If you’re moving your practice from a different state, there’s an eighth step you’ll need to follow: Learn how to pay taxes in multiple states.
This article covers the bare essentials needed to get your therapy practice up and running in the Little America.
1. Local Zoning Laws and Regulations in Maryland
Maryland boasts 23 counties and contains 157 municipalities consisting of cities, towns, or villages. Before you settle on a location for your therapy practice—even if that location is your own home—you must make sure the local zoning allows you to operate there.
To apply for a zoning variance in Maryland, you need to follow these steps:
- Contact the Office of Planning and Zoning of the county where the property is located to apply for a zoning variance.
- Submit a variance application to the Office of Administrative Hearings.
- Pay the filing fee.
- Attend a public hearing scheduled by the Office of Administrative Hearings to present your case. The Office of Administrative Hearings will decide whether to grant or deny the request based on the testimony received
2. Business Name Search in Maryland
In Maryland, business names are registered and managed at the state level. To register a business name in Maryland, you need to register your business with the state by filing the formation documents with the Maryland Department of Assessments and Taxation. You can form an LLC or corporation, or file for a “doing business as” name with your state’s business division. A state-level name search isn’t required for informal business structures like sole proprietorships or general partnerships in Maryland. However, if you decide to register a trade name or DBA name, you’ll need to search the database to see if your desired name is unique and available.
To get a DBA for your therapy practice in Maryland, you need to register a trade name with the Charter Division of Maryland’s Department of Assessments and Taxation. Before applying for a trade name, you must make sure that the name is available by searching Maryland Department of Assessments and Taxation records. Once you have confirmed the availability of the name, you can file the application to register a trade name with the Charter Division of Maryland’s Department of Assessments and Taxation. The registration of a trade name is valid for five years from the date of registration. The cost to register a DBA in Maryland is $25.00. There is an additional fee of $50.00 if you’d like expedited service.
3. Business Structure in Maryland
To choose a business structure recognized by the state of Hawaii, you can consider the following options: Sole Proprietorship/Partnership, C-Corporation, S-Corporation, and Limited Liability Company (LLC).
A sole proprietorship/partnership is the simplest structure, but it creates no separation from its owner. A C-Corporation is subject to stricter oversight and greater government regulations, and it should always employ the services of qualified corporate attorneys. An S-Corporation is similar to a C-Corporation, but it reduces the tax burden. An LLC is a flexible business structure that you can easily shift into a sole proprietorship if required.
When choosing a business structure, you should take into account your vision regarding the size and nature of your business, the level of control you wish to have, the level of structure you are willing to deal with, the business’s vulnerability to lawsuits, tax implications, expected profit (or loss) of the business, and whether or not you need to reinvest earnings into the business.
4. Register Your Business in Maryland
To register a therapy practice in Maryland, you need to follow these steps:
- Choose the area of counseling you wish to practice.
- Obtain the required education and training in counseling or a related field from an accredited educational institution approved by the Board.
- Choose a unique name for your therapy practice and conduct a Maryland DBA name search to ensure that the name is not taken by another registered Maryland business.
- Register your therapy practice with the Maryland Department of Assessments & Taxation to establish the legal entity.
- Contact the Health Department at (410) 996-5550 for inspection and certification if you are opening a therapy practice that serves food.
- Ensure that your therapy practice is legal and that you have a place to practice.
The filing fee for incorporating in Maryland is $120. There is also an optional $5 returned mail fee and an optional $50 expedited service fee. The expedite fee is required to file online, by fax, or in-person. However, according to if Articles of Incorporation are filed under certain sections, an additional $50.00 will be charged.
Maryland does not have a franchise tax. However, LLCs in Maryland are subject to an annual filing requirement and must pay an annual tax of 8.25% of net income allocable to the state. If the LLC is taxed as a corporation, it will also need to pay this tax.
Additionally, pass-through entities must pay a tax consisting of 5.75%, plus a special nonresident tax of 2.25% (for a total of 8.0%), of the nonresident distributive share of income derived from or connected with sources within Maryland.
5. Business Licenses & Permits in Maryland
The business licenses and permits required for a therapy practice in Maryland depend on the type of therapy practice. Here are some general requirements:
- Clinical art therapy license or graduate art therapy license for art therapists.
- Certification to operate in Maryland for community mental health programs and community substance use programs.
- Marriage and family therapist license for marriage and family therapists.
- Mental health counselor license for mental health counselors.
- Business license for physical therapy clinics.
The cost of licenses and permits varies depending on the type of therapy practice and the location in Maryland. For example, the cost of a clinical art therapy license or a graduate art therapy license is $200. The cost of becoming accredited for community mental health programs and community substance use programs varies based on the number of provider locations, number of individuals served, and complexity of the program.
The cost of a marriage and family therapist license is $200 for the application fee and $200 for the initial license fee. The cost of a mental health counselor license is $200 for the application fee and $200 for the initial license fee. The cost of a business license for physical therapy clinics is about $39 for most states.
6. Business Insurance in Maryland
The types of business insurance that are highly recommended for therapy practices operating in Maryland include:
Liability insurance: This policy provides financial protection for third-party bodily injuries and property damage, along with advertising injuries. Therapists and counselors pay a median premium of less than $30 per month, or $350 annually, for general liability insurance.
Medical malpractice insurance: This type of insurance is reserved for doctors practicing advanced and intensive surgeries that are prone to mistakes. However, liability insurance is still a requirement for therapists in Maryland.
Business owner’s policy: This policy combines general liability insurance with commercial property insurance, typically at a discounted rate. The median premium of a business owner’s policy for occupational therapists, psychologists, and other therapy and counseling professionals is about $40 per month, or $500 per year.
Workers’ compensation insurance: This type of insurance protects a business and its owner(s) from claims by employees who suffer a work-related injury, illness, or disease. Maryland requires businesses to carry workers’ compensation insurance for their employees.
The cost of business insurance for a therapy practice in Maryland varies depending on the type of insurance and the level of coverage. For example, therapists and counselors pay a median premium of less than $30 per month, or $350 annually, for general liability insurance.
7. Business Taxes in Maryland
The tax forms required for filing taxes as a therapy practice in Maryland depend on the business structure you are using. If you are a pass-through entity, you must file the applicable Maryland income tax return and pay any tax due on the member’s distributable or pro-rata share of the pass-through entity’s items for the tax year.
If you are a C Corporation, you must file a separate tax return. If you are a Sole Proprietorship, S Corporation, or Partnership, you must file the appropriate tax forms based on your business income and expenses. It is recommended to consult with a tax professional or attorney for additional guidance on which tax forms to file as a therapy practice business in Maryland.