Creating your own business in Maryland is an exciting opportunity. You get to be your own boss, make your own hours, and share your unique product or service with the world. While those benefits are enticing, actually setting the business up can seem overwhelming.
It’s important to create your business with a strong foundation now so that you don’t have to spend time and money correcting issues in the future.
Plus, there are several methods to set up your business in Maryland – so what’s the best way? In this article, we’ll take you through each step necessary to start your business. By using the following guide, you can be sure you create the business of your dreams the right way the first time around.
10 Steps to Start a Business in Maryland
1. Decide on a Business Structure
Your business structure can make you appear more credible to lenders and customers, but it can also determine your level of personal risk. Each business structure has different requirements, so it’s important to decide how you’ll operate before getting started.
There are a few main business structures you can choose from:
- Sole Proprietorship: The sole proprietorship is the most informal business structure and the easiest to start with. If you don’t have employees, you won’t need to register your sole proprietorship in Maryland. However, if someone sues your company, you’re financially liable and could lose your personal assets.
- LLC (Limited Liability Company): An LLC is simple to set up and provides you with protection for your personal assets. LLCs are fairly easy to manage and qualify for certain tax breaks.
- Corporation: If you form a corporation, it’s seen as a separate legal entity. Though there are more regulations to deal with compared to LLCs, investors tend to take corporations more seriously. Corporations also get even better tax breaks.
- Partnership: A partnership is the easiest way to set up a business that you and one or more other people own together. Partnerships offer some protection of your personal assets.
2. Create Your Business Plan
Any official business needs a business plan. This is a document in which you discuss your product, procedures, and market research. You’ll use it to guide your decisions as you grow your business and lenders will ask to see it if you apply for a loan.
Your business plan should include:
- Business name
- Business structure
- Executive summary
- Company overview
- Analysis of your competition
- Service and product overview
- Customer research
- Marketing strategy
- Projected earnings
- Startup costs
3. Register in Maryland
You can register your business online via Maryland’s State Department of Assessments and Taxation (SDAT) website. This process makes your business a legal entity. After you submit your information, the department will review your application and then provide approval, as well as an SDAT ID number that identifies your business in Maryland.
Even if you’re forming a sole proprietorship or general partnership, you’ll need an SDAT Identification Number to open business accounts. You can also get an ID number using the Maryland Business Express website. The cost to register depends on what type of business you’re starting, but you can expect to pay $100 to $170.
In Maryland, you’ll also need to choose a resident agent. This is a person or business entity that lives in Maryland and can accept legal and tax documents on behalf of the business.
Finally, you most likely need to get a federal Employer Identification Number (EIN) from the IRS. You don’t necessarily need an EIN if you are a sole proprietor without employees, but it could still be a good idea. Banks will ask for an EIN when you sign up for a business bank account, and you’ll also need it when hiring employees.
4. Get Licenses and Permits
Beyond registering your business, there are different licenses and permits you’ll need to get on a local, state, and federal level. Regulations vary depending on the type of business you own and your exact location. For example, you might need a permit to post signs or a particular license to sell physical goods in your city.
To determine exactly what you need, you can check out the below resources:
- Local: Email or call your local county clerk.
- State: Use the Maryland OneStop Portal.
- Federal: Read the U.S. Small Business Administration guide.
5. Fund Your Business
If you’re selling a physical product or want to open a brick-and-mortar location, you’ll likely need to get business funding. While you can take a do-it-yourself approach and pay for everything with your own savings or job income, there are other options.
A small business loan from a bank or lender can provide a lump sum of cash. Applying is fairly easy and you can usually complete the process online. Be sure to compare options from different lenders and get the lowest interest rate possible, as repaying a loan with a high rate can be tough on cash flow for a new business.
You can also choose to fund your business by using a business credit card. Credit cards tend to have higher interest rates than loans, but are easier to obtain and could be ideal for smaller purchases. Be sure to look for deals, like low or no APR introductory rates.
It’s also worthwhile to check out small business grants. The government and private organizations offer grants, which supply you with a lump sum of money that you don’t have to pay back.
6. Open Financial Accounts
It’s important to keep your personal and business assets separate for accounting purposes. You can open a business bank account much the same way you open a personal one. The process is entirely online, though you can go into a physical bank branch for assistance.
Either way, your bank will ask for your business name, structure, EIN or Social Security number, and estimated revenue. You may also choose to open a business credit card for smaller purchases, in which case you’ll need the same information.
This is a good time to sign up for accounting software, as well. Quickbooks is popular, especially among new businesses, but there are lots of options to choose from. You can even create your own spreadsheet to track expenses and income. What matters most is that you track your finances from the beginning to make taxes easier later on.
7. Insure Your Business
Business insurance isn’t necessarily a requirement in Maryland depending on your structure, but it could be a good choice regardless. Insurance can cover the costs associated with any legal troubles if someone sues your business.
There are a few options for business insurance. A general liability insurance policy is standard and works for most businesses. If you offer professional advice, like accounting, you may be better off with a professional liability policy. To find out what’s right for you, speak with an insurance agent who can provide customized guidance and quotes.
If you plan on having employees, Maryland requires that you have worker’s compensation insurance. This holds true even if your employees are just corporate officers.
8. Set Up a Payment System
Before you can make a sale, you need to find a way for your customers or clients to pay you. Figuring out a payment system might seem complex, but Pay.com makes it simple. Pay.com provides you with everything you need to get started – a full payment infrastructure. This includes a merchant account, payment processing services, and a payment gateway.
With Pay.com, you can serve customers online or over the phone. You can add payment methods to your website or manually enter your client’s payment information. You can also send Pay Links, which take the customer to a personalized checkout page. You can send Pay Links via email or text.
Plus, Pay.com lets you accept a wide variety of payment methods. That means your customer can pay you however they prefer, so you’ll never miss a sale. Additionally, the Pay Dashboard is also super easy to use and provides you with additional tools, like tracking payment status and analytics.
9. Set Up a Website
Whether you’re selling online or not, having a website can create credibility for your business. It’s a place for you to show off your product or service, talk about yourself, and build trust with your customers. Plus, most customers research a business online before making a purchase, so having some sort of presence is important for sales.
Websites are fairly easy to create nowadays, as you can use a website builder without any coding knowledge. These websites allow you to create a professional-looking website in a matter of hours.
There are plenty of options, from Squarespace to Wix, each with varying levels of customizability. Choose the one that’s best suited for your business.
10. Find Customers
With your business up and running, all that’s left is to find customers. You likely outlined a marketing strategy in your business plan, which you should now implement. If you’re struggling to get those first customers, though, there are a few things you can do.
First, join networking groups for your line of business. If you offer a service, you might find that other people who provide the same service are looking to offload clients. You can also join online or in-person groups with people who are part of your target market. For example, if you sell hiking gear, join a local hiking group and start networking.
Additionally, it can be helpful to reach out to your personal network. Talk to your friends, family, and acquaintances. Ask them if they know anyone who could benefit from your product or service. You can also offer a referral program by providing current customers with an incentive to refer a friend who would love your product or service.
The Bottom Line: Starting a Business in Maryland
Starting a new business requires a good amount of effort. Aside from creating a product or service, you’ll also need to properly register your business in Maryland and get the appropriate permits and licenses. Beyond that, having a strong business plan can help you get funding and advertising on your own website can earn you customers.
Perhaps the most important aspect of creating a business is choosing a payment system. After all, no business can survive without making money. That’s why Pay.com makes getting paid easy. Your customers can pay with their favorite payment methods, plus you can accept money online through your website and invoices. Whenever you sell your product, Pay.com is there. Click here to get started now!