How to Start a Nonprofit in Maryland


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Start a Nonprofit in Maryland

Are you looking to start a nonprofit in Maryland? You’ve come to the right place. Known for its vibrant community and rich culture, Maryland (often referred to as The Old Line State) is an ideal location for establishing a nonprofit organization. Unlike for-profit businesses, nonprofits focus on addressing pressing social issues and require a strong foundation, thorough research, and a clear mission targeting a specific community problem.

Embarking on the journey of creating a nonprofit entails various crucial steps, such as obtaining 501(c)(3) status. A 501(c)(3) organization is designed for charitable, religious, educational purposes, and more, qualifying it for federal and state tax exemptions.

In the spirit of Maryland’s motto, “Manly deeds, womanly words (Fatti maschii, parole femine),” thousands of nonprofits are founded within the state each year. This article will provide a comprehensive guide to starting your own nonprofit corporation in Maryland. Keep in mind that the steps discussed here are general guidelines, and modifications may be necessary depending on your specific circumstances. To gain a deep understanding of how to start a nonprofit in Maryland, we encourage you to read this article in its entirety.

What is a Nonprofit in Maryland?

Nonprofit organizations are legal entities that operate to serve public benefits and address community issues. Unlike for-profit organizations, nonprofits do not aim to generate any profit. The Internal Revenue Service (IRS) generally exempts nonprofit organizations from tax. However, based on the business entity structure, you will receive tax exemptions as a nonprofit.

In Maryland, ensure you have a community issue to address before you start forming your nonprofit. It can generally be education, religion, charity, social service, or other social issues. Nonprofits do not pay taxes on the money they receive through fundraising programs, donations, or any charitable funding.

Types of Nonprofits in Maryland

The first thing one has to decide is what type of nonprofit structure one wants. There are several types of nonprofits one can start. Here is a list of nonprofit types one can choose from-

  1. Nonprofit LLC
  2. Nonprofit Corporation
  3. Unincorporated Nonprofit

Forming an LLC in Maryland for your nonprofit can be a smooth option. However, having a corporation is less complex than having a nonprofit LLC. Hence, it is wise to start a nonprofit corporation instead of an unincorporated nonprofit or nonprofit LLC.

LLCBuddy Editorial Team.

Technically, starting a corporation for your nonprofit protects your personal assets but also is eligible for Federal and State tax exemptions. When you form an LLC for your nonprofit, it only protects your personal assets but does not give you any tax exemptions. On the other hand, a nonprofit Corporation has both corporation and limited liability company benefits. You can also have an unincorporated structure where you don’t have to register it. Unincorporated nonprofits in Maryland might be eligible for tax exemptions (check with Maryland Comptroller of Maryland), but this type of organization does not get to enjoy limited liability and personal asset protection.

How to Start a Nonprofit Corporation in Maryland

Setting up a nonprofit corporation requires a few things to consider. Name of the nonprofit, initial directors, drafting bylaws, get a Resident Agent, obtain tax IDs, insurance, and a bank account – these are important steps you must follow. The steps mentioned here are general business formation steps. State-wise, some steps can be different. Getting an expert consultation before you start your nonprofit corporation formation is recommended. Here are the steps explained below-

Step 1: Get a Suitable Name for Your Maryland Nonprofit Corp

The first step is to name your nonprofit corporation. You must be sure that the name is available and that no other organization is using this name. You can check the Maryland LLC name search to find the best suitable name for your organization. You must follow those rules to avoid any legal issues later. You can reserve the name for 30 days for any domestic entity (such as a nonprofit LLC) if you’re not forming the nonprofit immediately.

Step 2: Appoint the Initial Board of Directors

The next step is to get your nonprofit’s initial board of directors. It is very important when you are setting up a nonprofit corporation. You need at least One unrelated directors to start the organization. If you don’t choose a minimum of One directors, it will automatically become a member-managed corporation.

Step 3: Appoint Your Maryland Resident Agent

The third step is to get a Maryland Resident Agent for your nonprofit corporation. The Resident Agent is a person who receives all the legal documents on your behalf. It is necessary to get a registered agent. He/she must be above 18 years old and have a physical address in Maryland. 

