Baltimore is known for many things, and one of them is being a good place to start a business. Its location in the Mid-Atlantic region plays a huge part in this. Smack dab in the middle of the Eastern Seaboard, Baltimore and the rest of Maryland is in the center of the busiest business corridor in the U.S.
Charm City is also an important trading port in the country. Businesses have easy access to highways, rail and air travel as well, so logistics won’t be a problem.
Other factors that make Baltimore ripe for businesses to thrive in include access to funding sources, stable power grids, and a low business tax rate. It also has a highly educated and diverse workforce and has a more affordable cost of living than neighboring Boston, New York City, and Washington, D.C.
The point is: Building a business in Baltimore is not a bad idea. Here are the steps to get you started.
Pick a Business Structure
There are several types or forms of businesses you could go into, but you can only select one that best suits your operations. Each structure comes with their own set of advantages and disadvantages and you have to decide what is most appropriate for your business. You can consult professionals, such as lawyers and accountants, for advice before finalizing your decision.
The most common business structures are sole proprietorship, partnership, corporation, and limited liability company.
- Sole Proprietorship
In a sole proprietorship, you are your own boss. Among the business structures, it offers the most flexibility and freedom when it comes to how you run your business. However, a big disadvantage of a sole proprietorship is how there is no separation between the assets and liabilities of the business and your own. In other words, when the business incurs a debt, for instance, you are also personally obligated to pay for the debt even from your own personal assets, if necessary.
- Partnership
Unlike a sole proprietorship, you share the burden of running a business with other people when you form a business under a partnership structure. At least two individuals can form a partnership, and both become co-owners of the business.
They pool their resources and skills together to create and run the business. This also means that they share in the responsibilities and liabilities, as well as the profits and losses, of the business.
However, this sharing might not be equal as there needs to be at least one general partner in a partnership. This general partner will have the most control over the business but will also have to bear the most liability.
- Corporation
A corporation is formed by a number of shareholders, which own a part of the business in the form of shares of stock.
Unlike the previous two business structures which are linked to the individuals, a corporation is its own legal entity. This means that for legal purposes, the corporation is a separate person from its owners. In other words, a corporation can own assets, enter into contracts, and conduct business as if it was an individual of legal age.
As a result, shareholders are, in general, not personally liable for the corporation’s actions, obligations, or debts. Their liability is typically only limited to the amount of their investment.
Speaking of investment, a corporation usually requires a bigger capital to set up as well as incur higher maintenance costs. Shareholders have limited control over its daily operations and it is under stricter regulation from the government.
- Limited Liability Company
Similar to a corporation, a limited liability company (LLC) allows the business owners to separate their business and personal assets and liabilities. This means that whatever debts the LLC incurs will be paid for by the LLC assets and not taken from the personal assets of its owners.
However, unlike a corporation, you’ll have to pay for Social Security and Medicare. Profits and losses of the business are also passed along to the owners’ income tax returns. LLCs are easier to form too, and owners have more say in the business than the stakeholders of a corporation.
Table 1. A Comparison of the Most Common Business Structures.
| Business Structure | Advantages | Disadvantages |
| Sole Proprietorship | You are your own boss You have flexibility and freedom in running the business | There is no separation of business assets and liabilities from personal assets and liabilities. |
| Partnership | You co-own the business with at least one partner. You share responsibilities and liabilities. You combine your resources, skills, and efforts in running the business and share in the resulting profits and losses. | If you are the general partner, you will have the most control but also the most liability. |
| Corporation | It is a separate legal entity that can own assets and enter into contracts. A shareholder’s liability is typically limited to the amount of their investment. | Shareholder control over the day-to-day business is limited. It must comply with stricter government regulations. |
| Limited Liability Company (LLC) | The assets and liabilities of the business are separate from that of the owners. Owners have more control and flexibility over the operations of the business than shareholders of a corporation. | You’ll have to pay for Social Security and Medicare. The profits and losses are passed along to your own personal income tax returns. |
Register Your Business
Now that you’ve chosen a business structure, it’s time to start the business registration process. You need to register your business with the Maryland Department of Assessments and Taxation.
Aside from your business name and location of business, you will also need to identify the registered agent. This is the person who will formally accept any service of process in the event that your business gets sued or otherwise is subjected to any legal proceedings.
You will also need to get a Federal Tax ID Number from the Internal Revenue Service (IRS).
Secure Permits or Licenses
Depending on your business, you might need to get a permit or license to operate legally. For instance, retailers and wholesalers need a business license and a traders license in order to buy and sell goods. Practicing professionals will have to get occupational and professional licenses. If your business sells liquors, then you’ll need a liquor license or permit.
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