Does anyone have any information regarding what needs to be done to open a business in Maryland?
So far, I'm pretty sure I need a Maryland business license (Sole Proprietorship), and a solid contract for customers to sign for service based products. I was also pondering liability insurrance.
As far as taxes, do I need to just set aside a certain amount of money for when taxes are due in April, or do I need to do something in the interim? I'm pretty sure I need a Federal tax ID #, but is this going to be something different for the business, and how do I obtain one? (I think i need it to fill out the application for the Maryland business license).
Is it recommended that I work with a lawyer and/or accountant in starting, or is that unecessary?
I am located in Maryland. My local courthouse informed me that if I was conducting business over the internet, a traditional business license is not required UNLESS I am conducting business in person.
You are however obligated to collect sales taxes for sales made to customers located in Maryland.
As far as personal taxes go, you must file a quarterly tax report for self employment taxes if you are a sole proprietorship.
Now, this is based on the county I live in, and it may be different in other counties, so I would start with the local courthouse. The clerk working in the licensing department would be the one to contact.
The only case in which you would obtain a Federal Tax ID # is if you incorporate, OR you have employees. In fact, they won't even issue one to a sole proprietor unless you will have employees, which is a whole other area of business. Sole Proprietors with no employees simply use their social security number.
I'd like to offer a slight correction on the federal tax ID number issue. If you are a sole proprietor, you CAN get a tax ID--by forming a single-member LLC (limited liability company). Single-member LLCs are classified as sole proprietors by the IRS by default. While it is not mandatory, you can apply for and get a tax ID number in this case, and it's a good thing to have even if you have no employees. You can build business credit and use the tax ID number on credit apps, instead of using your social security number. And forming an LLC gives you personal asset protection from business creditors.
You can form a corporation or LLC online at www.MyNewVenture.com. They specialize in Maryland, DC and Virginia. You might want to check it out:
By the way, as far as setting aside money for taxes, at the federal level you technically only have to make quarterly estimated tax payments if you owed taxes in the previous year. It's still a good idea to sock money away though anyway because even after you take all your business deductions, you'll probably still have to pay Caesar something. But that's the good thing about an LLC, too. At the end of the year, you're still using the same personal income tax return (plus a Schedule C "Profit/Loss from a Business" form), so it's an easy learning curve compared to jumping into a corporation.