How to Form a Non-Profit Organization
It’s a little complicated to start a Non-Profit Organization.
You’ll need to complete state filings, company meetings, and tax exemptions.
Here’s how the process works…
1. Pick an Available Name
It’s so important to pick a company name that is available and isn’t trademarked.
A trademark is the exclusive right to use a company name.
The company that owns the trademark for a name is the only one who can use it. If you use a trademarked name, you could be sued or forced to rebrand.
It doesn’t matter if the Corporation name is available.
You’ll want to run a trademark search to make sure your name is available. Otherwise, you might be registering a company name that you can’t legally use.
Read More: The Smart Way to Name Your Company
2. Register with the State
It's pretty simple.
You'll have to register the non-profit with your state.
You can typically file online at your state corporations’ website.
You’ll likely need:
This is your company name, followed by Incorporated, Inc., Corporation, or Corp.
For example, "Sprout, Inc.”
Names of Board Members
You may have to list the names of the board members.
It's likely okay if they’re one person. Although some states require three people.
This is someone to accept your mail.
It can be you or you can hire registered agent service.
It has to be in the state where you're registering.
It can be your personal address. But know that it will be public.
It can be a registered agent service or a mailbox service. It cannot be a PO Box.
Typically, the company will want a "perpetual" duration.
There are circumstances where you may want it limited to a specific period.
Typically, you’ll need to state a recognized tax-exempt purpose. This can include any charitable, religious, scientific, literary, or educational purpose.
You’ll need to state that, when the non-profit ends, all assets will be distributed to another tax-exempt nonprofit or government for a public purpose.
3. Look for Additional Filings
Read the confirmation paperwork to see if there are additional filings.
For example, you may also need to file your bylaws with the state.
In some states, you need to publish your information in a local newspaper.
4. Check your Renewal
Read your confirmation paperwork to see when you need to renew.
You’ll want to keep up with renewals to avoid late fees and cancellation.
5. Create Bylaws
You’ll need bylaws to become a tax exempt organization.
This document spells out how your company works. It covers how you hold meetings, elect board members, and make decisions.
6. Appoint Directors
A board of directors makes the policy and financial decisions for the company. You’ll appoint a board of directors and have them formally accept the role.
7. Hold a Board Meeting
At the first meeting of the board of directors, you’ll adopt the bylaws, elect officers, and discuss the plan for federal and state tax exemptions. After the meeting, minutes should be created and filed in the nonprofit's records.
8. Apply for Non-Profit Status
You’ll submit Form 1023 with the IRS to receive a 501(c)(3) tax exemption.
You’ll list your nonprofit information and provide a copy of your state registration. You’ll also need an EIN for the non-profit corporation.
As long as you submit this within 27 months of filing the non-profit with the state, all donations received from that date are tax deductible.
You’ll also want to check with your state to see how you receive a state tax exemption. Some states are automatic and some require paperwork.