Montgomery County Business License: Trader's License, Home Occupation and Alcohol Rules

Starting a business in Montgomery County means dealing with three layers of paperwork. The first is state filing with the State Department of Assessments and Taxation (SDAT). The second is the county trader's license, issued through the Clerk of the Circuit Court. The third is county permits from the Department of Permitting Services (DPS) when you build out a space, put up a sign, or run a business from your home. Some industries, including alcohol sales and certain trades, add their own rules. This guide covers those layers in the order most owners hit them, so you can line up your montgomery county business license, montgomery county permits and montgomery county traders license steps before you spend money.

Informational only. This guide is general information, not legal or tax advice. County fees, forms and procedures change. Confirm every figure with the agency named before you pay or sign anything, and talk to a qualified business attorney or CPA if your structure, lease or licensing situation is complicated.

Step 1: Complete the state filing first

Montgomery County does not form businesses. You do that with SDAT's Charter Division, usually through Maryland Business Express. The filing you need depends on your entity type:

• LLC: Articles of Organization, $100 filing fee. The resident agent must have a Maryland street address (no P.O. box) and must consent before you file.
• Corporation: Articles of Incorporation, $120 filing fee.
• Trade name (DBA): Trade Name Registration, $25 standard, or $75 total with the $50 expedited fee. It is filed with SDAT, not the county.

Every LLC and corporation also files an Annual Report and Business Personal Property Return (Form 1) with SDAT each year. The fee is $300 and it is due April 15. Extension requests go to pprextensions.dat.maryland.gov. This matters for the county because the Clerk cannot issue a trader's license to a business with missing SDAT filings or unpaid personal property tax. Check your status before you go to the Clerk.

Search your name in the SDAT entity search before you file. The name must not be misleadingly similar to another LLC, corporation, trade name, limited partnership or limited liability partnership on file. An LLC name must include Limited Liability Company, L.L.C., LLC or L.C.

Step 2: Get the Sales and Use Tax License

Before the Clerk will issue a trader's license, you need a Sales and Use Tax License from the Comptroller of Maryland. It is free, and you apply through the Combined Registration Application on Maryland Business Express. Plan for this step to come before the county step, not after it.

Step 3: The Montgomery County trader's license

There is no single general state business license. Most businesses that sell goods need a trader's license from the Clerk of the Circuit Court in their county. In Montgomery County the license year runs May 1 through April 30, so a license bought in the fall expires the following April 30 and must be renewed for the next license year.

The county uses a flat $15 uniform trader's fee under Bill 40-20, which took effect in 2021. Confirm with the Clerk that the county adopted the fee as written and that it still applies before you pay. It is the one figure in this guide most worth checking on the day you apply.

Two rules trip up applicants:

• Growers and manufacturers are exempt from the trader's license. Confirm that your activity qualifies before you claim the exemption.
• Restaurants still need it. Montgomery County has no separate county restaurant license, but restaurants still need the trader's license under the county's guidance (see TB 50, and confirm the current wording with the Clerk).

Expect the Clerk to check two things before issuing: that your Comptroller sales tax license is on file, and that you do not owe personal property tax or have missing SDAT filings. Fix any of those first, because the Clerk cannot issue the license until they are resolved.

Step 4: Home occupation rules

Montgomery County sorts home businesses into three tiers. The tier depends on how much the business affects the neighborhood: customer visits, employees who come to the house, signs, deliveries, equipment and noise. Read the county's zoning definitions before you sign a lease, buy equipment or order a sign.

• No-impact home occupation: The lightest tier, for work with no visible effect on the house or street, such as a remote consultant or a home office with no clients visiting. Confirm with DPS whether any filing is required, even at this tier.
• Low-impact home occupation: Requires registration with DPS. Expect limits on visitors, employees and signage. Check the current conditions before you register.
• Major home occupation: Requires a conditional use approval. This is the most involved tier and the one to plan for if you expect regular client traffic, outside employees or equipment that goes beyond a residential use.

A home business that sells goods can still need the trader's license from Step 3, even when zoning is clear. Zoning approval and licensing are separate, and you may need both.

