How to File Maryland Articles of Incorporation

Your Guide to Incorporating in Maryland

Maryland articles of incorporation are filed to create a corporation. This guide provides instructions and tips when preparing and filing this legal document.

Overview

Preparing and filing your articles of incorporation is the first step in starting your business or nonprofit corporation. Approval of this document secures your corporate name and creates the legal entity of the corporation. Only after this approval can the corporation apply for tax IDs, obtain business licenses, sign contracts, and otherwise conduct business.

Incorporating provides many important benefits:

• Limits the liability of directors, officers, and shareholders
• Fulfills statutory requirements to register your business’s or organization’s name
• Provides governance and adds credibility to the business or organization

Articles of incorporation are filed with the Maryland State Department of Assessments & Taxation (SDAT). Preparing and filing articles of incorporation is the first step in starting your business or nonprofit corporation.

By default, Maryland SDAT can take 10 weeks or more to process your incorporation and deliver confirmation. In addition, by default SDAT assumes that you “opt out” of having your articles of incorporation returned to you. This guide will help you discover how to address these and other quirks about filing articles of incorporation in Maryland.

Remember that you have not secured the name of your corporation until after your articles of incorporation are approved. Only after you receive state approval should you start using your corporate name. This includes applying for a Federal Employer Identification Number (EIN), obtaining business licenses, signing contracts, and otherwise conducting business.

As you get ready to file your articles of incorporation, it is important that you take time to understand the specific information required on those documents. Failure to file these documents correctly can delay starting your business or cause unexpected problems down the road. In Maryland, corrections to rejected articles of incorporation can be filed within 60 days for free. This guide walks you through preparing and filing your Maryland articles of incorporation so you can get your business or nonprofit corporation off to the right start.

How to Incorporate

The Maryland SDAT offers articles of incorporation templates and instructions. Be sure to locate the correct forms for your type of corporation.

• Stock Corporation - This type of corporation would be most appropriate for two or more individuals engaged in an enterprise with the intention of making a profit.
• Close Corporation - This type of corporation would be most appropriate for one individual engaged in an enterprise with the intention of making a profit.
• Religious Corporation - This type of corporation is appropriate only for incorporating a religious congregation which will be requesting tax-exempt status.
• Tax-Exempt Nonstock Corporation - This type of corporation would be most appropriate for one or more individuals engaged in a nonprofit enterprise. Use this version if you intend to apply for federal income tax exemption under §501(c)(3) or similar IRC subsection.
• Nonstock Corporation - This type of corporation would be most appropriate for one or more individuals engaged in a nonprofit enterprise.

Understand that SDAT will approve your articles of incorporation if they contain the minimum amount of information required by Maryland statute. Acceptance does not guarantee that your corporate name does not conflict with other trade names (trademark infringement), that your articles of incorporation contain sufficient language to apply for 501(c)(3), or that your articles of incorporation do not contain other omissions or errors. You may not learn about errors in your articles of incorporation until the IRS, a licensing board, bank, or other agency refuses to accept them. It is a lot easier to incorporate correctly the first time than try to fix mistakes later on.

You do not need an attorney to file your articles of incorporation. You can file the articles of incorporation yourself or use our easy incorporation service.

Business Corporations

Stock and Close Corporations

How to File Articles of Incorporation for a Maryland Business Corporation

Articles of incorporation for a stock or close corporation include the information listed below. Please note that certain information is noted as optional.

1

Incorporator(s)

The incorporator is the individual responsible for executing the articles of incorporation. More than one may be listed. All incorporators must be at least 18 years of age. Include the name, address, and signature of all incorporators. The incorporator’s address may be anywhere, even outside the US. Use an address where mail can be received, even in a foreign country.

2

Name

Corporate names must be distinguishable from all other Maryland registered entities (including LLCs, LPs, and other corporations). Search that your desired corporate name is available prior to filing your articles of incorporation. Be sure to include a corporate designator as a suffix to your business name. Corporate designators include corporation, incorporated, limited, or a similar abbreviation. Maryland SDAT cautions “Acceptance of a name guarantees only that the corporation will have that name. It does not mean you cannot be sued for trade name or trade mark infringement. ”

3

Declaration of Purpose

Your corporation must state a purpose of incorporation. Describe the business of the corporation in 1-2 sentences.

4

Business Address

List the corporation’s principal place of business. Any physical address in Maryland is acceptable. A P.O. Box is not allowed.

