We have written on non-profit corporations before, but as we only dedicated a sliver of a paragraph to how you actually form a non-profit, we felt the topic was worth revisiting. A non-profit corporation is a great way to fulfill a philanthropic pursuit, and if you are looking at dedicating your life to charity, then running a non-profit may be right up your alley. Forming a non-profit corporation is actually very similar to forming a regular corporation.
Step 1. Find a business name
Your non-profit is going to need a name just like with any other standard corporation. That name needs to be unique and, typically, has to include the a designator like ‘Corporation’ or ‘Incorporated,’ though not all states require that.
After you’ve confirmed that your corporate name is available, you have to actually form the corporation by filing what is normally known as your Articles of Incorporation. The forms usually aren’t too complicated, and normally just ask for the names and addresses of the corporation, its registered agent, and its directors, as well as the corporation’s purpose for existing.
Step 3. Write your mission statement and bylaws
The first part of this step is very, very important because your mission statement is one the key documents that the IRS and state tax agencies will review when determining whether or not to grant the corporation non-profit status. What do you hope to accomplish with your non-profit? Who do you want to help? What sort of a vision do you have? You need solid answers to those questions before you ever begin to raise money. Along with your mission statement, you should draft corporate bylaws. Though not normally legally required, they will be the set of rules that guide how your non-profit is run, so they are important to have.
Step 4. Hold an organizational meeting
Once your Articles of Incorporation are filed, you should hold an initial organizational meeting to appoint corporate officers and any new directors to the board. This initial meeting will also be when the non-profit adopts any bylaws and sets its annual budget. You must also keep minutes for this, and every subsequent, meeting as the IRS or state tax agency may wish to review them.
Step 5. File for tax-exempt status
Finally, once your articles are filed, your boards are set, and your bylaws adopted, you file for non-profit status with the state and federal governments. The IRS requires would-be non-profits to file Form 1023 and pay a fee, after which the agency will review the company and decide whether or not to grant tax-exempt status. The form is very detailed, and requires that you disclose all compensatory arrangements and answer a series of questions. Some states also require their own forms before exempting corporations from state taxes, so check with your secretary of state or department of corporations to see whether or not Form 1023 covers your state.
Once everything is filed and you’re approved for non-profit status, you can begin fundraising. But first be sure to read our other post on how to run a non-profit!
As always, if you have any questions feel free to leave a comment below, or just give us a call at 1-877-692-6772!