Once you decide to incorporate as nonprofit organization and to apply for tax-exempt status, there are a number of steps that you must take. This list can serve as a blueprint and as a reminder of what needs to be done and in what order.
Difficulty: N/A
Time Required: Varies
Here's How:
- Draft a mission statement. It should describe the charitable purpose of your organization
- Recruit board members. Your state will require a certain number of board members if you incorporate as a nonprofit. If you do not plan to incorporate, or if it is too early in the process to do that, pull together an informal advisory group to guide you.
- Hire a lawyer. A lawyer can help you file your articles of incorporation; help you apply to the IRS for tax-exempt status; and, eventually, review your organization's personnel policies.
- Open a bank account. Choose a bank that has experience with new, small nonprofits.
- Find an accountant to set up a basic bookkeeping system.
- Get an insurance agent. You may need liability insurance, property insurance, and advice about staff issues such as worker's compensation, health and life insurance benefits, and more.
- Write articles of incorporation. Your Secretary of State's office may provide a template for articles of incorporation. The articles provide a legal description of your organization and assign power to the board. Submit them to your board for approval. You will need these in order to incorporate in your state as a nonprofit.
- Draft bylaws and get board approval. Bylaws specify how the organization will be run and how the board will operate.
- File for incorporation with your state. The secretary of state's office can provide you with your state's specific requirements. The IRS maintains links to state websites where you can find the appropriate office.
- Apply to the IRS for federal tax-exempt status. The IRS provides information at its Tax Information for Charities & Other Non-Profits.
- Apply for state tax exemption, if necessary.
- Find out what laws govern charitable solicitations your state. You will need to fulfill all requirements before you start to raise funds for your nonprofit.
- Get a mail permit from your local post office. This will get you a discount on bulk mailings.
- Get a federal employer identification number (EIN). You will need this to hire employees, withhold income taxes and FICA. You must apply for your EIN with the IRS before submitting your application to the IRS for your federal nonprofit status as a 501(c)(3) corporation.
- Find out about unemployment insurance requirements from your state.
Tips:
- Don't forget to create a name for your nonprofit, a task that is more involved than you might think.
- Many states supply materials such as templates for your articles of incorporation. These forms may be online and you may even be able to file them online. Check your secretary of state's office website which you can probably get to through the main site of your state. You may also send a letter to your Secretary of State requesting that information on incorporating as a nonprofit be sent to you.
- Most state websites provide a link to the state's nonprofit corporation laws. You will want to look at these and know how to reference them as you prepare your incorporation paperwork.
