Do-It-Yourself Steps to Start a Nonprofit

Before incorporating your nonprofit and submitting Form 1023, take the time to build a strong foundation. Use our Checklist for Starting a Nonprofit in Maryland as a helpful guide along the way.

Your organization’s purpose must be exclusively charitable and/or educational to meet the requirements of IRS §501(c)(3).

Gather a group of 5-7 unrelated individuals who will be legally responsible for your nonprofit’s governance, finances, and compliance. “Unrelated” means they are not family members or business associates. Look for individuals who are committed to your mission and bring valuable skills to the table.

Identify existing nonprofits in your community with similar goals. This helps you:

• Understand the community’s needs.
• Assess the viability of your idea.
• Identify existing programs and potential gaps.
• Explore funding opportunities and community support.

Outline your proposed programs, specifying who you will serve and how. Create a three-year budget that includes:

• Expected income (e.g., grants, donations, fees for services).
• Projected expenses for operations and programs.

Write a concise statement that explains your nonprofit’s purpose and goals. Your mission should clearly communicate the impact you aim to make.

Bylaws outline your organization’s internal governance, such as how the board operates and how decisions are made. At least two officers should sign the bylaws. These are required for your federal tax-exemption application but don’t need to be submitted to the state. Download our customizable Sample Bylaws template.

This policy ensures that your nonprofit avoids or properly manages conflicts when making decisions about resources. It should include:

• A Conflict of Interest Policy.
• A Declaration of Interest Statement.

This policy protects your organization and board members and is required for your federal tax-exemption application. Members of Maryland Nonprofits can download a template through the Member Portal. Not a member yet? Join now.

Before applying for federal tax-exempt status, your nonprofit must first become a legal entity. Follow these steps to create your corporation:

Submit Tax-Exempt Nonstock Articles of Incorporation to the Maryland State Department of Assessments and Taxation (SDAT), Corporate Charter Division. To meet IRS requirements for 501(c)(3) status, include a dissolution clause stating that your organization’s assets will be distributed for exempt purposes or to government entities if dissolved.

• Where to File:
  • Online via the Maryland Business Express
  • By mail or in person at:
    Maryland State Department of Assessments and Taxation
    301 W. Preston Street, Room 801
    Baltimore, MD 21201-2395
    Phone: (410) 767-1184
• Fees: $170 ($150 filing fee + $20 Organization & Capitalization Fee). Expedited service is available for an additional $50.

Download our Articles of Incorporation Template.

Your initial board meeting, required by law in order to complete the foundation of your corporation, is critical to finalizing your nonprofit’s formation. 

During this meeting, the board members identified in your Articles of Incorporation should:

• Elect officers (President, Vice President, Secretary, Treasurer).
• Approve the bylaws.
• Accept the Articles of Incorporation.

The Secretary should take minutes to document the meeting and record the elected officers. 

Important Note: Decide early whether founders will serve as volunteer board members or paid staff (e.g., Executive Director). Board members must remain independent and cannot be paid employees.

Apply for an EIN from the IRS, which you’ll need for tax filings and to open a bank account. Use Form SS-4 to apply:

• Online: Apply for an EIN.
• By Mail:
  Internal Revenue Service
  Attn: EIN Operations
  Cincinnati, OH 45999
• By Phone: (800) 829-4933

Download our FAQ on Corporations and Taxes for additional guidance.

To become a tax-exempt nonprofit, you’ll need to file a 1023 Application with the IRS to obtain public charity status under Section 501(c)(3) of the Internal Revenue Code.

The application process depends on your organization’s circumstances. You can file either:

• Form 1023 (long form): Suitable for larger or more complex nonprofits. It’s detailed, time-consuming, and requires careful attention to avoid errors that could delay or jeopardize your application. 
• Form 1023EZ (short form): An online-only option for smaller organizations. To check your eligibility, complete the Form 1023EZ Eligibility Worksheet on pages 11-20 of the Form 1023EZ Instructions.

What You’ll Need to File

Before submitting your application, ensure you have:

• A date-stamped copy of your filed Articles of Incorporation.
• Signed Bylaws.
• An adopted Conflict of Interest Policy.
• A detailed description of your program activities.
• A program budget for at least three years.

The long Form 1023 requires you to include these documents with your application. The Form 1023EZ does not require that these documents be uploaded, but you must attest under penalty of perjury that they exist.

