Start Your Alabama Nonprofit

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How to Start a Nonprofit in Alabama

Welcome to our Alabama Nonprofit Startup Guide! If you’re passionate about helping others and have an idea to serve your community, starting a nonprofit is a great way to turn your vision into a reality. There are many different types of nonprofits - religious, educational, human service oriented, animal welfare, and more. What all nonprofits have in common is a focus on helping others and benefiting their community. You are genuinely committed to these goals so you are already well on your way!

According to the National Center for Charitable Statistics, there were over 18,000 nonprofit organizations in Alabama in 2012. Before you start a new nonprofit, make sure you have identified an unmet need in your community and know that there are not any existing organizations serving your cause. If another organization exists, consider working together, as that may be a better way to make an impact in your community and use existing resources.

When you are ready to start your nonprofit, plan to incorporate and apply for 501(c)(3) status, as these are important steps to fully achieve your goals. As a 501(c)(3) nonprofit, you will be able to apply for grants and accept donations, be exempt from federal corporate income tax, and limit the liability of your organization’s officers and directors. Most importantly, you will gain credibility and legitimacy for your cause, instilling the public with confidence in your organization.

This guide will walk you through the basic steps to start your nonprofit in Alabama. Let’s get started!

  1. Name Your Organization

    Your organization’s name establishes its brand and is also important for incorporating with the state. The legal name of your nonprofit corporation may not conflict with any other organization registered in the state. Make sure the name is available and meets state requirements.

    Name Search: Alabama Secretary of State - Business Services Division
    Name search
    Suffix:

    Not required. 
    AC &sect10A-1-5.04

  2. Obtain a Name Reservation

    In Alabama, a name reservation is mandatory.

    Submit to: Alabama Secretary of State
    http://www.sos.alabama.gov/
    Form: Name Reservation Request Form for Domestic Entities
    Filing Method: Mail, courier, or online. Fax and email are NOT accepted.
    Fee: $10 mail standard processing. $25 mail less than 3 business days processing. $28 online 24hr processing.
    Turnaround: Standard mail: in order received. Expedited mail: less than 3 business days. Online: less than 24 hours.
    Law: AC §10A-1-5
    Notes:
    • We recommend filing online.
    • The state will issue a Name Reservation Certificate that you will need to submit with your Certificate of Formation.
    • Names using a professional designation in the name (i.e., engineering) require evidence of licensing.
  3. Recruit Incorporators and Initial Directors

    The incorporator is the person who signs the Articles of Incorporation for your nonprofit. You will need at least one, but can have more than one. Directors make up the governing body of your nonprofit corporation and are stakeholders in your organization’s purpose and success. You’ll want to identify three, unrelated individuals to meet IRS requirements. You will also want to be aware of any age or residency requirements.

    Alabama director requirements:
    • Number: minimum 3
    • Qualifications: Natural person. No residency requirement. No membership requirement.
    • Quorum: majority
    • Committee: minimum 2 directors
    Alabama officer requirements:
    • A president, one or more vice-presidents, a secretary, a treasurer and other officers and assistant officers as deemed necessary are required.
    • Term: default is 1 year, 3 year maximum
    • Two or more offices may be held by the same person, except the offices of president and secretary
  4. Appoint a Registered Agent

    A registered agent is responsible for receiving legal notices on behalf of your organization. The appointed registered agent must be physically located in the state and maintain an office that is open during regular business hours. As a nationwide registered agent, our service is designed to receive your legal documents and provide secure access to those documents through your online account. Our local Alabama registered agent office is located in Dothan, AL. We offer registered agent service independently or as part of our nonprofit formation packages.

  5. Prepare and File Articles of Incorporation

    Your nonprofit’s articles of incorporation officially mark the creation of your organization. They document where and when the organization was formed and capture other information necessary to verify its existence. While requirements for language vary from state-to-state, there are some basic provisions that the IRS will look for when you apply for 501(c)(3) exemption. It is important to customize the articles for your organization and make sure you meet the state and IRS requirements. Meeting these requirements from the start will help avoid having to make amendments later or risk getting your 501(c)(3) application rejected. Some states will also require you to publish your articles of incorporation, so be mindful of any deadlines and publishing instructions.

