July 18, 2017

DO YOU WANT TO FORM A MARYLAND SMALL BUSINESS?

            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.

            1. 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.

            2. 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.

            3. 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.

            4.  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.

            5. 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. 

July 11, 2017

IS RUNNING A HOME-BASED BUSINESS FOR ME?

                Running any type of business is challenging, but running a home-based business has its own set of challenges. If you are considering running a home based business you should thoroughly weigh the pros and cons for your type of business and your personal needs. You need a fit for both to be successful and happy.

                A wide variety of small businesses are home based. Examples include, daycare, home improvement, retail, cleaning services, bed and breakfasts, catering, baking and some franchises. Technology and the ability to run and stay connected to a business remotely, have made home based businesses much more common and acceptable today. According to the U.S. Small Business Administration (quoting Forbes magazine), more than 52% of all small businesses in the U.S. are home based. https://www.sba.gov/blogs/5-reasons-start-home-based-internet-business.

                In many ways, thoroughly evaluating two factors before you start a home based business are the most important:

                1. Does my type of business lend itself to being home based?

                2. Does my personality have the characteristics for a successful home based business?

                Oftentimes, the first thing people jump to is the legal requirements for running a home based business without really thinking through what it takes and whether it is the best scenario for you and your business. This is a big decision which should not be based solely on saving money or not paying rent.

                On the type of business, ask yourself if it's feasible to run your business from home? What kind of equipment or tools will you need? How much space will you need? Do you have a separate and dedicated office, computer, and phone? Do you have a business address? Does it matter? Will you need to meet with clients or customers? Will they be deterred from hiring you if you work from home? What zoning requirements are there for your type of business? Will you have room for employees and growth? What about parking? What about homeowner's nearby or homeowner association covenants? What about traffic flow? What about supplies and technology you will need?

                On whether a home based business suits your personality ask yourself if you would like not being in an office or around others regularly? Are you disciplined enough to work at home and ignore household chores and other distractions? Will you put in the required hours? Are you good at or do you have the money to hire someone to help you with taxes, payroll, necessary filings, accounting, marketing, equipment repair and maintenance, and every other aspect to keep your business afloat and flourishing? Can you really treat your home office like an office? Are you good at time Management? Do you have the discipline to treat this like your real job, which it is, without being tapped by friends and family during the workday to run errands or do non-work related things?

                Like any other type of business, there are people who love working from home and others who hate it. This is a personal decision. To help you, here are some links to websites and articles discussing this topic:



                If you decide that a home based business is right for you, you must still form the right type of business, get any necessary licenses, and comply with tax laws and other laws and regulations. http://www.taylorlegal.com for more information about Katherine Taylor, a Maryland business attorney.