How to File

• IRS Form 1023: Download and complete the Form 1023 or use the Interactive Form 1023 to prepare your application online, then print and mail it to the IRS.
• Form 1023EZ: Learn more about filing the online Form 1023EZ here.

IRS Filing Fees

• $400: If your projected gross revenue is less than $10,000 annually (average over the first three years).
• $600: If your projected gross revenue is greater than $10,000 annually.

What to Expect After Filing

Once submitted, the IRS review process can take 3-12 months before you receive your determination letter.

Congratulations on receiving your IRS determination letter! Your nonprofit is now officially tax-exempt under 501(c)(3). While this is a big milestone, there are a few more important steps to take to fully wrap up the process and ensure compliance. 

Follow the steps below to register for charitable solicitations in Maryland, and click here to learn about registering in additional states.

If your nonprofit plans to fundraise in Maryland, you’ll need to register with the Maryland Secretary of State’s Charitable Organizations Division:

• If you received less than $25,000 in the previous fiscal year:
  File the Exempt Organization Fundraising Notice.
• If you received more than $25,000 in the previous fiscal year:
  File the Registration Statement (COR-92) with all required attachments.

Where to File:

Online
Email your form and required attachments to dlcharity_sos@maryland.gov.

By Mail
Mail your form and required attachments to:

Maryland Charitable Organizations Division
Office of the Secretary of State
16 Francis Street
Annapolis, Maryland 21401

Questions?
Call the Secretary of State at (410) 974-5534 or email your question to dlcharity_sos@maryland.gov.

To apply for exemption from Maryland sales tax on organizational purchases, file the Sales and Use Tax Exemption Certificate (SUTEC) Application. This form can also be used to:

• Establish a payroll withholding account for employees.
• Register for unemployment insurance for employees.
• Set up workers’ compensation coverage.

Send a letter to the Comptroller of the Treasury that explains your organization’s charitable nature, purpose, and scope. Include the following documents:

• A copy of your IRS determination letter.
• A copy of your bylaws.
• A copy of your most recent financial statement (this could be the COF-85 if you haven’t completed a tax year yet).

Where to Send:
Comptroller of the Treasury
Revenue Administration Division
Attention: Legal Department
110 Carroll Street
Annapolis, MD 21411
Phone: (800) 638-2937 or 410.260.7980

If your organization owns real estate, you may apply for state and local property tax exemptions. Applications can be downloaded for:

• Charitable Property
• Churches, Parsonages, Convents, Educational Buildings, and Church Cemeteries
• Fraternal, Benevolent, or Educational Property

Congratulations on getting your nonprofit up and running! To keep your organization in good standing with active status, it’s essential to stay on top of ongoing requirements.

Review the requirements below, and see the IRS Compliance Guide for 501(c)(3) Public Charities for additional details.

Be sure to submit your required annual filings on time each year.

• Maryland Form No. 1 – Personal Property Return:
  Due April 15th each year. All Maryland businesses must file an Annual Report. If your nonprofit owns, leases, or uses personal property in Maryland, or holds a trade license, you’ll also need to file a Personal Property Return.
• IRS Form 990 Series:
  File Form 990-N, 990-EZ, or 990 based on your annual gross receipts. This form is due on the 15th day of the 5th month after your fiscal year ends (e.g., May 15th for calendar-year filers). Learn about The Importance of an Accurate Form 990.

Renew your registration annually by filing updates to the Charitable Solicitation Form (COR-92) within six months of your fiscal year-end.

The Secretary of State requires organizations to give written acknowledgment of charitable contributions and to make certain documents, like your Form 990, publicly available. 

Learn more about disclosure and financial statement requirements.

File updates with the Maryland State Department of Assessments and Taxation if your agent or office changes.

Adopt policies that ensure oversight and controls on financial matters and appropriate retention of documents. Keep corporate and financial records complete and organized.

Depending on your activities, you may need state or local licenses. Consult the Maryland State Department of Labor or Maryland Department of Commerce for guidance. See the State Department of Assessments and Taxation’s Maryland Checklist for New Businesses for additional information.

To protect your organization and board members:

• Register employees with the Comptroller of Maryland.
• Pay state and federal employment taxes and unemployment insurance.
• Secure workers’ compensation insurance.
• Display required workplace posters.
• Obtain proper liability, property, and hazard insurance, including Directors & Officers (D&O) coverage.

Important Note: Noncompliance with employment laws can expose board members to personal liability not covered by D&O insurance.