    Agency:Alabama Secretary of State - Business Services Division
    Form:

    Domestic Nonprofit Corporation Certificate of Formation

    Filing Method:

    Mail

    Agency Fee:

    $100 state filing fee + min $50 county filing fee

    Turnaround:

    ~3-5 business days

    Law:

    AC §10A-1-3.05 and AC §10A-3-3.02

    Notes:
    • Mail one original and two signed copies to the Office of the Judge of Probate in the county where the corporation’s registered office will be located.
    • Include a $100 state filing fee plus the applicable filing fee in your county (minimum $50, ask your Office of the Judge of Probate).
    • Attach your Name Reservation Certificate.
  6. File Initial Report

    After filing articles of incorporation, you must file an initial report.

    Not required



  7. Obtain an Employer Identification Number (EIN)

    This unique, nine-digit number is assigned by the IRS to identify your nonprofit. All types of nonprofits will apply for an EIN, not only those that hire employees. You will use your EIN to open a bank account, apply for 501(c)(3) status, and submit 990 returns to the IRS.

    Agency:Internal Revenue Service (IRS)
    Form:

    IRS Form SS-4

    Filing Method:

    Mail, phone, fax, or online.

    IRS fee:

    $0

    Turnaround:

    Immediately online or by phone. 4 business days by fax. 4-5 weeks by mail.

    Notes:

    The IRS website is only available during certain hours. Print your EIN before closing your session. For additional guidance, see IRS Pub 1635: Understanding Your EIN.

    Fact Checked:8/28/19
  8. Store Nonprofit Records

    As you launch your nonprofit, you will receive a number of official documents. Organizing these documents in one place will save you headaches down the road. You will soon have numerous items to keep in your records including your EIN letter, bylaws, meeting minutes, 501(c)(3) determination letter, and more.


    A preview of our Records Manager software

    A great way to maintain necessary documentation is Records Manager, our software for storing records securely, tracking directors and officers, and getting notified of meetings.

  9. Establish Initial Governing Documents and Policies

    Your bylaws are the governing document for your nonprofit. They serve as your organization’s operating manual and should be consistent with your articles of incorporation and the law. When your Board of Directors meets for the first time, you’ll review and ratify the bylaws and they will be a roadmap for governance from there.

    At the same time, you’ll also want to create and adopt a conflict of interest policy. A conflict of interest is when someone in a key position in your nonprofit has competing interests and is making choices that could benefit themselves to the harm of the organization. Personal interests should be set aside and organizational interests prioritized. If a conflict of interest does arise, it should be disclosed immediately.

    Your application to the IRS for 501(c)(3) exemption will require that both the bylaws and the conflict of interest policy are approved and adopted. Once they’ve been adopted, safely store them in your Nonprofit Records Kit.

  10. Hold Organizational Meeting of the Board of Directors

    The initial organizational meeting of your Board of Directors will be incredibly productive. At this meeting you will approve the bylaws, adopt the conflict of interest policy, elect directors, appoint officers, and approve resolutions such as opening the organization’s bank account. Important decisions are being made so be sure to record them in the meeting minutes.

    In Alabama, you must provide a minimum of three days notice for the initial meeting (AC §10A-3-3.04).

  11. Get State Tax Identification Numbers and Accounts

    Incorporating as a nonprofit corporation in your state comes with the obligation to follow state laws. These requirements vary from state to state, so make sure you understand the tax and licensing requirements that pertain to your organization.

    Alabama offers a consolidated state tax registration application.

    Submit to: Alabama Department of Revenue
    http://revenue.alabama.gov/
    Form: Form COM-101: Alabama Department of Revenue Combined Registration/Application
    Filing Method: Mail or online
    Fee: $0
    Turnaround: ~3-5 business days online
  12. Apply for 501(c)

    Applying for 501(c) tax exemption can feel like the most daunting step in bringing your nonprofit dream into reality, but obtaining tax exemption comes with many benefits. You will be able to apply for grants and grow your fundraising success in addition to being exempt from IRS income tax. 501(c) is the chapter of the Internal Revenue Code that regulates nonprofit organizations. Like others, you may be most familiar with 501(c)(3) nonprofits, including charities and foundations. 501(c)(3) nonprofits apply using Form 1023 or Form 1023-EZ. Review the criteria for each application and make sure you meet the eligibility requirements set out by the IRS. Other types of nonprofits, including 501(c)(4)s and 501(c)(6)s, apply using Form 1024. After reviewing and approving your application, the IRS will return a Determination Letter officially recognizing your exemption.

    Completing the federal application for tax exemption is significantly easier with the assistance and support of a professional. Find someone with the expertise to ensure the correct application is being used and is completed accurately. A well-prepared application takes time, over 100 hours by IRS estimates, so put yourself on the path to success by finding a specialist to walk alongside you in the journey - from start to tax-exempt finish!