Step 4: Write Maryland Nonprofit Bylaws

The next important step is to write the company bylaws. The directors and board members must decide how the meetings, elections, voting, and other corporate activities will be held. These bylaws must comply with the Maryland state law. It is similar to an LLC operating agreement in Maryland for the LLC owners.

Step 5: File the Maryland Articles of Incorporation

This is the most important step. File your Articles of Incorporation with the Maryland Secretary of State. You can do it through three ways, online, by mail and in-person. All the formation forms, such as the Maryland LLC Articles of Organization form, the Maryland Articles of Incorporation form for corporations, forms for LLPs, and all others can be found on the Maryland SOS official website. Submit the details of your nonprofit corporation, like the name of the nonprofit, address, name and address of the registered agent, operation dates, directors’ details, and more information related to your company. You can send the form (for offline filing) and the filing fee of $120 for filing in person and by mail to the CoState Department of Assessments and Taxation, Charter Division 301 W. Preston Street; 8th Floor, Baltimore, MD 21201-2395 or upload it online (if available).

Step 6: Obtain Tax ID for Your Maryland Nonprofit Corporation

The subsequent step involves obtaining a Tax ID for your nonprofit corporation. You will need to acquire an Employer Identification Number (EIN) from the official IRS website. To obtain the EIN, submit your application to the IRS office either by mail or through their online platform. There is no associated cost for this process.

Step 7: Get Business Licenses in Maryland

The next step is to get the business licenses you need to run your nonprofit organization in Maryland. Check with the local government office if any special licenses you need to run your nonprofit. You can file your nonprofit as a charity if you want. 

Step 8: Federal Tax Exemption

You must submit Form 1023 to the IRS to file for federal tax exemption. This form, titled “Application for Recognition of Exemption Under Section 501(c)(3) of the Internal Revenue Code,” is required for all nonprofit corporations. Smaller nonprofits have the option to file Form 1023-EZ instead. You will be prompted to provide details about your organization upon obtaining the relevant form. Complete the form with the necessary information and submit it. The filing fees are $600 for Form 1023 and $275 for Form 1023-EZ.

Step 9: State Tax Exemption

Once you get the Federal Tax Exempt, it is time for State Tax Exempt. In Maryland, you must apply for the tax exemption to Maryland Comptroller of Maryland. Get the form, fill it up with the correct details, and send it to the office. You may need to pay a fee along with the form and supportive documents to apply for the State Tax Exemption. You need SUTEC 2022 Form to apply for the state tax exemption. Read Maryland classification of taxes to learn more about the Maryland tax structure.

Step 10: Get Insurance for Your Maryland Nonprofit

Once you start your nonprofit, you must get insurance to protect your organization. You must get workers’ compensation and unemployment insurance if you have employees. Based on your nonprofit structure, you might need general liability insurance, property, vehicle, auto insurance, etc. You can contact the insurance providers to learn more about which are required for your organization. Also, you can contact Maryland Insurance Administration for more information. 

After Forming Your Maryland Nonprofit Corporation

Once your nonprofit is formed, there are additional steps to complete:

  • Get a Business Bank Account: You must get a business account for all types of business-related transactions in Maryland. You may need different documents based on the bank and place of business. Check with the bank for it.
  • File Nonprofit as Charity: This is optional. Your nonprofit is either for charity purposes or any purpose that meets your community’s needs. If your organization is for charity purposes, then you can file your nonprofit as a charity to enjoy tax exemptions. 
  • Other Business Compliances: You may need additional compliances based on your nonprofit type. Check with your attorney or local authority for more information.

Names of Nonprofit Corporations in Maryland

Following are some of the Nonprofit Organizations in Maryland. The contact information of these organizations can be found on Maryland SOS official websites.

