A C corporation is a for-profit corporation that has not been approved by the Internal Revenue Service to be taxed as an S corporation under Subchapter S of Chapter 1 of the Internal Revenue Code. C corporations and S corporations are both taxed at the federal level, but their existence derives from state law. In Maryland, incorporation is handled by the Maryland Department of Assessment and Taxation. Every C corporation in Maryland must file a state income tax return in addition to federal returns.
A stock corporation is a traditional for-profit corporation; a close corporation is generally designed for a single individual and does not have to appoint a board of directors; a non-stock corporation is typically a non-profit corporation that cannot issue shares and has not yet qualified for tax-exempt status. All of the foregoing are considered C corporations, and Maryland treats each type of corporation differently. Tax-exempt non-stock corporations and religious corporations are nonprofit and are not considered C corporations.
Selecting a Corporate Name
When choosing a name for your new corporation, it must be different from that of any other business entity registered in Maryland. You can perform a charter records search on the website of the Maryland Department of Assessments and Taxation to find out if your proposed corporate name is available. Your corporate name must include the suffix "Corporation," "Incorporated," "Limited," "Inc.," "Corp." or "Ltd." Although the Maryland Department of Assessments and Taxation does not guarantee the accuracy of the information in a charter records search, you can obtain the most up-to-date information by contacting the office at: State Department of Assessments and Taxation Corporate Name Availability 301 West Preston Street Baltimore, MD 21201 Telephone: 410-767-1340
Every Maryland corporation must select a registered agent to receive official communications on behalf of the corporation. State tax bills will be sent to the registered agent, for example, and a plaintiff suing the corporation will have the complaint and summons served on the registered agent. The registered agent must be a resident of Maryland, even if the corporation does not do business in Maryland.
Filing Articles of Incorporation
"Fill-in-the-blank" articles of incorporation are available on the website of the Maryland Department of Assessments and Taxation. The articles must specify the registered agent's name and address; the name and address of the person forming the corporation; the purpose of the corporation ("any lawful purpose" is acceptable in Maryland); the address of the principal office; the number of authorized shares and their nominal value (for a stock corporation); the number of directors; and the names of the initial directors (except for close corporations). The filing fee for all forms is $120. The articles of incorporation must be submitted to the Maryland Department of Assessments and Taxation. Processing can take up to eight weeks.
After filing the Articles of Incorporation, the corporation should draft bylaws and convene an organizational meeting. At the first meeting, corporate shareholders should approve the bylaws, formally appoint directors and arrange to apply for an Employer Identification Number if this has not already been done. A corporate bank account should be opened and business applications filed for any licenses needed to commence operations. Although Maryland does not require a corporation to create bylaws, they can be critically important if a dispute arises.