    Agency:Internal Revenue Service (IRS)
    Form:

    IRS Form 1023IRS Form 1023-EZ, or IRS Form 1024

    Instructions:

    IRS Instructions for Form 1023IRS Instructions for Form 1023-EZ, or IRS Instructions for Form 1024.  Also see guidance IRS Pub 557: Tax-Exempt Status for Your Organization.

    Filing Method:

    Mail

    Agency Fee:

    $275 for organizations filing Form 1023-EZ and $600 for organizations filing Form 1023.

    Turnaround:

    1023-EZ average: <1 month. 1023 average: 3-6 months.

    Fact Checked:8/28/19

    Tax-Exempt in 2 Weeks!

    Download the case study of how our client, Reform It Now, obtained 501(c)(3) tax exemption in only two weeks using the new IRS Form 1023-EZ!

    From filing the 1023EZ on August 1st to receipt of the determination letter on August 14th is, in my humble opinion, simply breathtaking and I dare say, ONLY Harbor Compliance could have achieved that.
    Dr. Bob A.Reform It Now, Inc.
  13. Apply for State Tax Exemption(s)

    With your IRS Determination Letter in hand, make sure you familiarize yourself with your state’s requirements for recognizing your nonprofit’s tax-exempt status. This is an area where requirements vary state-by-state. Many states issue their own tax-exempt certificate that can be used for sales and use tax purposes, but it may require application and periodic renewal.

    To file to obtain exemption from state income tax:

    Not required



    Exempt upon obtaining Determination Letter from the IRS

    More information: Alabama Department of Revenue

    To file to obtain Sales Tax Exemption:

    Agency:Alabama Department of Revenue
    Form:

    ST: EX-A1: Application for Sales Tax Certificate of Exemption and Instructions

    Agency Fee:

    $0

    Notes:

    Most nonprofit organizations will not qualify for a sales tax exemption in Alabama. Alabama Statutes § 40-9-1 et seq describes organizations that may qualify for an exemption.

    Fact Checked:7/20/18
  14. Register for Charitable Solicitation (Fundraising)

    This is another area where laws differ from state to state, but most states require any nonprofit soliciting donations to register to do so on an annual basis. This means registering in the state prior to soliciting any resident of that state. Registering in your home state in essential, but you may also need to register other states depending on the scope of your organization.

    Alabama Charitable Organization Registration

    Agency:Alabama Attorney General - Consumer Interest Division
    Law:

    Alabama Code § 13A-9-71 et seq.

    Foreign Qualification is Prerequisite:No
    Registered Agent (Special Agency) Required?No
    Fact Checked:4/10/20

    One-Time Exemption Registration

    Exemption Eligible Organizations:
    • Charities that do not intent to solicit and receive and do not actually receive more than $25,000 in contributions during a fical year and do not use professional fundraisers
    • Educational institutions and their authorized and related foundations
    • Religious organizations
    • Political organizations
    • Fraternal, patriotic, benevolent, social, educational, alumni, health care foundation, historical,
      and civil rights organizations, including fraternities and sororities and any auxiliaries
      associated with any such organizations
    • Civic leagues and civic organizations which solicit contributions solely from their own
      membership
    • Appeals for individuals that raise $10,000 or less
    • Any charitable organization receiving an allocation from an incorporated community chest or
      united fund, provided the chest or fund is complying with this section relating to registration and filing of
      annual reports with the Attorney General, the charitable organization does not actually receive, in addition to an allocation,
      contributions in excess of $25,000 during the fiscal year, and all of the fund raising functions of the charitable organization are carried on by
      persons who are not paid for such services
    • A local post, camp, chapter, or similarly designated element, or a county unit of such elements
      of a bona fide veterans organization, which issues charters to local elements throughout this
      state, or a bona fide organization of volunteer firefighters, ambulance companies, or rescue
      squads, or a bona fide auxiliary or affiliate of such organizations, provided all of its fund
      raising activities are carried on by members of the organization, family members of the
      members of the organization, volunteers, or an affiliate of the organization and the members
      receive no compensation, directly or indirectly
    Filing Method:

    Online

    Agency Fee:

    $0

    Notes:

    Exemptions do not expire as long as the organization continues to qualify under the exemption criteria.

    Fact Checked:8/15/19

    Initial Registration

    Form:

    Charitable Organization Registration Form

    Filing Method:

    Mail or online.

