February 5, 2009 11:06 AM EST
The absolute minimum you should do is apply for a business license with your state (in your case, Maryland). You state website can always give you more information on that. If you are collecting sales tax on the products you are selling, depending on the state, you might need a vendor license. Again, your state website (and/or your accountant or attorney) can give you more information on the specifics.
As for what type of business to form? It is a toss up between an S-Corp and an LLC. There really isn`t much of a difference between the benefits of the two. Some would argue that an LLC would be better if there is more than one owner.
---Motivation for Entrepreneurs