Are you considering starting a small business in Maryland? If so, it is important that you select the right type of entity and comply with Maryland requirements. A Maryland business attorney and accountant can be helpful in guiding you through the necessary steps. As a broad overview, take note of the following tips.
- What type of entity should my business be? This depends on many factors. Maryland recognizes the following business entities: sole proprietorship, general partnership, corporation and limited liability corporation. Sole proprietorships and general partnerships do not require the formation of an entity. Instead, Maryland simply requires registering such businesses with the State Department of Assessments and Taxation and paying personal property assessments. In contrast, corporations and limited liability corporations must be properly registered business entities with the State Department of Assessments and Taxation. Regardless of the type of entity, certain businesses in Maryland also require a business license.
- Do I need a Business Name? The name of your business can be critical. You want a name that suits your business and can be used effectively in marketing. However, for a corporation, you must ensure that the name you select is available in Maryland and then file required forms with the State Department of Assessments and Taxation. If you have a trade name or trademark, you should also considering registering them. Trade names can be registered with the Maryland Department of Assessments and Taxation. Trademarks can be registered with the U.S. Trademark Office. An experienced Maryland business attorney can assist with this.
- How are taxes paid? All businesses must pay Federal and Maryland taxes. New businesses should obtain an "EIN," or taxpayer information number from the IRS. This is needed for withholding and tax payments. Your new business should also obtain a Maryland Combined Registration Number from the Maryland DLLR if the business will have employees.
- Are there zoning considerations? Where you locate your business is another key consideration. You must comply with local zoning laws to be sure that your business can be located in the area you select. If you plan to run your business from home, you must be sure that there are no zoning restrictions for home-based business.
- Do the founders need an agreement in writing? Absolutely yes! If there is more than one founder, you must have an agreement - called an operating agreement for an LLC and a shareholders' agreement for a corporation. This is something that many founders forego, but not having a well drafted agreement can cost many headaches, a lot of money and even spur lawsuits later on.
These are some initial things to consider when planning a new business. This list, however, is not exhaustive. There are many considerations. Selecting the right entity and carefully following Maryland's requirements can make a big difference and get your business off to a strong start.
Katherine Taylor is an experienced Maryland small business attorney who has drafted hundreds of operating and shareholder agreements. Go to www.taylorlegal.com for more information.