Starting a Nonprofit in MD: Everything You Need to Know
Starting a nonprofit in MD involves establishing a nonprofit organization in the state of Maryland.3 min read
Starting a nonprofit in MD involves establishing a nonprofit organization in the state of Maryland. If you are passionate about a cause, starting a nonprofit is a great way to offer support and make a difference in your community. There are several steps you must take if you are starting a nonprofit in MD.
Give Your Organization a Name
To begin, you need to incorporate your organization. To do this, you must first choose a legal name for your company. The name you choose helps establish your brand so it stands apart from other organizations. The name of your organization must be unique, meaning no other registered organization in Maryland can have the same name. It must also meet the state requirements.
To find out if the name you choose is available in Maryland, do a name search with the Maryland State Department of Assessments and Taxation (SDAT). In Maryland, the name of an organization must include one of the following terms or their abbreviations:
Choose a Corporation Structure
There are three nonprofit corporation structures you can choose from in Maryland. They are as follows:
- A religious corporation structure is suitable for a religious congregation seeking a tax-exempt status.
- A tax-exempt nonstock corporation is ideal for one or more people taking part in a nonprofit business who plan to apply for federal income tax exemption under Internal Revenue Code (IRC) subsection 501(c)(3) or similar.
- A nonstock corporation is a good choice for one or more people involved in a nonprofit business.
Identify Incorporators and Directors
You need to choose at least one person to act as the incorporator for your nonprofit. This person signs the articles of incorporation for your organization. In Maryland, you also need to choose at least one director for your nonprofit. However, to meet Internal Revenue Service (IRS) requirements, you need at least three unrelated people to each take on a director role. Directors form the governing body for your nonprofit and help drive the vision and purpose of the organization.
Select a Registered Agent
A registered agent is responsible for receiving legal documents for your nonprofit. The agent you select must be located in Maryland and have an office open during standard business hours.
Create Articles of Incorporation
To officially establish your corporation you need to prepare and file articles of incorporation that document specific details about your organization, such as when and where it was formed. In Maryland, articles of incorporation must include the following information:
- Name of your nonprofit and a description of your business.
- Name and address of the incorporator.
- Address of your business in Maryland.
- Name and location of your Maryland-based registered agent.
- Number of directors and their names.
- Federal and state tax-exempt statements outlining how funds are used, types of restricted activities, and how assets are distributed in the event of dissolution.
When creating the articles of incorporation for your organization, make sure they also meet IRS standards. By doing so, you reduce the risk of needing to make changes to the articles of incorporation or having your 501(c)(3) application rejected by the IRS.
You can file your articles of incorporation with the Maryland SDAT by fax, in person, by mail, or online. The following fees apply:
- $100 state filing fee
- $20 organization and capitalization fee
- $50 development center fee for 501(c)(3),(4), or (6) applications
- $5 return mail fee (optional)
- $50 expedite fee required for online, fax, or in-person applications, but optional for applications sent by mail
It can take 10 weeks or longer to process applications sent by mail. Expedited online and fax applications take seven days to process. If you apply in person prior to 4:15 p.m. you can expect same-day processing. Only those who pay the $5 return mail fee receive notification when their application is done being processed. You can also check online for an update on the status of your application.
If you're thinking of starting a nonprofit in Maryland to support a cause you're passionate about, it is important to understand all the actions you need to take. From choosing a board to filing articles of incorporation, there are many steps involved in the process.
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