Business & Commercial Law
Maryland Small Business Law
Preparedness is an important trait for small business owners to have. Even if it’s a million dollar idea, a small business faces great odds against competitors, the free market and the law.
For business owners in Baltimore, Frederick or Silver Spring, it’s important to understand state and federal laws and know how to proceed when a legal issue develops. LawInfo has the Maryland small business law information you need from business plans to workers’ compensation.
Maryland Business Taxes
As a small business owner, you’re responsible for paying both your personal taxes and business taxes. If you own a sole proprietorship or a partnership, your personal income tax covers your business income. Owners of corporations are double taxed with personal and business income taxes, though, since a corporation is considered a legal entity separate from its owners.
In addition to income taxes, you’ll be responsible for paying sales, use and property taxes. If your business has employees besides you and co-owners, you may also be responsible for withholding a portion of their income to pay for local and state taxes on their behalf. Maryland also has excise taxes for the sale of alcohol and tobacco products, as well as taxes for entertainment and boxing/wrestling receipts.
The Maryland Comptroller website is a great resource for businesses to learn how to pay the taxes they’re liable for. It includes information on current and historical tax rates, too.
Maryland Buyout Agreements
While it’s not a requirement in Maryland, a buyout (or “buy-sell”) agreement can be considered a necessity for corporations and limited liability companies (LLCs). A buyout agreement is used to ensure that a business doesn’t suffer from a shareholder or member’s departure. A departing owner—or their estate, if the owner dies—agrees to sell their shares to either the other owners or an approved buyer.
By having a buyout agreement, a business can protect itself from an owner’s bankruptcy or potentially toxic inheritors. This can be useful if your corporation is family-owned and a shareholder’s spouse takes possession of their shares from inheritance or divorce. If the spouse is historically irresponsible with business matters, a buyout agreement can ensure that the other shareholders have the power to choose an appropriate replacement.
Typical Small Business Legal Issues in Maryland
Legal issues crop up for all businesses, be it contracts, taxes or employment. Legal questions and issues will vary widely by industry and it’s a good idea to consult a business attorney beforehand. But a small business owner may encounter legal issues such as:
- Maintaining the required level of workers’ compensation insurance coverage;
- Which legal structure to select (such as a corporation, partnership or limited liability company);
- Hiring and managing employees in accordance with Maryland and federal employment laws;
- Protecting inventions and trademarks through intellectual property law;
- Extending credit and collecting on past due amounts in accordance with Maryland and federal laws; and
- Complying with health and safety regulations when constructing or preparing a work site.