  • Pocomoke City Charities
  • Poolesville Charities
  • Potomac Charities
  • Prince Frederick Charities
  • Princess Anne Charities
  • Randallstown Charities
  • Reisterstown Charities
  • Ridgely Charities

FAQs

What is a nonprofit organization?
A nonprofit organization is an entity that is organized for a purpose other than making a profit. The purpose of a nonprofit organization is typically to benefit the public in some way.
How do I form a nonprofit organization in Maryland?
To form a nonprofit in Maryland, you must file Articles of Incorporation with the Maryland Department of Assessments and Taxation (DAT). The Articles of Incorporation must include the purpose of the organization, the name, and address of the registered office and name of the registered agent.
What are the steps to form a nonprofit organization in Maryland?
The steps to form a nonprofit organization in Maryland are
What is the filing fee for forming a nonprofit organization in Maryland?
The filing fee for forming a nonprofit organization in Maryland is $70.
What documents must be filed to form a nonprofit organization in Maryland?
The documents that must be filed to form a nonprofit organization in Maryland are Articles of Incorporation with the Maryland Department of Assessments and Taxation (DAT), and registration with the Internal Revenue Service (IRS) for a federal EIN.
How do I register my nonprofit organization with the Internal Revenue Service (IRS)?
To register your nonprofit organization with the IRS, you must submit Form SS-4, Application for Employer Identification Number.
How do I obtain 501(c)(3) status from the Internal Revenue Service (IRS)?
To obtain 501(c)(3) status from the IRS, you must submit Form 1023, Application for Recognition of Exemption, to the IRS.
How do I obtain a Maryland Charitable Solicitation License?
To obtain a Maryland Charitable Solicitation License, you must submit Form CHAR500 to the Maryland Department of Labor.
Are there any other licenses or permits required to form a nonprofit organization in Maryland?
Depending on the nature of the nonprofit organization, there may be other licenses or permits required.
What is the purpose of corporate bylaws?
Corporate bylaws are the rules and regulations that govern a nonprofit organization in Maryland. The bylaws set forth the rights, duties, and responsibilities of the members of the organization, as well as the operating procedures of the organization.
Do I need to file an annual report in Maryland?
Yes, every nonprofit organization in Maryland must file an annual report with the Maryland Department of Assessments and Taxation (DAT).
When is the deadline for filing an annual report in Maryland?
The deadline for filing an annual report in Maryland is June 15th of each year.
What are the penalties for not filing an annual report in Maryland?
The penalty for not filing an annual report in Maryland is $25.00.
How do I obtain fundraising approval in Maryland?
To obtain fundraising approval in Maryland, you must submit Form CHAR500 to the Maryland Department of Labor.
What are the rules for fundraising in Maryland?
The Maryland Charitable Solicitation Law outlines the rules for fundraising in Maryland. These regulations include registration requirements, reporting requirements, and prohibitions on certain types of fundraising activities.
Do I need to register my nonprofit organization with the Maryland Secretary of State?
No, you do not need to register your nonprofit organization with the Maryland Secretary of State. However, you must file Articles of Incorporation with the Maryland Department of Assessments and Taxation (DAT).
Can I form a nonprofit limited liability company (LLC) in Maryland?
Yes, you can form a nonprofit limited liability company (LLC) in Maryland. However, the LLC must comply with all the same requirements as a nonprofit corporation.
Can I form a for-profit corporation in Maryland and then convert it to a nonprofit?
Yes, you can form a for-profit corporation in Maryland and then convert it to a nonprofit. However, you must follow the same steps as forming a new nonprofit organization.
Do I need to hire a lawyer to form a nonprofit organization in Maryland?
No, you do not need to hire a lawyer to form a nonprofit organization in Maryland. However, a lawyer can provide advice on the process and help ensure that you are in compliance with all applicable laws.
How do I obtain tax-exempt status in Maryland?
To obtain tax-exempt status in Maryland, you must submit Form 501(c)(3) to the Internal Revenue Service (IRS).
How do I apply for grants in Maryland?
To apply for grants in Maryland, you must contact the appropriate grant-making organization. Some organizations, such as the Maryland State Arts Council, have an online application process.
Are there any restrictions on how I can use grant funds in Maryland?
