The birthplace of the national anthem is a wonderful state to start your nonprofit in. Maryland offers scenic waterways, lots of history, and some very dedicated and passionate donors. In this article, we'll walk you through everything you need to know about how to start a nonprofit in Maryland.
Welcome to our step-by-step guide on how to start a nonprofit in Maryland! If you’ve identified an unmet need in your community or field, and you wish to help people on a bigger scale, we’re excited to help guide you through the necessary first steps.
While there are many different types of nonprofits–from cultural to educational to religious–every nonprofit must follow the same federal and state regulations to incorporate and apply for 501(c) status. This will not only give your organization validity within the broader community, but it will also help you apply for grants, open a bank account, and reduce liability issues.
There are several thousand nonprofit organizations currently operating in Maryland. Starting yours may feel daunting at first, but through this 15-step guide, we will show you how to incorporate in Maryland, file for your Employer Identification Number (EIN), and file for tax-exempt status, as well as every other required step.
We’re here to help you learn how to start a nonprofit in Maryland. Let’s go!
The first step is to choose a name for your organization. You’ll want something that is engaging and relevant to the purpose of your nonprofit. It can help to do a quick online search of your name, to make sure it won’t be competing with anything major when people search for your nonprofit.
Maryland has a few requirements, as well. You may already have a great name picked out, but be aware that your name can’t be too similar to the name of another organization already operating in the state. Visit Maryland’s Business Express site to search through their organization database to confirm if your name is available.
Your name must also include either the word “Limited,” “Incorporated,” “Corporation,” or “Company” (if it’s not preceded by the word or a symbol for “and”) or the abbreviation of one of those words. You can review all naming requirements for organizations in the state on Maryland’s Code and Court Rules.
If you plan to include characters or symbols, be sure to also review the IRS guidelines to help you when you apply for your EIN.
Pro tip: Check to see if your preferred name is available as a domain name or social media handle. This will help clarify your brand and make your organization more easily searchable.
Maryland also requires you to choose a nonprofit corporation structure. The state offers 3 options for nonprofit organizations: religious corporation, tax-exempt nonstock corporation, and standard nonstock corporation.
If you’re planning on applying for 501(c) status, you’ll most likely file as a tax-exempt nonstock corporation. In case you’re a nonprofit that is not seeking tax exemption, you’ll file as a standard nonstock corporation. And, if you’re a religious congregation or place of worship seeking tax-exempt status, you’ll need to file as a religious corporation.
At this point, you should start building your initial team, specifically your Directors and Incorporator(s).
Your directors, who will make up your inaugural board of directors, should be a diverse group with varied strengths, experiences, and insights. This will be the main governing body of your organization, so you should also look for a group of people with experience in your field and strong relationships within your community. Check out some helpful insights and tips on finding nonprofit board members here to get started.
In Maryland, you need at least one director and there is no residency or membership requirement. The IRS, on the other hand, requires you to have at least three, unrelated directors over the age of 18 when you apply for 501(c) status. The director(s) can serve until the next annual meeting, or until a successor is elected.
Your Incorporator is the person who signs and delivers your articles of incorporation. This short-term role can be filled by multiple people, or one person, and can be anyone.
Your registered agent is the business or individual authorized to receive legal documents and notices for your organization. In Maryland, your agent must be located in the state and operate within normal business hours.
While your registered agent can be anyone, we don’t recommend listing yourself. The agent address becomes part of the public record upon incorporation, so it will likely receive a lot of junk mail. Plus, the agent must be available to receive documents during normal business hours, meaning you can’t be out of the office during your workday.
Filing your articles of incorporation is the legal start of your nonprofit organization in the eyes of the government. In addition to the IRS requirements for filing for 501(c) status, Maryland has a set of rules and regulations for incorporation. Make sure to review both state and federal regulations thoroughly before filing your articles of incorporation. Remember the language in the documents must match.
Maryland requires you to file your articles of incorporation with the Department of Assessments and Taxation (DAT). There are different documents depending on your nonprofit structure, so be careful to choose the correct form. Maryland has also recently launched its Business Express site, with consolidated forms and information, as well as online filing options.
