How Can I Start a Business in Maryland?

Today, the opportunities to access a broader market provided by the Internet allows for the potential that a small to mid-sized business could take off nationally or even internationally. In addition to online opportunities, economic conditions in Maryland and throughout the United States have steadily improved leading to ample opportunity to establish traditional brick and mortar companies. Still other budding commercial ventures may take a blended multi-channel approach which may necessitate additional legal planning and compliance work.

While the government, trade and business associations, and other entities take steps to reduce the confusion and uncertainty surrounding starting a business, basic advice and FAQs on websites cannot be specifically targeted to your business. As such, it is essential to consult with a lawyer who can explain how certain concepts apply or affect your stated business goals. Working with a Baltimore business lawyer can help protect your personal assets from business debts, ensure your entity structure is appropriate for your goals, and help you understand what to expect at tax time.

Consider the Form your Entity Will take to Avoid Tax and Liability Surprises

One of the foremost considerations any business owner should make is regarding how his or her company is organized. Many businesses start off as sole proprietorships since that is the default form of organization. However, there are serious drawbacks to sole proprietorships including the fact that your personal and business assets are commingled. That is, your home and other personal assets are not protected from creditors if your company falls into debt. This fact is also true of a traditional partnership although Maryland does make a limited liability partnership (LLP) available.

In addition to the LLP, several forms of business organization can isolate your business debts so that your personal assets are safe. Consider the fact that an LLP, limited liability company (LLC), S corporation, or C corporation will all protect your personal assets subject to certain exceptions.  While these entity types will all protect your personal assets, they will produce different tax results. Depending on whether you expect to have employees and your company goals, certain forms of organization may produce a better tax and financial result.

Create or Refine a Business Plan and Remember to Perform Due Diligence on County and Local Zoning

Following consideration of the form the entity should take, the individual should begin planning the details of how his or her business will be run. Typically, this aspect is handled through the creation or refinement of a business plan. While the business plan is largely a non-legal document, there are certain related practical considerations that do involve the law. For instance, as part of the search for office, retail, or commercial space one must consider county and local zoning rules and restrictions. A failure to take these legal issues into account in the larger business process can result in signing a lease or purchasing a property where your intended use is prohibited or significantly restricted.

In addition, business owners should consider any local, state, or federal laws that would potentially impact the company’s commercial goals. For instance, companies that frequently solicit customers or present marketing offers would be wise to explore the Telephone Consumer Protect Act’s (TCPA) and other laws’ scope, applicability, prohibitions, and penalties before engaging in commercial activities.

Put your Plan into Action and Register Your Entity with the State

Once you have engaged in significant planning and due diligence workup, it becomes time to put your plan into action and form your commercial entity. Generally, this means that you will register your entity with the Maryland Department of Assessments and Taxation or another appropriate state’s authority if you chose not to register your business in Maryland. However, before you register your company you should first search to determine whether an existing business has already secured your company name. If not, you can register your entity’s with your chosen name and, if you choose, register a trade name.

Following registering your business, you should also consider whether your entity needs to register for any statewide or county level licenses or permits. Common commercial ventures requiring registration and licensing include:

• Child care centers
• Assisted living facilities
• Employment agency services
• Home improvement businesses
• Hotel and motels
• Insurance consulting
• Liquor license
• Restaurants and food service
• Home builders
• Taxi

After considering whether your business needs to secure state or local licenses, you should then consider business taxes. At this stage, the necessary accounts should be established with the state Comptroller. Furthermore, it is wise to register with the IRS to obtain a Federal Employer Identification Number (FEIN).

Work with a Business Formation Attorney in Baltimore, Maryland

If you are starting a new business or considering the legal aspects of a sole proprietorship or partnership for the first time, Baltimore business formation attorney William Heyman may be able to help. To schedule a confidential consultation with Mr. Heyman, please call the Law Firm of William S. Heyman by dialing (410) 305-9287.