    Agency Fee:

    $25

    Turnaround:

    2-3 weeks

    Notes:
    • The CFO and the president / other authorized officer must sign. The signatures must be notarized.
    • Some Alabama counties and municipalities may require charities that solicit in-person to register prior to fundraising.
    Before you Apply:

    All Applicants:

    • Check the available exemptions to see if your charity is eligible for exemption from the full registration requirement.
    • Look through the list of required attachments and make sure that you have each required document in hand before starting the registration application.
    How to Apply:

    Domestic Applicants:

    1. File entity formation documents with the Alabama Secretary of State.
    2. Submit the online form or Charitable Organization Registration Form and all required attachments to apply for registration with the Alabama Attorney General - Consumer Interest Division.

    Foreign Applicants:

    1. Determine whether or not your charity will need to foreign qualify based on your activity in Alabama. If not required, skip to number 3.
    2. File foreign qualification documents with the Alabama Secretary of State.
    3. Submit the online form or Charitable Organization Registration Form and all required attachments to apply for registration with the Alabama Attorney General - Consumer Interest Division.
    Required Attachments:

    • Articles of incorporation
    • Bylaws
    • IRS determination letter
    • List of officers and directors
    Fact Checked:4/14/20

    Registration Renewal

    Form:

    Charitable Organization Renewal Form

    Filing Method:

    Mail or online.

    Agency Fee:

    $25

    Due:

    Renewal is due annually within 90 days after the close or your organization's fiscal year. So if your fiscal year ends December 31, then the report is due March 31. 

    Due Date Extension:

    Due dates can be extended for 180 days beyond the original due date by submitting a request for extension through the online portal.

    Notes:
    • The CFO and the president / other authorized officer must sign. The signatures must be notarized.
    • The organization must also notify the Attorney General throughout the year within 90 days of any change in the information.
    Required Attachments:

    • Either IRS form 990 or audited financials
    • Only if amended: IRS determination letter, articles of incorporation, and bylaws
    Fact Checked:2/4/20

    Change of Fiscal Year

    Agency Fee:

    $0

    Turnaround:

    1-2 business days

    Notes:

    Email Emily Nichols at enichols@ago.state.al.us to update fiscal year.

    Fact Checked:12/7/18

    Cancellation

    Form:

    Charitable Organization Notice of Non Renewal

    Agency Fee:

    $0

    Notes:

    To close out your registration, submit a notice of non renewal or a letter describing your intent to withdraw and provide a statement indicating that you will no longer solicit in Alabama.

    To fundraise nationally or online, please see our Fundraising Compliance Guide. Our services manage your initial, renewal, and exemption filings in every state.

  15. Obtain Other Business Licenses & Permits

    Running your nonprofit corporation legally also means securing all applicable licenses and permits. The range of local, state, and federal requirements is wide. Access resources like the Small Business Administration Business License & Permit look-up tool and search by your business type and locality.


You’ve made it! You turned your passion into a legitimate nonprofit corporation exempt under IRS 501(c) and are benefiting your community. That solid foundation on which you built your organization requires ongoing maintenance. Investing in maintaining compliance with all of the government agencies is an ongoing responsibility and commitment needed to ensure your vision continues long into the future. Check out our compliance guide to learn more!

Once you have registered your nonprofit per the steps listed above, you will need to maintain compliance with all of the government agencies. Staying current with the IRS and state requirements is an ongoing responsibility. Continue reading our Alabama nonprofit compliance guide to learn more!

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Fast Facts

Below is an overview of the paperwork, cost, and time to start an Alabama nonprofit.


Paperwork
  • Name Reservation Request Form for Domestic Entities
  • Name Reservation Certificate
  • Form SOSDF-5: Domestic Nonprofit Corporation Certificate of Formation template
  • Bylaws
  • IRS Form SS-4: Obtain an EIN
  • IRS Form 1023: 501(c) Tax Exempt Application
  • IRS Determination Letter
  • Form COM-101: Alabama Department of Revenue Combined Registration/Application
  • Alabama Charitable Organizations Registration Statement or Alabama Charitable Organizations Registration Exemption

Cost
  • Name reservation: $28
  • Incorporation: $100 state filing fee + min $50 county filing fee
  • 501(c): $275 or $600 IRS fee
  • Alabama charitable registration: $25 ($0 if exempt)

Time
  • Name reservation: 24 hours
  • Incorporation: 4 days to ~6 weeks
  • 501(c): 2 weeks to 3 months
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