How To Form a 501(c)(3) Nonprofit In Maryland

How to Use this Guide

Use the guide below to form a 501(c)(3) nonprofit in Maryland. Keep in mind that the process requires forming a nonprofit corporation and getting tax-exempt status with the IRS.

Since the overall process is extremely complex, we highly recommend consulting with an attorney or using a service like Harbor Compliance for personalized top-to-bottom nonprofit formation and obtaining IRS 501(c)(3) status.

Step 1) Secure Your Nonprofit Name

Choose a Business NameThere’s a handful of things you need to know as you tackle your nonprofit’s corporate name (MD Code § 2-106 (2013)). First, it must be unlike any other registered entity – conduct a Business Entity Search to check for naming conflicts. The name can’t be deceptive and imply your nonprofit does anything other than what you’ll state in your Articles of Incorporation.

Also, the name must include one of the following words or their abbreviation: “Company”, if it’s not preceded by the word/symbol “and”; “Corporation” “Incorporated”; or “Limited.” In Maryland you can also reserve a trademark by filing a Trade Name Application.

Filing Fee: $25 regular, $50 expedited, $75 total expedited

Quick Note: Before you commit 100% to a name, you may also want to check that there’s a decent URL available for your business. Use WEEBLY to search your options. If there’s a quality domain name for purchase, we advise buying it right away. Even if launching a business website isn’t on your radar right now, it’s going to be soon, and you might as well nail down a domain name that’ll make it easy for customers to find you!

Step 2) Appoint A Registered Agent

Choose a Registered AgentA Maryland Registered Agent is required to incorporate any nonprofit in the state. This “statutory agent” should be an individual of legal age and a resident or a registered business entity on file with the Dept. of Assessments & Taxation. Your “registered office” is also required to have a physical MD street address.

Costs can run $160 every year, or you can get a qualified/dependable agent free of charge when you incorporate your nonprofit through well-trusted services like Harbor Compliance (see details).

Step 3) Select Incorporators & Directors

Get a Registered Agent

Chances are you’re unfamiliar with the formal nature of nonprofit corporations. That’s okay, choosing to govern by a board of directors has a fair amount of upsides vs. being “member or volunteer-run”. The first being that you’ve got to assemble a team! Now incorporators are the individuals who execute the Articles of Incorporation in Step 5 – sign & file. As long as they’re 18 you’re good to go.

Bookmark the Checklist for MD Nonprofits because it has some of the finer details and links to more resources, but to be frank, working with an attorney or incorporation provider really comes in handy during this foundational step because there are definitely corporate formalities to learn.

Step 4) Draft Nonprofit Bylaws

Register an LLC

Without your own bylaws, your nonprofit would be subject to the default rules and statutes concerning these subjects which may not be suitable at all. Common nonprofit bylaws include:

  • Detailed info on principle and registered agent offices.
  • Management, procedures, and responsibilities of the board.
  • Details on each office – Pres., Secretary, Treasurer, etc.
  • How to go about Adding/Amending bylaws,
  • How to handle other corporate formalities required in Maryland.

To get started, check out a savvy Corporate Bylaws Template with an example that you can customize yourself.

Step 5) File Articles Of Incorporation

Business LicensesFirst, head to the Departmental Forms page and then choose the Articles of Incorporation that suit your organization, whether religious or strictly tax-exempt. It will need to be filed with the MD State Dept. of Assessments & Taxation (SDAT) and do keep in mind that if you don’t leverage the expedited services it could take over 2 months to get this processed! Below is the current fee structure (subject to change) and here’s a link to the Annotated MD State Code as well.

Filing Fees: $100 filing fee + $20 Organization & Capitalization fee + $50 Development Center Fee if applying for 501(c)(3),(4), or (6) + optional $5 return mail fee + optional $50 expedite fee which is required to file online, by fax, or in-person.

Step 6) Start A Corporate Records Book

File Annual Reports & Publication RequirementsWhat is a corporate records book? It’s where you store and keep a ledger of critical hard copy paperwork for your nonprofit. A very common practice – not mandatory officially, but you won’t find a serious company or nonprofit without them.

As the name of the book implies, it’s a record holder of your Maryland registration documents, licenses and permits, minutes of meetings, etc. You can pick one up at a nearby office supply store, get a great deal ordering online through Amazon, or get a Corporate Kit which includes gorgeous records books/binders you can brand for as little as $99.

Step 7) Conduct Initial Meeting

Hold a Meeting with Your Board of Directors

This is your first official meeting with your nonprofit board of directors which is required by law as a final part of formation! Be sure to record “minutes” of the meeting and have it signed by all attending directors then add it to your records book. Here’s a Minutes Template you can customize and use to get the ball rolling. Topics covered should include:

  • Appointing initial nonprofit officers and any committee directors,
  • Approving/Amending your initial bylaws;
  • Setting up a tax year as well as an accounting period/appoint CFO;
  • Approve initial transactions and more depending on the nature of your nonprofit.

Step 8) Get An EIN

Get an EIN for Your LLC

You have a social security number, right? Well an EIN, or Employer Identification Number, is exactly like it except for business entities and incorporated nonprofits. The state/federal government uses it to track your financial activity, but beyond that you’ll be able to use your EIN to set up an official bank account in Step 10, hire paid employees if necessary, and more.

While there are a number of ways to get yours, it’s quick, easy and free of charge when you do it through the IRS Website.

Step 9) Apply For Federal And State Tax Exemptions

Small Business Taxes

By now you should be ready to apply for exemptions under state and federal laws and in the process take care of any remaining licensing/permit issues. If you don’t have a legal team, here are four resources to get you started:

Two other great resources are the Baltimore district office of the Small Business Administration and the state’s Business Express page because they’re so highly-connected throughout the state to financial and other services your nonprofit can leverage.

Step 10) Setup A Business Bank Account

Best Business Bank Account

Now that you have an official nonprofit with an EIN, find a great banking institution to secure your financials. What’s important here is to shop around. There are tons of options in terms of local, state, and national banks/credit unions whether we’re talking lowered fees, great online banking, general business services, and more.

If you think it’ll be helpful, look into this short breakdown of Business Checking Accounts to start brushing up on the basic numbers involved. Once you set up shop, be sure to sync this account with your accounting software and keep any and all other accounts separate!

Need Help?

How To Form a 501(c)(3) NonprofitIf you’d like help forming a 501(c)(3) Nonprofit In Maryland, we highly recommend looking into Harbor Compliance for personalized top-to-bottom nonprofit formation and obtaining IRS 501(c)(3) status.

They handle everything on your behalf and be on-call for questions you have. If you’d like more info, visit their website or read our review.