5

Resident agent

You are required to choose and declare your resident agent on your articles of incorporation. A resident agent is the individual or company that will receive service of process (notice of a lawsuit) and other official legal or government documents for the business. The corporation cannot name itself as its own resident agent. List the name and address of your resident agent and have them sign accepting their duties. You may legally use any physical address located in Maryland (not a PO Box). You can also hire a resident agent service (also called a registered agent service), which is a company that serves on your behalf. If you have a home office, are regularly out of the office, or wish to have added privacy of keeping your address off the public record, then using a resident agent service may be in your interest. If you later need to change your resident agent, the Maryland change fee is $25.

6

Stock

Indicate the number of shares authorized to be issued and the par value per share. Stock is the means by which ownership of the corporation is divided and assigned.

• You do not have to issue all shares authorized, that way you have the flexibility to add more shareholders at a later date. In the example of a corporation with three owners, you may authorize 1,000 shares and issue 250 shares to each owner. This leaves 250 shares to issue to future investors or partners.
• The articles of incorporation can be amended to increase the maximum number of shares.
• Stock is required to take advantage of certain tax options.
• Articles that state &ldquozero” or “not applicable” in the number of shares or par value will be rejected.

7

Directors

Directors are the individuals elected by the shareholders to oversee the management of the corporation. The Board of Directors elects corporate officers to run the day-to-day operations and make certain decisions for the corporation. On the articles of incorporation, list the number of initial directors, their names, and their titles. The directors needn’t reside in Maryland.

Close corporations are slightly different. The language in the articles corporation SDAT template states this as “The corporation elects to have no board of directors.” - understand that the lack of a true board of directors in a close corporation is only temporary. You should provide the name of one adult who will act as the director for the corporation until he or she issues stock at the organizational meeting of the board.

8

Other Provisions

You may choose to include statements that provide more information about your company. Be aware that any information you include will become part of public record.

• You may choose to include statements that provide more information about your company such as the corporate purpose(s)
• Some people prefer to include more information about the initial directors and officers. If you have specific bank loans or other banking purposes in mind, contact your bank to see if they require this information on the articles of incorporation.
• Obtaining certain licenses, tax statuses, or other government classifications sometimes requires other provisions listed on your articles of incorporation.

9

Special corporate structures

There are special types of corporations available. Review the Maryland statutes for all options available and to learn how to be compliant with declaring a subtype. Common examples:

• A professional corporation is formed to provide a specific professional service that requires a license, such as medicine or law. A professional corporation must abide by the Maryland Professional Service Corporation Act, including having a permanent office in Maryland.
• A benefit corporation (B-Corporation) is a new type of corporation. Maryland recently passed benefit corporation legislation in recognition of corporations that are certified to meet rigorous standards of social and environmental performance, accountability, and transparency. In addition to obtaining B-Corporation certification, certain language must be included in the articles of incorporation.

Supplementary Information Filed with the Articles of Incorporation

Filing fees

Include filing fees when submitting articles of incorporation. The fee is $120, but you should call SDAT for a fee calculation if the aggregate par value of the stock exceeds $100,000 or if no par value stock is used. Expedited and document return fees are extra.

Necessary government approvals

It may be necessary for you to obtain approvals from other government agencies, such as licensing board if you wish to use a word or words that are regulated (e.g., engineering).

Consent to appropriation of name

Your corporation may need to obtain consent to use the business name from another business entity.

How to Elect S-Corporation Status

S-Corporation is a tax election made with the US Internal Revenue Service. By default, your corporation will receive tax treatment as a C-Corporation. Many small businesses elect S-Corporation tax treatment.

• Electing Subchapter S status helps shareholders avoid the double taxation that applies to traditional C-Corporations.
• S-Corps can also help the owners avoid paying the 15.3% Self-Employment Tax (Social Security and Medicare) on distributions.

Corporations must file form IRS-2553 within 75 calendar days of incorporation to be taxed as an S-Corp.

Nonprofit Corporations

Religious, Tax Exempt, and Nonstock Nonprofit Corporations

How to File Articles of Incorporation for a Maryland Nonprofit Corporation

Maryland offers three forms of nonprofits: corporation, association, and trust. In addition, Maryland offers three forms of nonprofit corporations: religious, tax exempt, and nonstock. Determine which structure applies to your organization and leverage the corresponding templates from the Maryland SDAT website. This article addresses filing articles of incorporation for a religious, tax exempt, or nonstock nonprofit corporation.

