Start a Maryland nonprofit for FREE^*

A nonprofit is an entity or association created to promote and maintain the well-being and greater good of a community, in which profits (or surplus) are directed towards the business and mission rather than divided among the owners and shareholders. Nonprofits are often tax exempt. There are several different types of nonprofits, each with its own purpose, structure, regulations and limitations, and tax implications.

Advantages:

• Your nonprofit's assets and property belong to the corporation. In the event of lawsuits or creditor claims against the corporation, only these assets are vulnerable. Trustees, officers and managers have no personal liability.
• Some nonprofits qualify for tax-exemption in Maryland. This relieves them from having to pay business income, property, and similar taxes.

Disadvantages:

• Significant time and effort is required to plan and form a nonprofit.
• If you want control and autonomy in running your business, nonprofit status is not appropriate.

Starting your nonprofit in Maryland doesn’t have to be a complicated process. Here are a few simple steps:

1. Doing research. Is your nonprofit serving a mission in the community? And do you have the means to maintain it?
2. Making your case. Write your mission statement, think about a name, select your directors carefully.
3. Filing. Rocket Lawyer can help you with this step!

Although they’re used interchangeably, a 501(c)(3) and a nonprofit are not the same thing. 

A nonprofit is an organization that meets the requirements of its state law. While most people think of nonprofits as charitable organizations, states recognize many types of nonprofits, including many that do not perform charitable activities. Insurance companies, industry-specific professional societies, homeowners' associations, and social clubs are just a few examples of nonprofits that are not necessarily 501(c)(3) organizations. 

A 501(c)(3) organization, on the other hand, is an additional application on a federal level. It’s a nonprofit organization that is exempt from most state and federal income tax because it applied for recognition as exempt from tax under section 501(c)(3) of the Internal Revenue Code. A 501(c)(3) organization must operate for exempt purposes. The exempt purpose must be charitable, scientific, educational, religious, literary, public safety, amateur sports competition, or the prevention of cruelty to children or animals.

In addition to 501(c)(3), the IRS recognizes 26 other types of nonprofit organizations. The most familiar type is charitable organizations. Others include:

• 501(c)(4) Civic League, Social Welfare Organization, or Local Employee Association.
• 501(c)(5) Labor, Agricultural and Horticultural.
• 501(c)(6) Trade or Professional Association.
• 501(c)(7) Social or Recreational Club.
• 501(c)(8) Fraternal Societies.
• 501(c)(9) Employee Beneficiary Association.
• 501(c)(12) Local Benevolent Life Insurance Associations, Mutual Irrigation and Telephone Companies, and Like Organizations.
• 501(c)(14) State Chartered Credit Union and Mutual Reserve Fund.
• 501(c)(19) Veterans Organizations.
• 501(c)(29) CO-OP Health Insurance Issuers.

• Create a mission statement.
• Draft a fundraising plan
• Draft bylaws. You don't have to file these with the state in Maryland, but you must attach them to your application for federal tax exemption.
• Appoint a board of directors.
• Elect officers.
• File your Articles of Incorporation with Maryland's State Department of Assessments and Taxation.
• File a trade name registration form with the State Department of Assessments and Taxation if your entity is using a name other than the one designated in your Articles.
• Apply for an employer identification number, or EIN, from the IRS.
• Hold an organizational meeting.
• Register for charitable solicitation in Maryland.

Fees for registering a nonprofit can differ from county to county and even specific times of the year. Some fees may also be dependent on how much the nonprofit is expected to earn or has earned in previous years. 

There are a few fees that you may be charged when you register a Maryland nonprofit. They include the following:

Maryland state filing fees and processing times: 

• State fee: $226.
• State processing time: 8-12 weeks.
• Rocket Lawyer state filing fee: $0 $99.99.
  • First filing FREE* for RocketLegal+ members.
  • Get additional filings HALF OFF with RocketLegal+.

501C IRS filing fees and processing times

• IRS exemption-status fee: $275 for shorter applications or $600 for applications requiring more detailed information (including LLCs, organizations with higher income or value, foreign organizations, churches, schools, some healthcare organizations and some research organizations).
• IRS processing time: typically 6-12 months.
  • Simple applications may be processed more quickly.
• Rocket Lawyer IRS filing fee: $599 $1,199.
  • RocketLegal+ members get HALF OFF.

The Business Services team at Rocket Lawyer are pros when it comes to the requirements for registering a nonprofit and the steps and processes required to file in Maryland. They can help you gather and file the necessary information quickly and at an affordable price. Rocket Legal+ members get their first business registration filing for free, paying only the state filing fees, and also get access to professional services for up to half off, including registered agent services, tax prep and filing, trademark registration, and more.

If your nonprofit does not have a physical address in Maryland (P.O. boxes are not acceptable substitutions), you may be required to have a registered agent. Registered agents accept official and legal correspondence on behalf of your organization. While you are setting up your nonprofit, why not set up Rocket Lawyer as your registered agent at the same time? Better yet, if you have a Rocket Legal+ membership, you can save on your business registration and your registered agent services with the membership that pays for itself.

Businesses can save up to $2,500 per year with a Rocket Legal+™ membership. This calculation is based on total savings on an initial business registration and registered agent, trademark, and business tax filing services for Rocket Legal+ members (a total cost of $924.97) compared to Rocket Legal members (a total cost of $1,949.96). This is in addition to savings on the average cost of 5 hours for document preparation by a non-Rocket Lawyer network attorney at the average attorney hourly rate in the U.S. of $300 (an estimated cost of $1,500 when purchased without any form of Rocket Lawyer membership) compared to unlimited use of customizable business documents for both Rocket Legal+ and Rocket Legal members at no extra cost.

A mission statement clarifies your goals and explains how you plan to meet them. As a guideline, describe what, where, when, and how your nonprofit's purpose will be met, as well as who is going to help your nonprofit meet it. It may take a few tries to narrow your ambitions down into a workable plan.

Although you're creating a nonprofit because you want to give back to your community, you still have to meet certain requirements to protect yourself and to ensure that you achieve your organization's goals. When you create a mission statement, you can explain your organization's purpose. Consider what problem or issue your organization wants to address, then focus your statement on including the efforts and values that will guide your nonprofit to these goals.

When you form a not-for-profit organization in Maryland, your first consideration is securing nonprofit status. Then you must concentrate on retaining that status by meeting a few requirements.

• Articles of Incorporation must be filed with Maryland's State Department of Assessments and Taxation.
• You must submit a trade name registration form to Maryland's State Department of Assessments and Taxation if your nonprofit's trade name differs from the one used in your Articles of Incorporation.
• You must file an annual report with the State Department of Assessments and Taxation.
• A charitable solicitation form must be filed with the State Department of Assessments and Taxation if your entity solicits funds from the public.

• Maryland Nonprofits: This site offers events, job openings, training, advocacy, a download center and research updates.
• Business Volunteers Maryland: This group's mission is to inspire volunteers and connect motivated individuals and businesses to nonprofits so communities are enhanced and strengthened.

If you are planning to operate in another state, you may need to register a nonprofit in that state. Rocket Lawyer can help you determine which states you should register in.

Other states may have their own rules for foreign nonprofits that originate in Maryland or domestic nonprofits that also operate in Maryland. Talk to an attorney to understand the legal and tax requirements for the state(s) in which you plan to operate.