Small businesses are central to its economy and Maryland is home to more than 618,000 of them. There’s a lot of support and celebration for small businesses in Maryland – but what about the barebones details of what you need to consider when starting yours?
Get the right business idea
The first step when starting your journey as an entrepreneur is to get the right idea. Try brainstorming – the business idea must fill a niche within the landscape of the state, so try to consider what people may need. Maryland is an educational hub so there are a lot of scientific and tech startups in the county, but there are always cultural and societal needs to tap into as well.
Visualize & Plan your business
A good business plan is the first step to any successful entrepreneurial endeavor. It’ll help you keep on track, be a reference when it comes to legalities and can be used to secure funding from investors later on.
There’s no single way to write a business plan but here are some important aspects to consider when you’re working on yours:
- Business description: A description of your business, including your target market and competitive advantage.
- Products or services: A description of your products or services, and pricing. You can hire a professional photographer to ensure these are properly represented to match your branding.
- Market analysis: Research on your target market and competition.
- Sales and marketing strategy: Your plan for selling and marketing your products or services.
- Financial projections: Your expected revenue, expenses, profits and cash flow.
Name your business
The name of your business is the first thing anyone will see, so choose carefully. Pick a name that reflects your sector and the services you offer, as well as a hint of the values you promote.
Maryland requires business names to be unique. Once you’ve decided on a business name, you can check on the Maryland Secretary of State’s website to see if the name you want is available.
Register your business
Now that you’ve got the core components of your business together, you can take the next step and register your business with the state of Maryland. This not only enables you to do business legally but also protects you by separating your personal assets from those of the business.
Maryland has made this easy – all you need to do is go to the Maryland Business Express to get the process started.
When you get to this point, you’ll also need to know your business structure.
Choose a business structure
- Sole proprietorship: This is the most informal business structure. It’s 100% associated with its owner in terms of rights and profits. This also means the owner has full financial responsibility for any debts or legal matters.
- Partnership: A partnership is similar to a sole proprietorship but involves multiple owners.
- LLC: A limited liability company is a popular choice for a small business. By combining the personal asset protection of a corporation with the flexibility of a sole proprietorship, it gives you legal protection as well as multiple tax advantages. Be aware there are special rules behind naming LLCs in Maryland.
- Corporations: This is a legal entity beholden to its shareholders. There are many formal regulations and this is the structure usually chosen by large businesses for the ease of bringing financing in via shares.
Start a business bank account
Establishing a dedicated business bank account is essential. This functions both as a further method of separating your personal assets from the business and makes it far easier to track income and expenses for tax purposes. If your business is an LLC, a separate bank account is a requirement to keep your liability protection.
Get business insurance
It’s easy to think that you’ve covered all loopholes to ensure things move smoothly, but there are always going to be issues somewhere along the road. With the number of transactions you’re hoping to make, mistakes will happen. Make sure you take out business insurance just in case a lawsuit is raised against you.
A good start is general liability insurance, but make sure you take a look into further coverage if you have assets or stock associated with your business. If you have any employees and have registered an LLC, you’re required by the state to have workers’ compensation insurance.
You also want to consider insurance that covers any instances of online fraud. If you want to find out more, SEON highlights the main features of fraud to watch out for. You can learn about SEON and fraud monitoring through their online service.
Get funding
Almost every business is going to need funding to get going. Before you go about raising that money, make sure you have a concrete idea of the costs to get started. Make sure you account for any unexpected spending and allow a bit of leeway while you get yourself off the ground.
When it comes to sourcing your funding you have a few options – bootstrapping is tried and true, and entails working up the savings to fund your business startup yourself. You can also present your business idea to family and friends to see if they can assist with any initial costs.
If your startup costs are too high or you simply don’t have the money, you can take out a small business loan through a bank like Bank of America or Chase Bank (and here’s where that financial plan comes in handy) to give yourself a head start into the world of entrepreneurship. There are even options for small business grants in Maryland to take the pressure off having to pay a loan back.
Be aware that one of the leading fraudulent activities affecting small business is investment fraud. If you’re concerned you may be at risk from this or any other criminal enterprises online.
Do your taxes
In Maryland, you’ll require an Employer Identification Number (EIN). This is the tax identification number for your business that registers you with the federal government. The IRS will recognize you through this number for tax purposes.
Obtain required permits and licenses
Registering your business isn’t the final step. Whichever sector you fall under, there are going to be special permits and licenses that are required to do business at federal, state and local levels. Make sure you do some research into each of these, such as a health permit for any food establishment or a permit for road transport of dangerous goods.
In Maryland, you can use the OneStop Portal page to check which licenses you need at state level. Your local county clerk can help with any local licenses and permits.
At federal level, you can check the US Small Business Administration (SBA) guide.
