If you’re beginning a business in Maryland, you might wonder if you need to register a “doing business as” name, or DBA. For sole proprietorships or general partnerships that use the owner’s entire legal name as the business name, DBA registration is not necessary in Maryland. However, you must submit a DBA registration form to the Maryland Department of Assessments and Taxation if you intend to use a name that is distinct from your own legal name.
All businesses must register as DBAs if they want to conduct operations under a name other than their official business name. For instance, if your company is officially registered as “John Smith LLC,” but you want to conduct business as “John’s Auto Repairs,” you must submit a DBA registration. This is crucial because it allows for the legal protection of your company name and guarantees that the general public is aware of who is behind the operation.
As a single proprietor, you are the lone owner of your company and have total authority over its financial operations. As a result, you can treat yourself as a sole proprietor and get paid, but you should be aware that you will have to pay self-employment taxes on your earnings. As a sole owner, you can also be on payroll, however you might not need to do so unless you have workers.
Your tax liability will be determined by your business’s profits as well as additional elements like deductions and credits. In addition to any income tax due, the lone proprietor’s federal tax rate for tax year 2021 is 15.3% for self-employment tax. Maryland has its own tax structure as well, with personal income tax rates ranging from 2% to 5.75%. You can register a bank account for your company as a sole owner using your personal details. Although many banks demand confirmation of DBA registration before opening a business account, it’s a good idea to do so if you intend to use a business name. It can be simpler to file taxes and maintain track of your finances if you have a separate bank account for your business.
In conclusion, DBA registration is important if you intend to use a different business name even if it is not necessary for single owners in Maryland who use their legal name as their business name. You can pay yourself and be on payroll as a single proprietor, but you should be aware of the tax repercussions. Additionally, you should register a company bank account to keep your personal and financial affairs distinct.
In Maryland, if you are self-employed, you must pay self-employment taxes for Social Security and Medicare as well as federal and state income taxes. Depending on the kind of your business and where it is located, you can also be required to pay additional taxes like sales tax, real estate tax, and local taxes. To make sure you are adhering to all tax regulations, it is crucial to seek advice from a tax expert.