Maryland is a state where innovation in business is one of the top priorities and the state and Federal government has in place numerous incentives and benefits that businesses can take advantage of to harness their full potential. In fact, there has been a rise in companies company Maryland that is owned by women. It ranks 2nd in a country where percentage of women-owned firms is concentrated with a share of 39.5%. It is interesting to note that small businesses established in Maryland received almost $106.2 million in 2017 from the U.S. Small Business Administration. This was made possible through the highly competitive Small Business Innovation Research (SBIR) program.
Advantages of setting up an LLC Or Corporation
Business growth in the “Free State” as this state is known has been quite remarkable and the primary reason is the advantages specific businesses have and the support provided by the state through incentive program. Whether you are planning to register a new company in Maryland as an LLC or a Corporation, there are distinctive advantages that your business can benefit from. Let’s take a look at some of them.
Advantage#1: Salient benefits of Corporation or LLC formation
- Raise additional Funds: If you register a new company in Maryland as a C Corporation then the business entity will be able to raise additional funds through sale of stock.
- Tax credits: There are several state run tax credit programs that Corporations and Individuals can benefit from like the Bio-Heating Oil Tax Credit. A corporation would have to submit Form 500CR to benefit from this credit.
- Independent Life: If you register a new business in Maryland as an S Corporation then the most important advantage is that it will enjoy an independent life. The business entity will continue operations undisturbed even if it is faced with the death of one of its stockholders.
- Flexibility of taxation: When you register a new business in Maryland as an LLC, the choice of taxation can vary from that of a sole proprietorship, partnership, C Corporation or S corporation and thus providing great flexibility.
- Limited Liability: The owner of a Maryland LLC will be able to enjoy limited liability protection, which means creditors can sue the LLC but not the owner or investors.
- No Minutes of meetings: Unlike a corporation, an LLC startup company in Maryland will not be required to maintain any minutes of the meetings or resolutions.
Advantage#2: Business Incentives
Maryland is a state known for its pro-business climate. There are several factors responsible for creating a conducive business climate and the foremost among them are the various incentives and financing programs. A startup company in Maryland has to qualify for the incentive programs. Most of these programs are state governed although some are Federal incentive programs. Let’s take a look at a few such incentive programs:
- Maryland Enterprise Zones: If you register a new company in Maryland Enterprise Zone then your business entity can leverage from a variety of incentives and income tax credits based on new jobs created. The credit can be a maximum of $3,000 for jobs created in the first year of operation of the business.
- Job Creation Tax Credit (JCTC): This is a program that provides income tax credits to businesses established in specific regions of Maryland. A startup company in Maryland responsible for creating a minimum number of new jobs will be entitled to this tax credit. Businesses can benefit from $3,000 to $5,000 per job in tax credits especially in a “revitalization area.”
- Regional Institution Strategic Enterprise (RISE) Zone Program: If your business is located in a RISE Zone then the benefits can vary from income tax credits on capital investment to real property tax credits. The current RISE Zones are in Baltimore City, Baltimore, and Prince George’s.
If you register a new business in Maryland, there are several other incentive programs that you can benefit from including One Maryland Tax Credit, Research and Development Tax Credit, Small Business Relief Tax Credit, Maryland Economic Adjustment Fund (MEAF), Maryland Small Business Development Fund, Maryland Resource-Based Industry Financing Fund Loan (MRBIFF) among others.
Are there any Disadvantages of Incorporating in Maryland?
If you register a new company in Maryland, whether domestic or foreign, the business will enjoy benefits that aid in the overall growth process. There are but a few disadvantages although they will not have any negative effect on your business in the long run. The process of incorporation takes more time and is monitored by federal, state as well as local agencies leading to paperwork that is compliant with the regulations. As for an LLC, it can be quite difficult to raise financial capital although that problem is solved by the state based grants and loan programs.