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Howard County MD Business Law Blog

Pros and cons of buying an existing business

Purchasing an existing business is an option for Maryland residents who would like to become business owners. Before going ahead with the purchase of an existing business, however, it us important to consider the benefits and drawbacks of purchasing an established venture. Although there are many advantages of buying a business that has already gone through its startup phase, the disadvantages could give some potential buyers pause for thought.

The obvious advantage of purchasing an existing business is the fact that startup costs will be significantly reduced. An existing business may already have inventory, a trained staff and a loyal customer base. If the business is profitable, the new business owner might also gain immediate access to cash flow that can be used for any improvements they would like to make to the business.

What is the process to start a new business in Maryland?

The first step in establishing any business is coming up with a business plan and structure. The prospective owner of the new business should consider what type of business is ideal for the market and find out as much information about that type of business as possible. After deciding on the type of business, the owner should decide the structure of the business, such as a sole proprietorship, partnership, or corporation.

The next step involves registering the business, which requires a name and location. Checking with local and county zoning requirements is an important part of the location selection process because violations can be expensive. Once the name and location are ready, the business owner can use the Maryland Central Business Licensing and Registration Portal to register a business trade name, form a business entity and establish a business tax account.

Business tax planning in Maryland

Tax considerations are important for businesses of all sizes, and planning is important to limit the risk of unexpected consequences. The more your company grows, the more extensive your tax obligations may become. Proper business tax planning can be important to ensure that obligations are minimized so that the value of company holdings and income can be maximized.

Making decisions without experienced insight may be risky due to the fact that the laws related to business taxes can be complex and confusing. These decisions could be risky if your understanding is limited. However, reliable legal representation may allow you to bypass risky decisions that could jeopardize your company. Additionally, you may find that as your short-term tax obligations and decisions are handled, an experienced business tax lawyer may provide long-range understanding of your choices and their implications. In addition to federal income tax concerns, your company may be faced with issues such as managing tax withholding from employees' paychecks and collecting sales tax on products. In the planning process, a legal adviser may provide guidance on managing and monitoring these funds.

How do I start a business in Maryland?

Establishing a new business in Maryland can be both thrilling and intimidating. Proper planning, though, can make the undertaking relatively straightforward. The major steps in the creation of a new business entity are the selection of the business structure, business registration, name selection and application for business license. The four common entity options are a limited liability company, partnership, corporation and sole proprietorship. The latter is generally the simplest but may not offer some of the advantages open to the other entity types. A business attorney could help interested parties decide among the options by explaining the various advantages and disadvantages of each.

New Maryland businesses are registered with the Department of Assessments and Taxation. In choosing a name for the entity, it is first necessary to determine whether the name conflicts with a business that already exists. Name conflicts may result in trademark disputes down the line.

Exelon may acquire Pepco in 2015

Residents in Maryland may be affected by the proposed merger between Exelon and Pepco Holdings that was filed on Aug. 19. The $6.9 billion acquisition must be approved by the Maryland Public Service Commission and other state regulators before it can be finalized. Company executives claim the acquisition will improve the economic environment for the Pepco service areas located throughout the Eastern Shore and nearby Washington, D.C. An executive with Pepco stated that she expects the deal to be approved by the second or third quarter of 2015.

Baltimore Gas & Electric, an Exelon subsidiary, is not expected to be affected by the new acquisition. Pepco executives also maintained that there would not be any rate changes as a direct result of the merger. Between Potomac Electric Power servicing the Maryland-D.C. area, as well as Atlantic City Electric and Delmarva Power & Light servicing New Jersey, Pepco has approximately two million customers.

Restaurant investor brings lawsuit against former partners

Maryland businesses may be interested in the story of one man's restaurant investment that ended in multiple lawsuits. The final trial ended in a settlement.

In the early months of 2011, a New York man entered a partnership with two other men, investing up to $75,000 in the restaurant that the two men owned in Waldorf. The investor also worked in the restaurant's kitchen for three months as a cook. According to reports, the investor was paid only twice during this time, totaling $2,000. Four months after his initial investment, the man then asked his two partners for a certificate of ownership or some other documentation of their partnership.

Tax information for Maryland business owners

If someone is opening a new business, it is important that they are proactive about how they deal with taxes. Proper business tax planning can help prevent entrepreneurs from running into legal problems as well as help them estimate their business costs related to taxes. Planning should include selecting the most appropriate business structure, keeping track of tax-related documents and taking advantage of tax credits.

The most common business structures are sole proprietorships, partnerships, LLCs and Subchapter C or S corporationa. Each has different pros and cons, and the type of structure someone chooses for their business will also determine how they are taxed. Along with selecting the right structure, it is critical that individuals keep track of their accounting and any receipts that may be needed for tax purposes. Failing to do so may lead to problems filing and the possibility of an audit.

Maryland employers need to know employee screening laws

According to the Society for Human Resource Management, 69 percent of all employers conduct a criminal background check on prospective employees. While the vast majority of background checks are not conducted until a job offer is made, 4 percent of background checks are conducted as soon as an application is received. Although such background checks are intended as due diligence, employers are restricted regarding the type of information they review.

The Equal Employment Opportunity Commission says that employers should consider the nature of an offense, how long ago it occurred and the type of job being applied before determining if a background check is legal and relevant. Additionally, the EEOC says that background checks should not be conducted until a job offer is made as they may inadvertently disqualify minorities at a higher rate if they are done before making a formal job offer.

Apple sued for alleged meal and break violations

Maryland residents may be interested to learn about a class-action lawsuit that has been filed against Apple. The lawsuit was filed in California and alleges that the company committed several California Labor Code violations. The complaints listed in the suit include failures to provide timely meal and rest breaks to employees as well as a late payment of a final paycheck.

The employment dispute originally began when four retail and corporate Apple employees filed a lawsuit in December 2011. On July 21, 2014, the lawsuit gained class-action status and now encompasses an estimated 20,000 plaintiffs. Although the court documents list an estimate of 18,000 current and former Apple employees, the class size reportedly grew as a result of employee turnover that has taken place.

Business tax planning tips

Maryland business owners should have a long-term plan when it comes to paying taxes. Whenever a business experiences a financial gain or a financial loss, it may be a good idea to talk to a financial adviser who may be able to help a company minimize its tax burden. The first step that a business may want to take when it makes a profit is to create a retirement plan for its owner.

This will help an individual save for retirement while being able to deduct the contribution as a business expense. The next tip for business owners is to consider the structure of the business. While a sole proprietorship makes it easy to run the company, incorporating may provide legal protection that could save money in the future. An attorney may be able to help with additional paperwork that is involved when running a corporation.