How to start a Maryland nonprofit

Start by doing research. Is your nonprofit serving a mission in the community? And do you have the means to maintain it? Then make your case: write your mission statement, think about a name, and select your directors carefully. After that, all there’s left to do is file. 

Advantages and disadvantages of having a Maryland nonprofit organization

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. Here are the pros and cons of having one in Maryland:
 

PROS	CONS
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.	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.

How to form a nonprofit in Maryland

1. Developing a business plan for your Maryland nonprofit

• Define the purpose and goals of the organization.
• Research the issues and determine what resources you have and need.
• Establish your priorities.
• Market your idea to possible volunteers and board members.
• Create a budget and timeline.

2. Writing a mission statement 

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.

3. Choosing a unique name 

Your nonprofit's name must be distinguishable from existing names registered with the Maryland Secretary of State. This means it shouldn't be the same as or too similar to another organization's name. The name should also not be misleading to the public – it must accurately reflect the nature and purpose of your organization.

4. Filing your Articles of Incorporation in the state of Maryland

This is the legal document that brings the business to life. It includes important information like the nature of the company and the location of the corporate headquarters. Once accepted, the corporation becomes its own legal entity.

5. Applying for grants and loans in Maryland 

Grants and loans from federal, state, and private sources are a major source of funding for Maryland nonprofits. A not-for-profit corporation is responsible for complying with grant requirements and keeping appropriate records. It's important for nonprofits to keep money received from grants separate and apart from the nonprofit's general fund. A good reputation in administering grant monies helps nonprofits obtain more funding from these sources. 

What to do after forming a nonprofit organization in Maryland

After forming your Maryland nonprofit organization, you must follow specific guidelines to retain your status:

• Draft Nonprofit 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 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.

Maryland nonprofit resources

1. Maryland Nonprofits (PDF): This page offers events, job openings, training, advocacy, a download center and research updates.
2. 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.

Still have questions? Learn more about how to register your own nonprofit with Rocket Lawyer and get started today!
 

Key takeaways Starting a nonprofit takes planning, like creating a mission statement, picking a name, and choosing responsible directors to lead the group. There are good things about having a nonprofit in Maryland, like tax breaks and protection from personal lawsuits, but it also comes with extra paperwork and public financial records. After forming a Maryland nonprofit, it’s important to stay organized, follow state laws, and stay focused on helping the community to keep your nonprofit status.

Additional resources

Learning how to enforce a contract is just one step. Explore these additional topics to learn more and take the next steps.

• What is a nonprofit organization?
• How to start a nonprofit organization
• How are nonprofits taxed?
• How to get 501(c)(3) tax-exempt status
• How to register a nonprofit by state