It can be a bit confusing in that you will need to select your appropriate nonprofit corporation structure prior to applying with the IRS for tax exemption. The order of government paperwork to set up your nonprofit is as follows. First, file articles of incorporation. Only after receiving approval of this formal structure will you approach the IRS for a Federal Tax Identification Number and 501(c)(3) or other charitable recognition. Following IRS approval, then you should obtain or secure your Maryland State Income Tax exemption; state sales, use, and property tax exemption; and authority to solicit contributions.

It all starts with filing your articles of incorporation. Maryland nonprofit articles of incorporation include the information listed below. Please note that certain information is noted as optional.

1

Incorporator(s)

The incorporator is the individual responsible for executing the articles of incorporation. More than one may be listed and a religious nonprofit corporation must list at least four trustees elected by the members of the congregation. All incorporators must be at least 18 years of age. Include the name, address, and signature of all incorporators. The incorporator’s address may be anywhere, even outside the US. Use an address where mail can be received, even in a foreign country.

2

Name

The name of your corporation is also the public name of your organization. Corporate names must be distinguishable from all other Maryland registered entities (including LLCs, LPs, and other corporations). Search that your desired corporate name is available prior to filing your articles of incorporation. Be sure to include a corporate designator as a suffix to your name. Corporate designators include corporation, incorporated, limited, or a similar abbreviation. Maryland SDAT cautions “Acceptance of a name guarantees only that the corporation will have that name. It does not mean you cannot be sued for trade name or trade mark infringement. ”

3

Declaration of Purpose

Your corporation must state a purpose of incorporation. Describe the business of the corporation in 1-2 sentences. Religious corporation purposes must include the forming of a congregation or place of worship.

4

Business Address

List the corporation’s principal place of business. Any physical address in Maryland is acceptable. List a specific address where mail can be received. A P.O. Box is not allowed. A religious corporation should list the principal place of worship as the business address.

5

Resident agent

You are required to choose and declare your resident agent on your articles of incorporation. A resident agent is the individual or company that will receive service of process (notice of a lawsuit) and other official legal or government documents for the business. If listing an individual, the individual must be a citizen of Maryland. If listing a corporation, the corporation cannot name itself as its own resident agent. List the name and address of your resident agent and have them sign accepting their duties. You may legally use any physical address located in Maryland (not a PO Box). You can also hire a resident agent service (also called a registered agent service), which is a company that serves on your behalf. If you have a home office, are regularly out of the office, or wish to have added privacy of keeping your address off the public record, then using a resident agent service may be in your interest. If you later need to change your resident agent, the Maryland change fee is $25.

6

Stock

Tax exempt nonstock corporations and nonstock corporations should explicitly state that the corporation has no authority to issue capital stock.

7

Directors

Tax-exempt nonstock corporations and nonstock corporations have directors. Directors are the individuals elected by the shareholders to oversee the management of the corporation. The Board of Directors elects corporate officers to run the day-to-day operations and make certain decisions for the corporation. On the articles of incorporation, list the number of initial directors and their names. The directors needn’t reside in Maryland. At minimum, list one adult director.

8

Trustees

Religious corporations have trustees. The trustees are the people who run the corporation and the articles of incorporation (not by-laws) must include any rule governing their election. Make these rules as specific as possible.

• State the time and manner for the election of new trustees, including the length of term, when elections will be held, and how the election will be run.
• State the qualifications to be elected as a trustee. By default, any adult can be elected.
• State the qualifications of those able to vote for trustees. By default, any adult who attends the election may vote.

9

Provisions to Qualify for 501(c)(3)

Many nonprofits wish to apply for federal income tax exemption for the corporation under IRC §501(c)(3) or other subsection. The IRS requires specific language in the articles of incorporation for your tax-exempt application. These statements are to the effect of the following:

• The corporation is not for profit
• It will not engage in prohibited political or legislative activity listed in 501(c)(3)
• If dissolved, it will distribute its assets in compliance with 501(c)(3)

It is wisest to check with the IRS for the exact language required for your type of nonprofit and intended tax exemption.

10

Other Provisions

You may choose to include statements that provide more information about your organization. Be aware that any information you include will become part of public record.