Step 5: DPS permits and building work

DPS is the county agency for building permits and most related approvals for construction, signage and changes to how a space is used. Start with DPS whenever your plan involves any of the following:

• Renovating or building out a commercial space before you open
• Installing or changing a business sign
• Changing the use of a building, such as converting a house or garage into a shop
• Any electrical, mechanical or structural work

Ask DPS for the list of permits your specific project triggers before you hire a contractor. Permit fees depend on the scope and value of the work, so get the current fee schedule from DPS rather than budgeting from a general number. A licensed contractor does not remove the permit requirement, and unpermitted work can delay your occupancy or the sale of the property.

Step 6: Alcohol Beverage Services rules

Montgomery County uses a control model for alcohol, administered through Alcohol Beverage Services (ABS). The county, not just the state, sets the rules and the process for selling alcohol here. A restaurant, bar or retailer that wants to sell alcohol must go through ABS licensing before it opens.

License categories, class requirements and fees are set by ABS and can change, so confirm the current category and cost with ABS directly. Do not sign a lease or spend money on a buildout that assumes alcohol sales until you have confirmed that the location and the license type work together.

Step 7: Electrical and plumbing trades

The two trades have different licensing paths, and it helps to know which one applies before you hire.

• Electricians are licensed by the state only. Montgomery County does not issue a separate county electrician license. Confirm the state license for any electrician you hire. Electrical work still goes through DPS permitting.
• Plumbing is handled by WSSC Water. Confirm WSSC's current plumbing requirements and permit process before you schedule any work.

Step 8: County taxes that affect specific businesses

Several county taxes apply only to certain business types. Know these before you set prices:

• Admissions tax: 7% on admission charges. It applies to venues, classes, events and entertainment that charge admission.
• Hotel tax: 7% on lodging. It applies to hotels and short-term rentals. Confirm how it applies to your particular type of stay.
• Business personal property tax: The county rate is $1.6855. You report taxable business personal property on the Form 1 return filed with SDAT. Confirm the current rate and assessment basis with the county, and confirm which of your assets are taxable.

For context on the state side, the state sales tax rate is 6%. Maryland's corporate income tax is a flat 8.25% of Maryland taxable income. Members of a pass-through LLC report their share on their personal Maryland returns, at a state rate of 2% to 6.5% plus a county rate of 2.25% to 3.30% for 2026. Confirm your county's personal income tax rate with the Comptroller or a CPA, since that rate applies to your own return.

Step 9: Employment rules

Montgomery County sets its own minimum wage, and the county rate is higher than the state minimum. If you hire, use the current county rate, not the state figure, when you set pay. Confirm the current county rate with the county before you post a job, because the rate changes over time.

Quick reference

Requirement	Agency	Cost	Timing or note
Articles of Organization (LLC)	SDAT	$100	Non-expedited review in the second calendar month after filing. Expedited review adds $50 and takes 7 to 14 business days.
Articles of Incorporation	SDAT	$120	Same review options as LLC filings
Trade name registration	SDAT	$25, or $75 with expedited fee	Filed with SDAT, not the county
Sales and Use Tax License	Comptroller	Free	Required before the trader's license
Trader's license	Clerk of the Circuit Court	$15 uniform fee (confirm)	License year May 1 to April 30
Annual Report and Form 1	SDAT	$300	Due April 15 each year
Home occupation	DPS and zoning	Confirm with DPS	Tier depends on impact
Alcohol license	Alcohol Beverage Services	Confirm with ABS	Confirm category and fees
Electrician	State	Confirm with the state	State license only
Plumbing	WSSC Water	Confirm with WSSC	Confirm current process

Before you file: what to confirm

1. Your SDAT entity name and status, and that your April 15 Form 1 is current.
2. Your Comptroller Sales and Use Tax License, obtained through the Combined Registration Application.
3. The current trader's license fee, and whether your activity qualifies for the grower or manufacturer exemption.
4. The home occupation tier your zoning places you in, and any DPS registration it requires.
5. Any DPS permits your buildout, sign or change of use requires.
6. The ABS license category and fees if you plan to sell alcohol.
7. The state license for any electrician you hire, and WSSC requirements for plumbing.

Official resources: Maryland Business Express, the SDAT business search, the Comptroller of Maryland, and the Montgomery County government website, where you can find the DPS, Clerk and ABS pages. For free one-on-one help with the paperwork, the Maryland Small Business Development Center Network can assist.

This guide is informational, not legal or tax advice. For complicated structures, leases or licensing questions, consult a qualified attorney or CPA.