A sole proprietorship is the most basic business structure, where the business is owned and run by one individual, and there is no legal distinction between the owner and the business. In Maryland, like in many other states, this structure is the default for individuals starting a business without formally registering a different entity. It offers simplicity in setup and operation, making it an attractive option for freelancers, independent contractors, and small business owners just getting started. While straightforward, operating as a sole proprietorship in Maryland comes with significant implications, particularly regarding personal liability and taxation. All business debts and obligations are considered personal debts, meaning your personal assets are at risk if the business incurs debt or faces legal action. This guide will explore the nuances of running a sole proprietorship in Maryland, from initial considerations to understanding its limitations and potential alternatives.
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