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Obtaining money for a startup company

Maryland citizens looking to start a business may wish to research some common experiences with obtaining funding for their enterprise. Many companies have begun in this state, and their background in searching for capital may be instructional to those who wish to follow in their footsteps. One lesson they have learned is to be pragmatic about capital. Venture capitalists account for only 1 percent of the funding for startups. Family members and friends, on the other hand, provide about 24 percent of the money needed for businesses to begin. Statistics indicate that 82 percent of all beginning ventures involve some amount of self-funding. This implies that those who wish to start a new company may find their own resources to be the most reliable. However, crowdfunding is a steadily growing portion of the market. Crowdfunding has become more reliable than venture capital, as it now accounts for 3 percent of startup business funding. This method of obtaining the money necessary to operate has grown to provide more than $5.1 billion to startups in the few years of its existence. $2 million now comes in from crowdfunding in an average day, and that number may continue to climb.

What are the advantages and disadvantages of a partnership?

A partnership is a type of business structure in which two or more people share ownership and, thus, have equal say regarding the operation of the business. There are several advantages and disadvantages to forming a partnership in order to run a business, all of which should be carefully considered prior to setting up such a business entity.

What is an S corp, and what are its advantages?

Entrepreneurs in Maryland may benefit from learning more about S corporations and the advantages or disadvantages they may offer. The S corporation can be described as a corporation that receives a special type of IRS tax election that allows it to avoid double taxation as a domestic corporation and to shareholders. The IRS considers S corporations to be unique entities that are separate from the owners.

Corporations in Maryland

In Maryland, determining if a company should be structured as a corporation depends on its commercial capabilities and goals. It is also important that a business choosing to incorporate is aware of the advantages and disadvantages of what becoming a corporation entails.

What is an LLC, and what are its advantages and disadvantages?

A limited liability company is a hybrid business structure. It provides its members with limited liability similar to a corporation with tax benefits similar to a partnership. Unlike a corporation, profit and loss from the business flows through to the personal tax returns of the members. An LLC can have one individual member, two members or can have other corporations and LLCs as members.

What is a sole proprietorship?

When entrepreneurs starts businesses in Maryland, they have a number of different business structures from which to choose. One of the simplest options is a sole proprietorship. The sole proprietorship allows business owners to quickly launch their company with little paperwork or administrative requirements. It also has very little reporting requirements and it gives owners the ability to retain complete control of their business. For many businesses, a sole proprietorship structure is an excellent choice.

Acquiring an existing enterprise

Entrepreneurs in Maryland may benefit from reviewing all the criteria necessary for buying an existing business. According to the U.S. Small Business Administration, some entrepreneurs absorb less risk by purchasing an existing business, as opposed to starting one from the ground up. Regardless of how seasoned a target company is, prospective purchasers are advised to conduct the necessary due diligence before going forward.

Maryland poised for business growth with Steak 'n Shake

Business formation isn't always about creating a brand new business. Sometimes, business formation and planning is required when expanding a business or franchise into a new location where business regulations and legal matters may differ from those in its current location. In many cases, the new location will welcome a business that brings revenue and jobs, but owners and operators must still understand where liabilities and issues could hide.

Enterprise Zone to expand in Maryland

In Maryland, business owners who operate out of an area that has been deemed an Enterprise Zone have some advantages that business owners in other areas may not be able to get. Specifically, they can get tax credits on both their real estate taxes and their income taxes. The amount of credit that they are awarded does have a lot to do with the businesses themselves, as it relates directly to steps that the owners take to create more jobs or to improve the property.

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