Yes, grants are subject to certain restrictions. The restrictions vary depending on the grant-making organization and the type of grant.
What is the Maryland Charitable Solicitation Law?
The Maryland Charitable Solicitation Law is a set of laws that govern fundraising activities in Maryland. The law includes registration requirements, reporting requirements, and prohibitions on certain types of fundraising activities.
What is the Maryland Nonprofits Act?
The Maryland Nonprofits Act is a set of laws that govern the operation of nonprofit organizations in Maryland. The Act includes requirements for forming and managing a nonprofit, as well as filing of annual reports.
Are there any reporting requirements for nonprofit organizations in Maryland?
Yes, nonprofit organizations in Maryland are required to file an annual report with the Maryland Department of Assessments and Taxation (DAT).
How can I get assistance with the process of forming a nonprofit organization in Maryland?
There are a number of organizations and resources available to provide assistance with the process of forming a nonprofit organization in Maryland. These include the Maryland Nonprofits website, and local bar associations.
What are the advantages of forming a nonprofit organization in Maryland?
The advantages of forming a nonprofit organization in Maryland include potential tax-exempt status, access to grants, and the ability to attract donors and volunteers.
What are the steps to starting a nonprofit in Maryland?
To start a nonprofit in Maryland, you will need to file articles of incorporation with the Maryland Department of Assessments and Taxation. Additionally, you must obtain an Employer Identification Number (EIN) from the Internal Revenue Service (IRS) to open a bank account and file tax returns, obtain any necessary local permits, and register with the Maryland Department of Labor, Licensing, and Regulation (DLLR).
What type of documents are required to form a nonprofit in Maryland?
The documents required to form a nonprofit in Maryland include Articles of Incorporation, a Bylaws document, and a Conflict of Interest policy. Additionally, you may need to obtain a tax-exempt status from the IRS and/or a local permit.
Is there a fee to file articles of incorporation in Maryland?
Yes, there is a fee of $100 to file articles of incorporation in Maryland.
How long does it take to form a nonprofit in Maryland?
It typically takes 4-6 weeks to complete the process of forming a nonprofit in Maryland.
Do nonprofits in Maryland need to register with the state?
Yes, all nonprofits in Maryland must register with the Maryland Department of Assessments and Taxation in order to obtain a Certificate of Authority.
What is the Maryland Charitable Solicitations Act?
The Maryland Charitable Solicitations Act is a state law that requires organizations to register with the state before engaging in charitable fundraising activities.
Are there reporting requirements for nonprofits in Maryland?
Yes, all nonprofits in Maryland are required to file annual reports with the Maryland Department of Assessments and Taxation. Additionally, nonprofits may be required to file tax returns with the IRS and may need to report fundraising activities to the Maryland Attorney General’s Office.
Is there any additional information available about starting a nonprofit in Maryland?
Yes, the Maryland Secretary of State provides additional information and resources to help guide you through the process of registering a nonprofit in Maryland.

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Conclusion

Starting a nonprofit corporation in Maryland is an incredible way to give back to your community and positively impact the causes that matter most to you. By forming a nonprofit, you can provide essential services, promote awareness, and make a lasting difference in the lives of those who need it most. In Maryland, a lot of nonprofit organizations are there to cater to people in need. Starting a nonprofit corporation is better than an LLC, as it provides limited liability and tax benefits. It helps you save taxes. If you want to start a nonprofit in Maryland, you must follow the steps mentioned above in the article.


About Author & Editorial Staff

Steve Goldstein, founder of LLCBuddy, is a specialist in corporate formations, dedicated to guiding entrepreneurs and small business owners through the LLC process. LLCBuddy provides a wealth of streamlined resources such as guides, articles, and FAQs, making LLC establishment seamless. The diligent editorial staff makes sure content is accurate, up-to-date information on topics like state-specific requirements, registered agents, and compliance. Steve's enthusiasm for entrepreneurship makes LLCBuddy an essential and trustworthy resource for launching and running an LLC.

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