The basic step to complete when forming a Non-Profit in Maryland is to choose a name for your business. For your Maryland Non-Profit name, any of the following words must be found in the actual name: ‘Corporation’, ‘Limited’, or ‘Incorporated’. Alternatively, its corresponding abbreviations including ‘Corp.’, ‘Ltd.’, or ‘Inc.’ can be used as well.
The Non-Profit name should also be unique without any resemblance to any existing business entity registered with the Department of Assessments and Taxation of Maryland. To verify that the business name selected is not in use, you can use the business name database tool.
When you’re starting a Maryland Non-Profit, it is the responsibility of the incorporator to elect an initial set of officers and directors.
These elected Maryland Non-Profit officers and directors will help the incorporator make decisions regarding the Non-Profit at the first organizational meeting. One or more directors can be elected as long as he is of legal age.
A Maryland Registered Agent is required at the incorporation of your Non-Profit. The Registered Agent in Maryland should be an individual of legal age and a resident of the state or a business entity in file with the Department of Assessments and Taxation to conduct business in the state.
A Maryland physical street address should be provided by the Registered Agent. Most importantly, the agent should consent to accept service of process before designation. To become compliant with this requirement, you can check Rocket Lawyer’s Registered Agent Services to help you.
To legally register your Non-Profit, you need to file a Non-Profit Articles of Incorporation to the Maryland Department of Assessments and Taxation. The instructions and guidelines for filling out the form are also provided in the actual form.
Be sure to read these to ensure you have correctly filled out the form. Aside from the standard information required during incorporation, you must also include specific languages required by the IRS for Non-Profit organizations.
These statements include certain provision donating your Non-Profit’s assets to another Non-Profit in Maryland upon dissolution, refusal to engage in any form of illegal activity, and statement of purpose regarding the use of funds. You can refer to IRS Publication 557 for more information on tax exemption stipulated by the IRS.
An initial meeting also called an organizational meeting should be scheduled to decide on the following Non-Profit agenda:
A minutes of the said meeting should be prepared, signed by those present at the time, and stored in the Corporate Records Binder.
A Corporate Records Binder is an organizational binder used by businesses to store important corporate documents.
This binder is where you should file your Maryland Non-Profit registration documents, tax and license compliance paperwork, business plan, corporate bylaws, minutes of the meeting, and other pertinent documents.
A Corporate Records Binder can be bought at the local office supply shop or through Amazon.
A Maryland Non-Profit EIN is required for your business even if you are not hiring employees. An Employer Identification Number is a series of 9 digits that uniquely distinguishes your Non-Profit from other existing businesses within the state.
Obtaining an EIN is free and can be processed and obtained instantly if you apply for it through the IRS website.
The next step to starting a Maryland Non-Profit is to start a separate bank account from your personal one. This is important because you will be able to keep all assets separate in the eyes of the law.
Although there are many options available, do the research to see which is right for you and your business. If you’re not sure where to get started, here is a great roundup of the best banking options.
Now that you have incorporated, the next step to filing your Non-Profit organization is to file for tax exemptions in both the federal and state levels. Regardless if this the case though, be informed that you may still be required to file for Maryland Non-Profit tax registration.
Registering for Non-Profit taxes exemption requires that you follow the steps below:
IRS Form 1023, Application for the Recognition of Exemption Under Section 501(c)(3) of the Internal Revenue Code, should be filed to obtain IRS federal tax exemption status. This lengthy form requires numerous information about the incorporator of the Non-Profit and on the actual business. A step-by-step instruction on how to fill out each entry is also provided in the actual form.
An alternative, more streamlined version form, IRS Form 1023-EZ, Streamlined Application for the Recognition of Exemption Under Section 501(c)(3) of the Internal Revenue Code, is also available. A much simpler, shorter, and easier form to fill out, this form can only be used if a Non-Profit qualifies for certain criteria. Non-Profits with expected gross annual receipts not exceeding $50,000 and total assets not exceeding $250,000 can qualify for this form.
As soon as you have filed for federal tax exemption, you can then obtain a Maryland tax exemption on income tax through the Comptroller of the Treasury. As well, submit the following documents to the Revenue Administration Division Legal Department:
A description of your Non-Profit’s nature, purpose as well as scope;
Your Non-Profit may also qualify for exemption of sales and use tax, so be sure to check it with the Charitable Organizations Division for more details on how to apply for this exemption.
Depending on state regulations, the size of your Non-Profit and the activities you conduct, you may also be required to comply with additional registration and reports. Check the Charitable Organizations Division for rules and regulations regarding this.
The next step to starting a business in Maryland is to take care of the license, permit, and regulations your business will need to adhere to. Depending on your location and type of business, requirements will vary.
To learn more, visit the SBA. To have professionals handle all the research on your behalf while you focus on starting a business, look into this reliable package.
Now that you have followed the steps above, you are an official Non-Profit organization in the state of Maryland. Other than those 10 steps that are based on state guidelines, here are 2 additional steps based on best practices for starting a successful organization. Not required, but highly recommended.
If you want your Non-Profit to serve the public good for a long time, you need to prepare a business plan.
This plan serves as your Non-Profit’s roadmap and will give you a clear perspective on how to stay focused on your purpose, how to achieve your goals, and how to avoid possible distractions.
To get started on creating a business plan, here are some links that you might find helpful.
In the internet age, it is important to have an online presence. This builds credibility and allows your customers to learn more about your business – which is good!
Although building a website was extremely difficult to do in the early 2000’s, nowadays you can use a simple tool like WordPress to build a customizable website. No need to spend thousands on a custom designer and you can learn how to do it yourself through this guide.
This guide should not be taken as a legal advice or document. Its purpose is only to provide information. For expert legal advice on starting a Non-Profit organization in Maryland or Maryland Non-Profit organizations in general, seek the services of a business lawyer.