By: RICHELLE JUNE Maryland Recommendations
Maryland is an excellent place for entrepreneurs to set up shop. Home to big names like Under Armour, Marriott International, and GEICO, the state is fertile ground for any business regardless of size. It also has a high percentage of female and minority-owned companies per capita, making it a friendly environment for a diverse set of entrepreneurs. Whether you're a local or an aspiring entrepreneur looking for an opportunity in Maryland, here is a quick guide on how to start a business in the Old Line State.
Write a business plan
No business will become successful without careful planning. Before you even begin with the steps of opening your very own business, you must first create a plan, one that functions as a tool to help you enumerate action items, your next moves, and other future activities. The U.S. Small Business Administration likens a business plan to a GPS, since its primary goal is to get your business going. Not only does it steer you in the right direction, but it also guides you through each stage of starting and managing your business. Not to mention, it can also help you secure funding in the future, as it will also be a tool that you use to persuade others into working with you.
Writing a business plan is not as difficult as one might think. You don't even have to list down everything right away. It's not a one-time document, but an ongoing project that you build on as you grow. But as a rule of thumb, it's best if you had separate plans per facet of your business — one for sales and marketing, one for pricing, one for operations, and so on. At the very least, it should also have a market analysis that describes the industry outlook and target market, your service or product line, proposed revenue streams, and your financial projections.
Select a name
Considering how a business name is the initial component of branding your products or services, it should also be one of the first things you should decide upon. The Houston Chronicle points out that it should be easy to read, decipher, and remember. You can start by summing up your entire business in a few words and looking up whether another company has already legally claimed that name.
If you're having a hard time selecting a name, circle back to the core of your business and think about what type of message you want to convey to your customers. Whatever you're company's offerings are, it should be easily identified in the name.
Choose a legal structure
After selecting a name and putting a plan into place, it's time to choose a business structure. If you're establishing a small business, the most popular structures are a sole proprietorship, partnership, or limited liability company (LLC). Each structure has certain advantages and disadvantages — a sole proprietorship gives you complete control of your business, but you're also fully liable for the debts and obligations of the business, while a partnership allows you to have one or more partners. Meanwhile, an LLC offers flexibility in the way that profits don’t need to be distributed equally among owners, so long as it's outlined in the operating agreement. An LLC also lets you protect your personal assets by limiting the liability to the resources of the business itself.
Establishing a sole proprietorship in the state only involves filing an application to register a trade name with the Department of Assessments and Taxation and obtaining the appropriate license. A partnership also follows a similar protocol, although it's recommended that you have a written partnership agreement to resolve any potential disputes. As for a limited liability company, forming an LLC in Maryland is an easy process that starts with selecting a name, appointing a registered agent, and creating an operating agreement. To make it official, file articles of organization in Maryland, pay the necessary fees, and apply for an EIN while you're at it so it's easier to open a business bank account, get financing, and hire employees later on.
Open a business bank account
One of the worst mistakes you can make as an entrepreneur is to merge your personal and business finances together. Business News Daily notes that it's better to separate the two, as it will be much easier for you to track business expenses, take advantage of tax deductions, accept payments from clients, and pay employees and vendors. It is then vital to open a business bank account to facilitate these transactions.
Much like personal bank accounts, business bank accounts have varying categories, including traditional checking accounts, savings accounts, and cash management accounts. A business checking account allows you to handle essential financial tasks involved in running a business, while a savings account lets you set aside a portion of your earnings and rack up interest on it. If you don't mind having a digital-only bank, though, you may want to look into a cash management account, which is an online account that is a checking, savings, and investment account rolled into one. It offers higher interest rates compared to traditional banks, and you can conduct all your banking affairs with no trouble too.
Get business insurance
Finally, before you hire employees and get started on marketing your business, you must obtain business insurance. It's a type of coverage that protects your business from losses brought about by events that occur during the normal course of business. Similar to health and auto insurance, it also has different types, including but not limited to coverage for legal liability, property damage, and risks concerning employees.
Considering how business insurance is your safety net, choosing one shouldn't be done in haste. It all depends on what your company needs. For instance, if you are a remotely operated web design business, you may not need the same type of coverage as a brick-and-mortar restaurant. It's always best to shop around and speak with multiple providers, do a risk analysis to understand your coverage needs, and choose a plan that can keep up with your growth. It would help if you also understood your specific industry's business insurance obligations, so you don't end up purchasing coverage that you don't need.
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