Categories: Business Entities

How to Form a Nonprofit

How appropriate that we are in the midst of the giving season, and today’s small business industry letter focuses on the businesses that give: nonprofits.

A nonprofit is defined as “an organization that uses surplus revenues to achieve its goals rather than distributing them as profit or dividends. Although nonprofit organizations are permitted to generate surplus revenues, they must be retained by the organization for its self-preservation, expansion, or plans.”

If you have a social or environmental cause that you feel passionately towards, so much so that you could make a job out of it, creating a nonprofit organization might just be for you!

How do I get started?

Starting a nonprofit isn’t all that different from starting your standard corporation or LLC save for a few details. After choosing a name and filing your articles of incorporation, you need to focus on creating a mission statement for your business. A mission statement is especially important for a nonprofit because it’s what the IRS and state tax agencies will take into consideration when deciding if your business will achieve a nonprofit status. Once you have a solid mission statement, it’s time to file for tax-exempt status. You’ll need to file form 1023 and pay a fee. Upon being reviewed, the agency will decide whether or not to grant tax-exempt status. Not too tricky, right?

How healthy is the nonprofit industry?

According to Urban Institute, the nonprofit sector has been growing steadily over time- both in size and financial impact. Between 2001 and 2011 alone, nonprofits have grown 25%- from 1,259,764 million to 1,574,674 million today.

Though it’s not an industry to become rich and famous in, the nonprofit industry is steady and healthy. It’s also a great industry to be in to dedicate your life to a cause you’re truly passionate about.

Have questions about starting your own nonprofit? Give us a call at 1 877 692 6772 or visit us online at www.mycorporation.com.

Deborah Sweeney

Deborah Sweeney is an advocate for protecting personal and business assets for business owners and entrepreneurs. With extensive experience in the field of corporate and intellectual property law, Deborah provides insightful commentary on the benefits of incorporation and trademark registration. Education: Deborah received her Juris Doctor and Master of Business Administration degrees from Pepperdine University, and has served as an adjunct professor at the University of West Los Angeles and San Fernando School of Law in corporate and intellectual property law. Experience: After becoming a partner at LA-based law firm, Michel & Robinson, she became an in-house attorney for MyCorporation, formerly a division in Intuit. She took the company private in 2009 and after 10 years of entrepreneurship sold the company to Deluxe Corporation. Deborah is also well-recognized for her written work online as a contributing writer with some of the top business and entrepreneurial blogging sites including Forbes, Business Insider, SCORE, and Fox Business, among others. Fun facts/Other pursuits: Originally from Southern California, Deborah enjoys spending time with her husband and two sons, Benjamin and Christopher, and practicing Pilates. Deborah believes in the importance of family and credits the entrepreneurial business model for giving her the flexibility to enjoy both a career and motherhood. Deborah, and MyCorporation, have previously been honored by the San Fernando Valley Business Journal’s List of the Valley’s Largest Women-Owned Businesses in 2012. MyCorporation received the Stevie Award for Best Women-Owned Business in 2011.