Baltimore’s economy is heavily reliant on small enterprises. The city is home to a wide variety of small companies, including restaurants, retail stores, and tech start-ups. However, it can be difficult to pinpoint the precise number of small enterprises in Baltimore. The U.S. Census Bureau’s most recent data indicates that there were about 35,000 small enterprises in Baltimore in 2018. This figure includes companies with less than 500 staff members and yearly sales of under $5 million.
As a lone entrepreneur, managing your company’s finances includes setting aside money for taxes. Depending on the revenue of your company and your tax bracket, you need budget a certain amount for taxes. It’s advised that sole proprietors set aside 25–30% of their revenue for taxes as a general rule. This covers any applicable federal income tax, Social Security and Medicare contributions, as well as any state or municipal taxes.
It is advised for sole proprietors to register their firms with the state of Maryland even though doing so is not mandatory for legal and tax reasons. By registering your company as a sole proprietorship, you can get liability insurance and a tax ID number for your company. Registering your firm might also make it simpler to get finance and build credibility with clients.
A common option for small business owners seeking liability protection without the complexities of a corporation is an LLC, or limited liability company. Although LLCs are exempt from filing taxes, they must nevertheless record their business’s earnings and outlays on a tax return. LLCs must also pay self-employment taxes, which include Medicare and Social Security taxes.
Finally, Baltimore is home to a wide variety of small enterprises, and managing your finances as a sole owner requires that you set aside money for taxes. Although it is not necessary to register your business, doing so is advised for legal and tax reasons. Although they are exempt from filing taxes, LLCs offer small business owners liability protection. It’s always better to get professional advice when dealing with any tax or legal situation.