Maryland recommends filing online, which is automatically considered expedited. You can also register by mail, fax, or in-person, and can find PDFs of the forms on the DAT site. You’ll need to include your organization name, address, purpose, name, and address of your registered agent, and the number of directors and their names.
There is a $100 filing fee, a $20 organization and capitalization fee, and a $50 assessment fee for the Maryland Not-For-Profit Development Center Program, for a total baseline fee of $170 that must be paid when the document is submitted. There is an optional additional $50 expedited fee. Regularly submitted forms can take 4-6 weeks to process, while expedited forms only take 7 business days. All of this information, along with detailed instructions, can be found in the PDF version of the articles of incorporation.
An initial report is a document laying out the initial state of your nonprofit organization when it’s formed. Some states do require you to file this after submitting your articles of incorporation. But it is not a requirement in Maryland.
An Employer Identification Number (EIN) is a unique, nine-digit number assigned to all organizations by the IRS, not just those hiring employees. It’s an important identifier when filing for tax exemption, submitting tax documents, and opening bank accounts.
Once your articles of incorporation have been approved, you can file for your EIN. This form is free and can be done online, which needs to be completed in a single session, and will immediately provide your EIN. If you’d prefer, you can also file by phone or fax, which will process in about 4 business days, or by mailing in a filled out Form SS-4, which will take 4-5 weeks.
As you work through these steps, you’ll quickly start accumulating important documents and form copies. A successful, well-run nonprofit will build an organizational system early to efficiently store their records and important documents. Because many forms and licenses will need to be referenced annually (if not more frequently).
Once your structure’s in place, you can safely store your EIN, Articles of Incorporation, copies of filed forms, licenses, and meeting agendas and notes.
Pro tip: Build a system that is safe, user-friendly, and navigable so everyone can easily and quickly find what they’re looking for.
Establishing your initial governing documents and policies is a critical step in the formation of your nonprofit organization. They’ll be approved at your initial board of directors meeting, so you should draft them in advance. These documents will include your nonprofit bylaws and conflict-of-interest policy.
Your nonprofit bylaws are not mandatory in Maryland when you file your articles of incorporation. However, the IRS asks for them when you file for 501(c) status. So, you should ratify them before you file for tax exemption.
Nonprofit bylaws are the main governing document of your organization. They cover the internal rules for key positions and operating structures. If you’re not sure where to start, we’ve outlined some tips and best practices in our article on nonprofit bylaws.
A conflict-of-interest policy is a regulatory document for important members of your nonprofit. At its most basic, it outlines how to avoid and mitigate conflicts of interest in the use of resources and assets, as well as in the actions of key stakeholders (like directors) to affirm that they’re acting in the best interest of the organization. You can find some more insights into ethics, accountability, and conflict-of-interest policies for nonprofits here.
Now that you’ve built your Board of Directors and drafted some of your initial governing documents, you need to hold your first organization meeting. You should plan this before you file for 501(c) status. That’s because you’ll need the approved bylaws and conflict-of-interest policy, as well as minutes from the meeting, for your application.
This is also the moment where you should appoint officers, pass a resolution affirming the establishment of the organization, clarify the purpose of the nonprofit, and discuss important steps like opening a company bank account. Maryland has a few officer requirements you’ll need to meet. You need at least three officers: a president, treasurer, and secretary. There is a term limit of one year, and a successor must be elected. Different individuals can hold two or more offices, except the president and vice president.
Pro tip: To make the most of your time, draft and share an agenda in advance of the meeting and designate someone to take minutes. If you’re unsure of where to start, check here for a guide on how to run a nonprofit board meeting.
Maryland has a combined application for registering for state taxes. You can submit Form CRA: Combined Registration Application to the Comptroller of Maryland either through mail or online. There is no cost to file this application. It will cover all taxes and licenses you need in the state. Also, all new organizations are automatically enrolled in Maryland’s property tax.
Another very important step is applying for 501(c) status with the IRS. This is what will allow you to get federal tax exemption and save money. It will also make a big difference as you apply for grants and sponsorships.
