other name already registered with the state. Start with a business name search to avoid legal problems and customer confusion.
Then do an online search for names similar to the one you plan to use. For example, if you want to use the name, Crystal Clean Maid Service, do simple Google searches for “Crystal Clean Maid Service+Maryland” plus Crystal Clean Maid Service+your county” and “Crystal Clean Maid Service+your town or city”. Search beyond the first page of results. Go at least five pages deep into the search results to see if the name you want or similar names are being used in your state, county or city.
Sole-proprietorships and general partnerships that choose to file a DBA (“doing business as”) or Trade Name Application can do so using Maryland’s online business portal known as the Maryland Business Express.
In the state of Maryland, registering a Trade Name does not guarantee a business sole rights to the use of that name. While the state checks the name against other registered trade names filed with the state, other businesses in the state may also register the same Trade Name in other states or federally and use them in Maryland. Registered businesses are expected to legally defend their trade names.
Business License Registration
All businesses in Maryland must be licensed by the state. Register for a state business license through the Maryland Business Express.
In Maryland, a general partnership is created when two or more owners form an oral or written agreement to start a business together. It is advisable for general partners to file for a DBA (“doing business as”) or Trade Name Application. A written partnership agreement drawn up by a lawyer is important for both or all partners. Partnership agreements do not have to be filed with the state.
Sole proprietors and general partners may apply for an Employer Identification Number (EIN) from the IRS even if they do not plan to hire employees. Getting an EIN may make it easier to open a bank account and reduce your risk of identity theft. You can apply for an EIN online. In addition, some business registration forms will require a NAICS business classification number for the house cleaning industry.
Business Tax Registration
Register for business taxes and Annual Reports to the state.
Residential housecleaning services are not taxable in Maryland. House cleaning services do not have to collect and send sales taxes to the State Department of Assessments & Taxation (SDAT) or Office of the Comptroller.
Income from sole proprietorships is taxed as individual income on state tax returns. Sole proprietors and general partners are responsible for paying estimated self-employment income taxes in Maryland (on Form PVW) similar to the way self employment taxes are paid to the federal government. Get more information about estimated tax requirements by calling the Comptroller of Maryland’s Office at 1-800- 638-2937 or from Central Maryland 410-260-7980.
Maryland general partnerships that file a Federal partnership information Form 1065, may need to file state income tax Form 1120. Get more information from a CPA or qualified tax preparer to find out if your partnership must file those returns.
Note: Maryland requires partnerships to pay income tax on income earned by partners who live out of state. In addition, each individual partner must pay Maryland state tax on his or her share of the partnership’s income.
Selected Maryland City Licenses
Note: Local city and county business licenses can be filed with the Clerk of the Circuit Court in each Maryland county. Call a County Clerk of the Circuit Court.
Baltimore Business License: https://finance.baltimorecity.gov/bureaus/collections
Bowie Business License: City of Bowie Planning and Economic Development Department
15901 Excalibur Road
Bowie, MD 20716
Contact by telephone at 301-262-6200. Monday through Friday 8:30 a.m. to 5:00 p.m.
Frederick Business License: https://www.courts.state.md.us/clerks/frederick/business
Gaithersburg Business License: https://www.montgomerycountymd.gov/Biz-Resources/licenses-permits.html
Hagerstown Business License: https://www.hagerstownmd.org/582/Licenses
Rockville Business License: https://montgomerycountymd.gov/cct/business-license.html