Step #3: Meet the Legal Criteria
A. Choose an Entity
There are three broad categories to investigate when determining your business organization: sole proprietorships, partnerships and corporations. While sole proprietorships are the least expensive and easiest to create, they carry a risk of personal liability for the owners. Partnerships and corporations can afford further protection for the owners, but require more paperwork and cost.
B. Register with the County or State
All businesses in Maryland operating under an assumed ‘trade’ name must file an Trade Name Certificate with the State. Partnerships and corporations must file a Trade Name Certificate with the Maryland Secretary of State. Check with your city or county court clerks to determine if a filing is required there as well.
C. Obtain IRS ID
The IRS requires a Taxpayer Identification Number for all entities. This number is used in the administration of tax laws. If your agency is organized as a sole proprietorship, your social security number is your tax identification number. If your agency is organized as a partnership or corporation, you are given a Federal Employer Identification Number (FEIN).
D. Apply for E&O
to applying for an entity license with the Maryland Insurance
Administration you will need to get errors and omissions coverage.
For sole proprietorships, a property and casualty license is issued to the individual; however, the individual must file a form to register a trade name under which he or she will be operating. For partnerships and corporations, the entity must have a separate license filed with the Maryland Insurance Administration. Application for Maryland licenses are through the National Insurance Producer Registry or NIPR. Keep in mind, this information is for Maryland only. If you plan to sell, solicit or negotiate insurance in another state, a non-resident license will be required for that state in addition to your resident Maryland license.