Starting Business In Maryland:
Starting your own Maryland business can be difficult. To pursue your entrepreneurial dreams successfully, you will need adequate funding, time, personal support, and professional support. Below are the steps on how to start a business in maryland.
Step 1: Select a Business Concept
Take the time to brainstorm and research business ideas. Consider your own interests, skills, resources, availability, and the reasons why you want to start a business at this stage. You should also assess the likelihood of success based on your community’s interests and whether your business idea will fill an unmet need.
After you’ve decided on an idea, consider creating a business plan to determine your chances of success. When you create a plan, you will have a better understanding of the startup costs, your competition, and money-making strategies. Before providing financial assistance, investors and lenders will want to review your business plan, and you can be prepared by drafting one before you begin soliciting funding.
Step 2: Choose a Legal Structure
The following are the most common legal structures for a small business:
- limited liability company (LLC), and
- sole proprietorship
Some of these structures have variants, such as limited partnerships and S corporations. You should think about which business entity structure provides the type of liability protection you want as well as the best tax, financing, and financial benefits for you and your company.
Step 3: Select a Business Name
For LLCs and corporations, you must ensure that your name is distinct from the names of other business entities on file with Maryland. By searching the Maryland Business Express business entity database, names can be checked for availability. Certain name requirements apply to LLCs and corporations as well (like including a word such as “LLC” for LLCs or “Company” for corporations).
In Maryland, sole proprietorships and partnerships that use a business name that differs from the surnames of the business owner (for a sole proprietorship) or individual partners must file an Application for Trade Name with the Maryland Department of Assessments and Taxation (DAT) (for a partnership). Trade names expire after five years and must be renewed within six months.
If you intend to conduct business online, you should consider registering your company name as a domain name. For more information, see Choose and Register a Domain Name. Furthermore, to avoid trademark infringement issues, you should conduct a federal and state trademark search to ensure that the name you want to use is not the same as or too similar to a name that is already in use.
Perform Market Research
Have you studied your market? Thorough market research is essential before writing your business plan. This can include conducting surveys, researching search engine optimization (SEO), or holding focus groups. Market research is intended to help you better understand your target market and competitors so that you can create an effective business plan.
Step 4: Create a Maryland Business Entity
- Sole proprietorship: To form a sole proprietorship in Maryland, no organizational documents must be filed with the state.
- Partnership: In Maryland, you do not need to file any organizational documents with the state to form a general partnership. Despite the fact that it is not legally required, all partnerships should have a written partnership agreement. If there is ever a disagreement among the partners, the partnership agreement can be very useful. You must file a Certificate of Limited Liability Partnership with the Maryland DAT to form a limited liability partnership (commonly used by professionals)..
- LLC :To form an LLC in Maryland, you must first file a certificate of formation with the Maryland DAT. You must also appoint a resident agent in Maryland for process service. Although it is not required by law, you should draft an operating agreement to lay out the fundamentals of how your LLC will operate. The operating agreement has not been registered with the state.
- Corporations: In order to form a corporation in Maryland, you must file articles of incorporation with the Maryland Department of Administration. You must also appoint a resident agent in Maryland for process service. Although not legally required, you should draft bylaws to establish the internal operating rules of your corporation. The state does not require that bylaws be filed. S Corporations must also file IRS Form 2553, Small Business Corporation Election, with the IRS.
Step 5: Apply for Licenses and Permits
Registration for Taxes. If you intend to sell goods in Maryland, you must apply for a sales and use tax license with the Maryland Comptroller. If you intend to employ people in Maryland, you must register with the Maryland Comptroller for employer withholding. You can use the online combined registration for both types of registration.
If you have employees or if your business is taxed separately from you, you must obtain a federal Employer Identification Number (EIN) from the IRS. Even if an EIN is not required, there are often business reasons to obtain one. Banks frequently require an EIN to open an account in the name of the business, and other companies with whom you do business may require an EIN to process payments. An EIN can be obtained by filling out an online application on the IRS website. There are no filing costs.
Regulatory licenses and permits. These cover areas such as:
- health and safety
- the environment
- building and construction; and
- specific industries or services.
For regulatory licenses and permits issued by the state, register through Maryland Business Express. For information about local licenses and permits, check the websites for any cities or counties where you will do business.
Professional and occupational licenses. These cover people who work in various fields. You can find a list of state-issued professional and occupational licenses at the Division of Occupational and Professional Licensing.
Step 6: Pick a Business Location and Check Zoning Regulations
You must choose a location for your business and research local zoning regulations. Before committing to a location, calculate the costs of running your business in that location, including rent and utilities. Return to your business plan to determine whether you can afford your desired location during the early stages of your company. Furthermore, ensure that the location is zoned for your type of business. Review your local ordinances and contact your town’s zoning or planning department to find zoning regulations for your town or city.
Running your business from your home is an alternative to opening a new location. Check your local zoning laws again if you decide to run a home-based business. You should also check your lease (if you rent your home) and homeowners association rules (if applicable), as both may prohibit some or all home businesses.
Step 7: Review Your Tax Registration and Reporting Requirements
– Single-person businesses. Pay business income taxes as part of their personal state income tax return.
– On their personal tax returns, partners pay state taxes on partnership income. In addition, your partnership, like every other Maryland pass-through entity, must file Form 510, the pass-through entity tax return.
– LLCs: On their personal tax returns, members pay state taxes on their share of LLC income. Furthermore, the LLC must file Form 510, the Maryland pass-through entity tax return, as well as an annual report.
– Corporations: Shareholders must pay state taxes on the corporation’s dividends. A salaried shareholder-employee must also pay state income tax on his or her personal state tax return. Furthermore, the corporation is subject to Maryland corporation taxes. Finally, corporations are required to file an annual report (also known in Maryland as a personal property return).
Step 8: Obtain Insurance
Business insurance can shield your company and personal assets from the consequences of unexpected disasters such as personal injury lawsuits and natural disasters. An insurance agent can assist you in researching the various coverage options for your company, which may include general liability insurance to protect you against bodily injury or property damage claims, or cyber liability insurance to cover litigation and settlement fees following a data security breach.
Step 9: Open a Business Bank Account
Whatever type of business you start, you should consider opening a separate business account to keep track of your income and expenses. To maintain liability protection, you must open a separate bank account if you own a business with limited liability, such as an LLC or a corporation.
Establish Your Brand
A strong brand is the foundation of the most successful and memorable businesses. Consider the following when developing your brand:
- what your company stands for
- what your core values are
- what will gain the trust of the customer