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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.
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.
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.
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:
This article is intended to be helpful and informative. But even common legal matters can become complex and stressful. A qualified business lawyer can address your particular legal needs, explain the law, and represent you in court. Take the first step now and contact a local business attorney to discuss your specific legal situation.