Starting a New Business in Maryland

The beginning of a new year is a popular time to launch a business. Whether you’re expanding on an existing idea or starting from scratch, the early planning stages involve many exciting decisions. But it’s important not to overlook the legal groundwork of starting a new business. A solid legal foundation can save you significant time, money, and stress if issues arise later. As you map out your next steps, here are key considerations:

1. Choose the Right Business Structure

Maryland offers several options, each with different liability and tax implications:

• LLCs – The most common for small and mid-size businesses. Popular because it may shield individuals from personal liability.
• Corporations – Better for companies seeking investors or issuing stock.
• Sole Proprietorships/Partnerships – Easy to set up, but offers little to no personal liability protection.

Filing with the Maryland Department of Assessments and Taxation (SDAT) is only the first step when starting your new business. The structure you choose affects ownership rights, management, and how disputes will be handled later on.

2. Don’t Skip the Operating Agreement

An LLC without a written operating agreement is vulnerable. Maryland law recognizes these agreements, and courts rely heavily on them during disputes.

Your LLC operating agreement should clarify:

• Ownership percentages
• Voting and decision-making
• Profit distribution
• Buy-out provisions
• What happens if owners disagree or someone leaves

Many lawsuits arise from businesses formed with handshake agreements or online templates. A tailored operating agreement may significantly reduce that risk. If your company is structured as a corporation, then it is required to have written bylaws.

3. Use Clear, Written Contracts

Every business relationship should be documented: vendors, contractors, employees, and partners. Written contracts protect expectations and reduce misunderstandings.

Important terms include:

• Payment and deadlines
• Scope of work
• Termination rights
• Venue and dispute-resolution language
• Intellectual property and confidentiality

Even simple agreements help prevent disputes and protect your rights if one occurs.

4. Keep Good Records From Day One

New businesses often overlook evidence preservation, but maintaining good records can help resolve problems if a dispute arises later.

Build good habits early:

• Use accounting software
• Keep receipts, emails, and contracts organized
• Store digital records securely
• Have a document-retention policy

Strong record-keeping makes your business more efficient and better protected.

Whether you are just starting to form your business or are already in the thick of running it, Lewicky, O’Connor, Hunt, and Meiser has a team of experienced business attorneys who can assist you both in preventing problems before they arise and in navigating issues when they do. Schedule your consultation today for help keeping you and your business on track.

Disclaimer: Any questions regarding tax obligations, consequences, or planning should be directed to a qualified tax attorney, accountant, or other licensed tax professional. This article does not provide detailed or comprehensive information about taxation matters.