You’ll apply for tax-exempt status with the IRS by filling out Form 1023-EZ, Form 1023, or Form 1024, depending on your eligibility:
You’ll have to include your articles of incorporation including your nonprofit’s purpose when you file, as well as limitations on distributions and any restrictions in case of dissolution.
If IRS approves your application, they’ll recognize your tax-exempt status by sending you a determination letter. You can find the different statuses and filing requirements outlined on the IRS website, but working with a specialist is a smart way to make sure you do everything right the first time.
Once you’ve received your determination letter confirming your federal tax exemption, you’re eligible to apply for state income tax exemption. You can apply for this by submitting the following to the Legal Department of the Revenue Administration Division:
Once you’ve received the exemption, you won’t need to file income tax returns.
Once you’ve received your determination letter, your nonprofit is eligible for state and use tax exemption, as well. The form you’ll need to apply for this exemption is included in the Combined Registration Application, but can also be found on the Comptroller’s website.
There’s also the possibility for exemption from Maryland property tax. You’ll need to contact the Department of Assessments and Taxation (DAT) office for the county your organization is located in to get information about a possible exemption or an exemption application form. You can visit DAT’s website to find more information, a list of local offices, and copies of the forms.
Maryland, like many other states, requires you to register for charitable solicitation (meaning fundraising or asking for donations). If you’re planning on fundraising in other states as well, be sure to check the requirements for each.
To register in Maryland, you need to file with the Office of the Secretary of State. The type of registration depends on the level of charitable contributions.
If your organization received more than $25,000 in the most recent fiscal year, you’ll need to include everything outlined in Form COR-92 and then submit it through mail or email. If your organization received less than $25,000 in the most recent fiscal year, you only have to fill out and file the Exempt Organization Fund form. The fee can be anywhere from $0-$300, depending on your level of contributions. You can expect to hear back in 4-6 weeks.
You’ll also need to update your registration annually. Everything you’ll need to submit is included in the Annual Update of Registration Instructions and Form, which you’ll need to file within 6 months of the end of your fiscal year.
Your organization might be eligible for exemption. This typically applies to religious organizations, organizations affiliated with a religious organization; also, those only soliciting charitable contributions from its members.
If you fall into one of the former two categories, you’ll need to submit a written request for religious exemption and include your nonprofit bylaws, IRS determination letter, articles of incorporation, and information outlining your mission.
If you’re in the third category, you’ll have to request a membership exemption by submitting your nonprofit bylaws which must explicitly state a right or benefit of your members beyond the right to vote, elect officers, or hold office. You’ll also have to include a statement outlining who is soliciting contributions.
Depending on your programs and needs, you may have to apply for other business licenses and permits in Maryland at both the state and local levels. Check out Maryland’s OneStop Portal for any and all state licenses, forms, certifications, permits, applications, and registrations. You can browse by use or state agency.
You can also contact your county’s office for any local requirements.
Congratulations! You’re officially on your way to starting a nonprofit organization in Maryland. While these 15 steps might feel like a lot now, with organization and patience, you’ll soon be making the difference you’ve been dreaming of!
While this is a solid foundation and a great start, remember that you’ll need to remain compliant with federal and state requirements. This means filing annual renewals and registrations on time and filing your required tax forms.
We believe in you and are there for you every step of the way. Visit our nonprofit blog for more tips, tricks, and guides on every aspect of successfully running a nonprofit organization.
In this section, we’ll be answering some of the most common questions regarding how to start a nonprofit in Maryland.
Starting a nonprofit in Maryland will cost anywhere between $445-$1120, depending on your eligibility and charitable contributions.
Filing articles of incorporation costs between $170-$220 depending on whether or not you opt to expedite the process. Filing for 501(c) status costs between $275-$600 depending on which form you’re eligible for. And, fees for charitable solicitation registration can cost between $0-$300; it depends on how much you’ve received in the last fiscal year.
No. In order to apply for 501(c) status with the IRS, you need at least three, unrelated directors.
Yes. While you should be aware of your budgetary limitations when setting your salary, it is legal and normal for nonprofit employees (yourself included) to receive a taxable salary.
You should be careful not to pay yourself an exorbitant salary. However, too much personal gain (especially if it adversely affects the operations of the nonprofit) might become a conflict of interest.
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Sarah Simpson