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So you have always wanted to own your own business. You believe this is the way to financial security and inner happiness. Well—you may or may not realize those goals, depending on whether you begin your business on the proverbial “right foot” or whether you overlook some essential starting blocks.

The first item to get out of the way is to decide under which business entity you want to operate. Should you operate as a sole proprietorship, a general partnership, a corporation (C or S) , a LLC or a LLP? A good place to consult regarding this choice is the Small Business Startup Kit which can be accessed through the IRS website, www.irs.gov. Actually the general IRS website has a plethora of excellent information for someone wanting to start up their own business. There is also another very good reference for starting up your own business available through the website for Maryland’s State Department of Assessment and Taxation. The title of the guide is “Guide to Legal Aspects of Doing Business in Maryland.”

Once you have decided upon your business entity type you will need to choose a name for your business. In the State of Maryland if you operate as a Corporation , LLC or LLP you will first need to file for a state identification number with the Maryland State Department of Assessments and Taxation(SDAT). You can call their office at 410-767-1340 or e-mail them at charterhelp@dat.state.md.us. You may also go directly to their web site to download the appropriate forms. This is where you need to check to see if the business name you want to use is available. Besides the business’s legal name you may want to assign your business a trade name or “DBA” (doing business as) name for easy recognition. To set up a trade name either call 410-767-1340 or download the application to apply for a trade name and send it to the SDAT with the appropriate fee.

If you are operating as a Corporation (C or S), LLP, LLC or limited partnership the State also requires you to file for a Corporate charter while requesting a State identification number. Applying for a Corporate charter involves filing Articles of Incorporation with SDAT and a $100-$150 fee to accompany the application. All of the necessary forms are available on SDAT’s website at www.dllr.md.us. The

website also contains sample articles of incorporation forms if you would like to do all of the work yourself. However, if there is more than one owner involved in the business it would be much more expeditious if you hired an attorney to prepare all of the proper paperwork. If you will be operating as a sole proprietorship there is no Corporate charter to file, but you still need to register with the State. The number to call is 410-767-4991.

After you have obtained your State identification number you now legally exist in the State of Maryland. As part of doing business in Maryland you will be required to file a Form 1 on a yearly basis. This form serves the dual purpose of 1) reporting all of your personal property, except licensed vehicles, to the State for purposes of tax assessments and 2) keeping your Corporate charter alive. The yearly filing fee for a Form 1 is $300 per year per entity. Sole proprietorships are also required to file a similar form, Form AT3-51 on a yearly basis, but only if their total personal property plus inventory is over $10,000. There is no yearly filing fee for sole proprietorships. Both forms are required to be filed by April 15th or June 15th if the proper time extension is filed.

Now that you have established yourself in Maryland it is time to file for a Federal identification number (FEIN) with the IRS. Who needs to apply for a FEIN? Any business that has employees must file for a FEIN. Corporations, LLCs, and partnerships with multiple partners who have no employees must also file for a FEIN because they will be filing separate tax returns for the business. It is very simple to file for a FEIN and may either be done on-line www.irs.gov, by phone or via mail. The form required to file for a FEIN is the SS-4. It asks very basic questions about the business and takes about 5 minutes to complete. You may obtain the number via Tele-TIN in a matter of minutes. The number for Tele-TIN is also on the IRS website. Once a FEIN is assigned to a business entity all correspondence to the IRS should use the entity’s FEIN number. The number will be used for payroll tax returns and income tax returns.