The Washington DC metropolitan area is known as one of the most affluent and economically resilient areas in the United States, and accordingly, presents many opportunities for construction contractors wishing to establish or expand operations in the area. The region is comprised of three main territories: Washington DC, Maryland, and northern Virginia (often referred to as the DMV). Due to the geographical vicinity of the three territories, it is common that a contractor operating in the DMV area will find opportunities to perform work in one of the territories outside that which their business is headquartered.
When a contractor considers starting a business in the DMV area, or whether to pursue opportunities across state lines, it is important to consider the licensing requirements in each territory and to make sure the business is in compliance with the respective laws. Failure to comply with applicable licensing requirements can have significant consequences. The following chart provides a quick snapshot of the licensure requirements for each main territory in the DMV area:
| District of Columbia | Maryland | Virginia | |
| Types of Licenses | General Contractor/Construction Manager License Other specialty licenses may be required depending on the type of business. |
Construction Contractors License Maryland requires businesses to have a State of Maryland Business License to work within the state. There is no “general” business license; Contractors will need to obtain a specialty license in their field. |
Contractor License There are Class A, B, and C contractor licenses. You must determine which class is most suitable for your business, along with the classification/specialty, to get the correct license. |
| How to Apply | Contact the Department of Regulatory Affairs Corporations Division. See website below: https://dcra.dc.gov/page/registration-and-licensing-services-businesses |
Contact the Clerks of the Circuit Court for your local jurisdiction. See website below to find your circuit: https://mdcourts.gov/circuit |
Contact the County or City Clerk for your local jurisdiction. See website below: https://www.dpor.virginia.gov/Boards/Contractors/ |
| License Requirements | To obtain a business license you must first register the following with the Department of Consumer and Regulatory Affairs Corporations Division: – DC Business Registration (form depends on type of entity) Businesses must also register the following with the DC Office of Tax and Revenue prior to commencing business in DC: – FR-500 DC Combined Tax Registration |
To obtain a business license you must first register the following with the Maryland Department of Assessments and Taxation: – Maryland Business Registration – Maryland Sales and Use Tax Registration |
To obtain a business license, you must first register the following with the Virginia Department of Taxation: – Virginia Business Registration (Form R-1, Business Registration) |
| License Fees and Associated Costs | DC fees vary per document and processing options. Check the following website for what fees apply to your entity: https://dcra.dc.gov/node/559572 |
MD fees vary per document and processing options. Check the following website for what fees apply to your entity: https://egov.maryland.gov/BusinessExpress/Payment/FeesSchedule |
Class A – $385 fee Class B – $370 fee Class C – $235 fee |
| Other Licenses Required | Certain specialty contractors may be required to obtain a special license to work in DC: – Home Improvement Contractors – Electricians – Plumbers – Refrigeration – HVAC Contractors – Asbestos Abatement https://dcra.dc.gov/node/1411971 |
Contractors are required to obtain a specialty license to work in the state of Maryland: – Home Improvement Contractors – Electricians – Plumbers – HVAC Contractors Tests/exams may be required. See the website below for more detail: http://www.dllr.maryland.gov/license/hms/ |
Tradesmen who engage in the following are required to be state certified in their trade(s): – Electrical – Plumbing – Heating, Ventilation, and Air Conditioning – Gas Fitting – Water Well Construction – Elevator Mechanics – Backflow Preventions – Building Energy Analysis |
| Other Information | Failure to register a business appropriately in DC may result in fines of $2,000 – $16,000, in addition to other fees, penalties, and charges during the period of noncompliance. | Contractors interested in doing business with the State of Maryland may register with the Maryland Department of General Services online through eMaryland Marketplace. This provides access to state procurement information as well as electronic bid solicitation, submission, and results. https://procurement.maryland.gov/ |
While you are able to file electronically for your business registration, initial registration for your business license cannot be filed or paid electronically. See website below for more details on contractor licenses: http://www.dpor.virginia.gov/Boards/Contractors/ |
| Forms | Entity Registration: https://dcra.dc.gov/page/corporations Tax Registration: https://mytax.dc.gov/_/#1 |
Entity Registration: https://dat.maryland.gov/Pages/sdatforms.aspx |
Business Registration: https://www.tax.virginia.gov/register-business-virginia License Application: https://www.dpor.virginia.gov/Boards/Contractors |
It is important that contractors operating in the DMV area qualify to do business in any applicable foreign states in addition to the meeting the requirements in their home state. This will usually only apply to corporations or LLCs, as individuals are not required to register their presence since they do not have a separate legal identity.
Consult with a trusted advisor, such as an attorney and/or CPA, when establishing a contracting business or expanding into new territories. Expert advice can be invaluable to getting your next business venture started on the right foot and preventing any future disruptions to operations from governing authorities.
Written by:
Brandon Davis – Tax Staff
Brandon Davis joined Thompson Greenspon as a tax staff accountant in August of 2018. He is responsible for providing clients with tax preparation and planning throughout the year at both the business and individual level to help them prepare for the future. Brandon graduated from Shippensburg University where he received a Bachelor’s degree in Accounting and Marketing. He is currently working on becoming a Certified Public Accountant while also starting to develop a specialization in the construction industry in regards to tax. He is a member of the American Institute of Certified Public Accountants and the Virginia Society of Certified Public Accountants.
Ryan Gum, CPA – Audit Supervisor
Ryan Gum joined Thompson Greenspon as a staff auditor in the fall of 2016. He is responsible for providing accounting, auditing, and tax services to clients in the construction, nonprofit, small business, and employee benefit plan industries. Ryan graduated from West Virginia University with a Bachelor of Science with a major in Accounting and a minor in Economics in 2015 and later earned his Master of Professional Accountancy in 2016. Ryan is currently a member of the American Institute of Certified Public Accountants and the Virginia Society of Certified Public Accountants.
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