Maryland Determining Business Structure Attorney

Determining business structure is the most important decision you make when starting a new business. The right structure allows your business to thrive, while the wrong one can result in business failure. Before establishing your new business, it’s best to understand your options and consult a Maryland business attorney for help deciding which is right for you.

Why Choose Lusk Law, LLC?

Lusk Law, LLC is a Maryland business law firm based in Frederick, MD. Our experienced team of Maryland business attorneys has many years of experience assisting Maryland business owners with the legal aspects of running successful companies.

We can help you establish your business and provide counsel throughout its lifecycle. Contact Lusk Law, LLC at (443) 535-9715 today to ask for a consultation.

Choosing a Business Structure: The Basics

Business Success Depends on Structure

At the most fundamental level, the factors that influence how to structure a business include:

Ownership – If you have no partners or investors, you can choose a relatively simple structure.
Type of business – Entrepreneurs entering into occupations that are high-risk or involve potential liability concerns will want to review business structures’ ability to shield owners from economic loss.
Workers – Some business structures are ideal for companies that have employees.
Long-term goals – Some types of structures allow for easier company growth.

When you’re thinking about starting your own company, one of the many points to consider is which business structure would be best for your needs. If you’re not sure which business structure would be the best for you, the following overview may be helpful.

Sole Proprietorship

If you plan to be the only owner/employee, a sole proprietorship may make sense for you. Sole proprietors pay business-related taxes as individuals and can schedule quarterly payments to avoid paying one lump sum each year. One drawback to this structure is that sole proprietors are liable for any harm or damage caused by their company.

Partnership

The two basic types of partnership are:

General partnerships – General partners co-manage the company and take responsibility for its debts and expenditures.
Limited partnerships (LP) – This structure includes a mix of general partners and “limited” partners – investors who have no control over the company and assume no risk or liability.

Maryland defines a third type of partnership: limited liability (LLP). In this structure, at least one partner must be the manager (general partner), and at least one must be the investor (limited partner). Both LLPs and LPs shield business owners from personal liability, except in cases of fraud and reckless conduct.

Corporation

A corporation is an independent legal entity, which means owners are not liable for the corporation’s actions, and business-related debt belongs only to the company, not the owners.

This structure is more complex and requires a thorough understanding of applicable regulations.

Corporations may sell stock, as well as offer stock options as part of an employee benefits program. Corporations also tend to need professional accountants, because of the complexity of corporate tax laws.

Limited Liability Company (LLC)

LLC taxes are based on each owner’s share of the company. So, if you own 100 percent of the company, you pay all of the taxes on your net profit. If you have one equal partner, you’re each responsible for 50 percent of the taxes. LLCs do not have to pay unemployment and disability taxes for the owners.

S Corporation

The owner of an S Corp may take a “reasonable” salary from the profits and pay taxes on the remaining profits. Tax complications may occur if the Internal Revenue Service disagrees with the owner about what is a reasonable salary. S Corp owners must pay unemployment and disability taxes.

B Corporation

This structure is for companies that can demonstrate “a material positive impact on society; consider how decisions affect employees, community and the environment; and publicly report their social and environmental performance using established third-party standards.”

Other Considerations

Entrepreneurs wishing to establish a branch office, franchise, independent subsidiary, joint venture, or C corporation may be subject to additional regulations, especially if their partner/parent company is registered only outside the United States.

Frequently Asked Questions

These are some common questions clients ask about choosing a business structure in Maryland.

How do I identify the right business structure?

You need to consider a wide variety of factors to identify which business structure is right for your needs.

Why should I call a business lawyer?

A business lawyer’s experience is invaluable, especially when you’re considering the legal implications of a business structure.

How do I choose the right Maryland business lawyer?

Looking at practice areas, client testimonials, and online reviews is a good start to choosing the right Maryland business lawyer.

Is a Maryland business lawyer worth the cost?

It’s always worth consulting a Maryland business attorney to ensure long-term business success.

Call Lusk Law, LLC to schedule a consultation for answers to additional questions.

Call Our Maryland Business Attorneys

Advocates For Life’s Obstacles and Opportunities

Lusk Law, LLC can help with all stages of the business lifecycle, including determining business structure and what’s right for you. We also assist in business law matters that include litigation, business contracts, and mergers and acquisitions.

If you need help with choosing a business structure, litigation, or general legal counsel, call Lusk Law, LLC at (443) 535-9715 or fill out our contact form.

Attorney Rebekah Damen Lusk

Rebekah Damen Lusk is the Founder and Managing Member of Lusk Law, LLC. Rebekah brings personal experiences as a small business owner, real estate investor, landlord, and farm owner to the task of practicing law and working with clients. Her practice areas include general civil litigation, business, employment, landlord/tenant, real estate, and equine/animal law. [ Attorney Bio ]