Maryland’s innovative approach to infrastructure, particularly their modern power grid and broadband access, has greatly boosted the state’s economy. This is the perfect moment for aspiring business owners to get their hands on a slice of the expanding pie.
Maryland is an excellent place to start a new business. Its proximity to the busy world of Washington, DC provides small businesses in Maryland with a unique chance to attract potential clients.
But what does it take to run a business in the Old Line State? The following short list of small business statistics will help entrepreneurs appreciate the state’s small business landscape.
Quick Maryland Small Business Statistics for Entrepreneurs
- 99.5% of all businesses in Maryland are small businesses.
- Small businesses employ 49.3% of all employees in the state.
- Military veterans make up 6.1% of workers and own 6.9% of small businesses.
- Racial minorities represent 42.5% of all small business employees.
- Maryland has nearly 42 minority business owners for every 100,000 residents and 17.5 women-owned businesses per 100,000 residents.
- In the 2021 CNBC “Top States for Business” report, Maryland 12th out of 50 states.
- The per capita disposable income in Maryland is $63,354.
- In 2019, small firms in Maryland exported goods worth $3.7 billion.
- Between March 2019 and March 2020, 15,064 Maryland businesses opened and 16,980 closed, resulting in a net loss of 1,916 jobs.
- During the same period, employment expanded at 33,693 and contracted at 35,397.
Maryland Small Business Statistics
1. What is considered a small business in Maryland?
Maryland follows the standard definition put forth by the US Small Business Administration, which varies on an industry-by-industry basis, but generally specifies a small business as having fewer than 500 employees for manufacturing businesses and less than $7.5 million in annual receipts for most non-manufacturing businesses.
There are currently 618,214 small businesses in Maryland. That’s 99.5% of all private enterprises in the state.
2. How many people are employed by small businesses in Maryland?
Approximately 1.2 million Marylanders work for small businesses. That’s 49.3% of all employees in the state. Maryland’s minimum wage has steadily increased in recent years. In Maryland, the current minimum wage is $11.75 per hour for businesses with 15 or more employees and $11.60 for small businesses with 14 or fewer employees.
However, tipped employees who make more than $30 per month in tips must be paid at least $3.63 per hour, and this sum, plus tips, must match the state minimum wage. Also, employees of recreational establishments must be paid at least 85% of the state minimum wage or $7.25, whichever is greater.
Workers under the age of 20 must earn at least 85% of the Maryland minimum wage for their first six months on the job.
3. Maryland small business statistics by industry
The professional, scientific, and technical services sectors have the highest number of small businesses operating in it, compared with other industries in the state, totaling 99,728. Out of this number, 81,633 are nonemployer businesses, 16,140 have 1–19 employees, and 1,955 firms have 20–499 employees.
The mining, quarrying, and oil and gas extraction industries collectively account for the lowest investment from small business owners, with only 123 firms currently operating within these industries.
4. Maryland small business ownership by ethnicity
Maryland’s population currently stands at 6,165,129. White/Caucasian Americans are the largest ethnic group representing 58.5% of the population. Black/African Americans are the second largest ethnic group at 31.1%. They are followed by Hispanic/Latino Americans (10.6%), Asian Americans (6.7%), American Indians and Alaska Natives (0.6%), and Native Hawaiian and Other Pacific Islanders (0.1%).
The figures below show how small business ownership is distributed among these groups:
- White/Caucasian — 374,462
- Black/African American — 150,750
- Asian — 56,375
- Hispanic/Latino — 46,091
- American Indian and Alaska Native — 1,363
- Native Hawaiian and Other Pacific Islander — 350
5. Maryland small business ownership by gender
Men own 325,860 small businesses in Maryland. Around 262,000 of these are nonemployer businesses, and the remaining 63,860 have employees on payroll.
Women own 237,668 small businesses, and approximately 215,000 are nonemployer businesses, while 22,668 have employees.
There are, however, 21,137, small firms in Maryland owned by both men and women.
6. How COVID-19 affected businesses in Maryland
Maryland has the 29th highest economic exposure to COVID-19 (of all states in the US), based on the percentage of employees working in industries with a high or medium-high degree of exposure to COVID-19.
In Maryland, 48% of all employees, or 1,522,780 people, work in industries with a high or medium-high degree of economic exposure to COVID-19. Also, 33% of all employees, or 1,051,886 people, work in industries with a low or medium-low degree of economic exposure to COVID-19.
7. Small business financing in Maryland
The Community Reinvestment Act is a federal statute that encourages commercial banks and savings institutions to assist borrowers in all segments of their communities, including low- and moderate-income areas.
Large banks in the US are required under the Community Reinvestment Act to disclose any new loans to small businesses. In 2019, reporting banks gave out $1.4 billion in loans to Maryland firms with less than $1 million in revenue. Total reported new financing to firms with loans of $100,000 or less was $1.7 billion, while total reported new lending to businesses with loans of $1 million or less was $4.2 billion.
8. Maryland small business taxes
The majority of small businesses in Maryland are regular LLCs (limited liability companies), which, according to the taxman, are pass-through firms that don’t have to pay federal income tax.
Maryland is distinct from most states in that it mandates LLCs to pay income tax on revenue allocated to nonresident members. Income allocable to nonresident members who are individuals is taxed at 7.5%, whereas income allocable to nonresident members that are entities is taxed at 8.25%. Furthermore, each individual LLC member is required to pay state tax on his or her portion of the company’s profits.
If you own or manage a business in Maryland, you must keep your company in good standing and stay up to date on all tax responsibilities. Failure to comply with state tax laws might have disastrous effects for your company. Maryland has the authority to levy fines and penalties, confiscate your business and/or personal assets, and even bar you from doing business in the state.
To mitigate any tax compliance issues, business owners in Maryland are advised to hire a reputable registered agent service that will assist them with their tax filing process and even send constant reminders so that they don’t miss any important filing dates.
Read my review of the best registered agents in Maryland to find out which agent will work well for your business.
9. Maryland small business export statistics
The US Census Bureau reports that, in 2019, a total of 6,491 identified enterprises exported items totaling $11.3 billion from Maryland. Small businesses accounted for 5,652 of those exporters, or 87.1%. Small businesses shipped items totaling $3.7 billion, accounting for 32.6% of all acknowledged business exports.
The Final Word
Maryland has a lot to offer entrepreneurs, and many of them continue to flock to the state because of its excellent business climate and ever-growing state economy.
With its proximity to Washington, D.C. and other large consumer markets, a local approach to community-based business, a large and skilled labor market, and an excellent education system, it’s no wonder that so many small business owners choose Maryland as their state of business.
- US Small Business Administration
- Biz Journals
- Maryland Department of Commerce
- Baltimore Sun
- CNBC – Top States for Business
- Business News Daily
- Best Places – Cost of living in Maryland
- US Census Bureau
- Ibis World