A Maryland sole proprietorship is the easiest and least expensive type of business to start in the state, since documents are not filed with the state to create a sole proprietorship. A Maryland sole proprietorship has one business owner who is responsible for every aspect of the company. A sole proprietorship in Maryland begins automatically when a business owner makes a business transaction. A Maryland sole proprietorship and the business owner do not have separation from one another and are treated as the same legal entity.
Select a name for the Maryland sole proprietorship. This is an optional step for Maryland sole proprietors that do not want to use their personal name for business purposes. Conduct a business name search using the Maryland Department of Assessments and Taxation website to ensure the name selected for the sole proprietorship is available for use. The name of the Maryland sole proprietorship must be different from other businesses that are authorized to operate in the state of Maryland. Call 410-767-1340 to confirm name availability by telephone.
Print a trade name application from the Maryland Department of Assessments and Taxation website. Fill out the trade name application by supplying information such as the proposed trade name and location of the business, as well as the nature of the Maryland sole proprietor's business activities. Mail or submit the trade name application in person to the Maryland Department of Assessments and Taxation office. The address is:
301 West Preston Street Baltimore, MD 21201
As of 2010, Maryland sole proprietorships must pay $25 to register a trade name with the Maryland Department of Assessments and Taxation.
Obtain a federal tax ID number from the Internal Revenue Service (IRS). This is required for Maryland sole proprietors who do not wish to use their Social Security number for business purposes. Log onto the IRS website to complete an online application, or call 800-829-4933 to complete a telephone interview. Supply the name and address of the Maryland sole proprietorship, as well as the nature of the Maryland sole proprietor's business activities. Provide the sole proprietor's Social Security number, name and address. Maryland sole proprietors will receive a federal tax ID number immediately after the online or telephone interview.
Register with the Maryland Comptroller of the Treasury. Visit the Maryland Comptroller of the Treasury website and complete the combined registration application that determines what taxes the business will be liable for paying. The taxes a Maryland sole proprietor will have to pay vary based on the nature of the company's business activities. For instance, Maryland sole proprietors who sell tobacco products are required to pay a tobacco tax. Provide information such as the number of individuals employed by the Maryland sole proprietorship and the owner's Social Security number or the federal tax ID number issued for the business.
Contact the clerk of the circuit court in the Maryland county where the sole proprietorship operates. This will allow a Maryland sole proprietor to get a general business license and other required local licenses and permits needed to operate in the Maryland city or county. Contact the Maryland Division of Labor's occupational and professional licensing office at 888-218-5925 to get the appropriate state-issued occupational license if the Maryland sole proprietorship provides professional services such as engineering or sports agent services.
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