• “Return to” information: State where the receipt, certified copies, certificates of status and the original articles are to be sent. Typically, this will be to one of the incorporators.
• Certain banking purposes require certain information on the articles of incorporation. If you anticipate any significant banking activities such as obtaining a loan or other financing, check with your bank about their requirements. For example, listing the officers (president, vice president, secretary, and treasurer) may be required.
• Consider if professional or other special types of corporations apply to your situation. For example, the nonprofit “Doctors Without Borders” is an example of a professional nonprofit corporation formed to provide a specific professional service. Consider if licensed individuals will be part of your corporation, such as medicine, law, accounting, or other professions.
• Applying for certain business licenses, tax statuses, or other government classifications sometimes requires other provisions listed on your articles of incorporation. In particular, nonprofits can qualify in many states for exemption from sales tax and income tax and should provide any required language in the articles of incorporation. If your nonprofit will have a footprint in more than one state, check with each state’s department of revenue and/or division of charitable organizations.

Supplementary Information Filed with the Articles of Incorporation

Trade Name Registration Form

If your organization wishes to use a public name other than the one listed in the articles of incorporation, file this additional form and fees.

Articles of Incorporation filing fees

Include filing fees when submitting articles of incorporation. The fee is $100 for filing plus a $20 organization and capitalization fee. In addition, if you intend on seeking 501(c)(3), (4), or (6) tax exemption, an additional $50 fee applies, due immediately on filing the articles of incorporation. The total is then either $120 or $170. Expedited state filing service and document return fees are extra.

Necessary government approvals

It may be necessary for you to obtain approvals from other government agencies, such as licensing board if you wish to use a word or words that are regulated (e.g. engineering).

Consent to appropriation of name

Your corporation may need to obtain consent to use the business name from another business entity.

Special corporate structure

Consider if you want to elect to be a nonprofit corporate subtype, such as a professional corporation. A professional corporation must abide by the Maryland Professional Service Corporation Act, including having a permanent office in Maryland.

How to Register for 501(c)(3), Fundraising, and State Tax Exemption

501(c)(3) Federal income tax exemption

Nonprofits may choose to apply for federal income tax exemption. 501(c)(3) recognition also allows donors to make tax deductible contributions The IRS published rev-557, an informational resource on how to obtain tax exempt status for a nonprofit organization. 501(c)(3) is perhaps the most common and well-known tax exemption category for charitable organizations, however the internal revenue code has exemption categories for many other types of nonprofits organizations. Incorporating the nonprofit and obtaining a Federal Tax ID (EIN) are precursors to applying for 501(c)(3) recognition.

State tax exemptions

501(c)(3) recognition provides income tax exemption on federal taxes. Nonprofits can apply to become exempt from paying various state taxes in each state where they conduct activities.

In Maryland, nonprofits can apply with the Maryland Comptroller of the Treasury for a five-year renewable exemption from sales tax and use tax.

State fundraising registration

Some aspects of fundraising are regulated by state government. Nonprofits that solicit funds may need to submit registrations with the Department of State or Revenue in each state where they solicit residents. Maryland expects your organization to register annually with the Secretary of State Charitable Organizations Division prior to soliciting residents for charitable contributions (either monetary or in-kind donations). Be sure to check the procedures for obtaining the authority to solicit, employee solicitors, or otherwise engage in fundraising in each state where you raise funds.

Additional Requirements for All Corporations

Instructions for Articles of Incorporation

Maryland SDAT requires all forms to be typed and in black ink.

Expedited Processing of Articles of Incorporation

Standard processing time is approximately 8-10+ weeks. Maryland offers expedited processing for articles of incorporation. Expedited service in 7 business days costs $50.

Understanding the Publishing Requirement for Articles of Incorporation

In some states, for-profit and nonprofit corporations are required to publish notice of their intention to or their filing of the articles of incorporation. This requirement does not apply in Maryland.

Register for Federal Taxes, State Taxes, & Licenses/Permits

After successfully filing your articles of incorporation, you will apply for a Federal Tax ID (EIN), a unique nine-digit number assigned by the IRS to identify your business. You should consult your tax professional to determine your state tax registration requirements. Many businesses register for sales tax or employer taxes. You may also need to get local licenses or permits.

Hold an Organization Meeting & Establish Records

Once the registration process is complete, you should hold an organizational meeting of the incorporators and take minutes of that meeting. At that time, you will ratify corporate bylaws, adopt a shareholders agreement, issue stock certificates and complete a stock ledger, elect directors and officers, and anything else you may want to include.

Maryland Annual Report

All Maryland corporations must file a Personal Property Return with the Department of Assessments & Taxation. Failure to file forfeits your right to conduct business in Maryland. The annual is due April 15th each year.

Ongoing Compliance Requirements

Ongoing requirements include annual meetings with minutes, special meetings to make important business decisions, maintaining a registered office, amending your articles of incorporation as needed, and more. For more information on business compliance action items, please consult your Harbor Compliance representative.