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Howard County MD Business Law Blog

Incorporating a business in Maryland

If someone is considering starting a business, they may choose to form a corporation. This is actually a fairly simple process, most of which hinges on filling out and submitting articles of incorporation with the state and paying a processing fee, which ranges from $100 to $800.

The first step in incorporating a business is to choose a name. It must not violate any trademarks, and it must not be the same as any other corporation in the state. Additionally, the business's name must indicate that it is a corporation, which is generally done by ending the name with Corporation, Limited or Incorporated. A name does not need to be registered with the state because that will be done so automatically when articles of incorporation are filed.

Independent business versus franchise decisions

Maryland residents who wish to start a business may want to look at two models: independent and franchise. Either type of ownership model of business can succeed. There are factors associated with the decision to buy either one, and those should be carefully weighed prior to any action.

A franchise owner is under the control of a parent company, which controls what services and products the new business can offer with little opportunity for independent decisions by franchise owners. The upside is that those products and services have already been tested in the marketplace. An independent business owner has autonomy and can strike out in new directions with services based on preferences or market changes. However, this typically means less security.

Airline industry wary of merger between Expedia and Orbitz

Maryland travelers may appreciate the implications of a merger between online travel businesses Expedia and Orbitz. Expedia has agreed to pay in excess of $1 billion to acquire its competitor, which is expected to strengthen Expedia's ability to negotiate lower pricing with airlines and hotels. Both Expedia and Priceline, the company's biggest competitor, have been working to dominate the online market as the Internet has become one of the most common methods used for booking travel services.

According to industry experts, this larger share of the market will allow Expedia to enjoy a stronger position in the chain of distribution, making it possible to compete for better terms with travel service providers. Those representing officials in the airline sector indicate concern due to the effects on competition and customer activities. Officials within the hotel sector express concerns about the impact on consumer choices. These industries are worried that the deal could increase pricing for consumers, but Expedia counters that consumers will benefit due to competition from newcomers to the online travel sector and due to competition from actual hotels and airlines.

Why mergers fail in Maryland

According to a study conducted be a major accounting firm, more than four out of five mergers fail to improve shareholder returns. One reason why this so often happens is a lack of communication during the transition process. Many employees are going to be against the merger or are just going to become disengaged while at work. During the merger period, there is no such thing as communicating too much. Keeping lines of communication open can help win over employees who may not be on board with the change.

Employee disengagement is an issue that needs to dealt with at the outset. Failure to do so could result in employees who offer nothing to the company either in the present or in the future. Severing ties with these employees may make it easier to fully invest in those who do have something to offer in the long-term.

Factors used to determine acquisition price in Maryland

When a company decides to purchase a stake in a business, it will look at five key indicators. First, it will determine a multiple of EBITDA, which is earnings before depreciation, taxes and other costs that reduce final earnings. This multiple will determine how much an investor thinks that the company is worth. For instance, if a company had an EBITDA of $500,000 and the investor went with a multiple of five, the company would be worth $2.5 million.

A company will also have to consider EBITDA margin, which is generally thought as EBITDA divided by revenue. Increasing this margin may make a company more valuable to investors. After taking EBITDA issues into consideration, an investor will have to determine the growth potential of the company as well as how much of the venture the investor will own.

Business tax planning

Taxes are often one of the biggest expense items on any Maryland business's income statement. When managed properly, tax expenses can be kept under control, helping you and your business reach higher levels of profitability. Without proper planning, taxes can be a major expense, possibly causing your business to take a loss. In extreme situations, poor tax planning could lead to tax errors, which could in turn cause fines, interest and other penalties. For all of these reasons, it's critical that you have a skilled, experienced and knowledgeable tax attorney on your side.

Tax planning begins with business formation. Different business structures have different tax consequences. From sole proprietorships to limited liability companies to corporations, every type of business structure has its own set of tax rules and regulations. There is no right structure for everyone. Rather, you should use the structure that best fits your needs and goals. A knowledgeable tax attorney can consult with you and help you decide on the structure that best meets your goals and manages your liability.

The options that employees have when their rights are violated

There are several laws in place to protect the civil rights of employees. For example, workers cannot be overlooked for promotion because of their gender, race or religion. When the protected rights of Maryland workers are violated, they have a few options to initiate an employment dispute.

One of these options is informal negotiations between the employee and employer, rather than going through a court battle. The optimum result is that the employer consents to compensate the worker, while the employee consents to dismiss the right to take legal action. However, this is not always the result.

Contract terms and validity for Maryland residents

Maryland residents should be aware of the elements of a valid contract. From business owners to the average citizen, contracts are used by people in numerous aspects of professional and financial life. Few people understand the rules that apply to contracts or how to draft and interpret them.

A valid contract is simply one that is legally binding and may be enforced. Although a lawsuit is one possible means of resolving a conflict dispute, it is not a very efficient one in most cases. Contracts are written to clarify the terms of an agreement in such a way that prevents a contract dispute from turning into a lawsuit. A litigious solution to a contract dispute also removes control from the parties at hand and gives it to the court.

UFC faces antitrust lawsuits

Residents of Maryland who enjoy mixed martial arts may be interested to learn that the Ultimate Fighting Championship, a major organization that specializes in the sport, was targeted with three separate antitrust lawsuits in December. The actions were filed against UFC on Dec. 16, Dec. 22 and Dec. 24 by a total of seven individual plaintiffs who claim the organization illegally hampered competition. Some of the plaintiffs are MMA fighters or participated in the sport in the past.

Commentators say the UFC hired a New York-based law firm to fight back against the allegations; this firm has participated in a number of high-profile antitrust cases, including Bush vs. Gore, United States vs. Microsoft and a dispute between the NFL Players Association and the NFL. According to a representative, the UFC simply served the needs of consumers and sports fans as it created its business, and the organization believes its current market status reflects these successes.

Answers to small business questions in Maryland

Although most small businesses do not need to incorporate to operate, there may be advantages to doing so. For instance, it may be easier to get a loan from a bank or gain access to tax breaks after a business incorporates. While incorporating is not a difficult process, it is one that needs to be done correctly.

Incorporating generally involves submitting the proper paperwork and paying a fee to the state where the company wishes to incorporate. For companies that operate in one state, it is best to incorporate in the state where the company operates. However, a business may have an opportunity to incorporate in any state if it operates in multiple states.