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Welcome to our Colorado nonprofit resource guide! This free guide will help you understand how to start your nonprofit in Colorado and become 501(c)(3) tax exempt. You will find step-by-step instructions and get answers to common questions like "what does it cost?" and "how many board members do I need?".
If you're starting out with little or no funds, gaining professional assistance is rarely an option. In that case, you may want to commit to researching the process and filing government applications on your own. This route is not for the faint of heart but is certainly achievable if you work diligently. The following step-by-step guide should help you as you undertake this process.
As you begin, take a moment to consider if you should start a new non-profit organization. According to the National Center for Charitable Statistics, there were over 28,000 nonprofit organizations in Colorado in 2009. To decide if a new nonprofit is necessary...
This guide focuses on starting a nonprofit corporation, the traditional nonprofit legal structure. This legal structure has a few key benefits. First and foremost, the nonprofit corporation limits the liability of the organization's officers and directors. Second, the nonprofit corporation is familiar to donors and grant makers. Lastly, nonprofit corporations meet a wide range of IRS eligibility requirements, in particular those relating to the 501(c)(3) application.
The legal name of your nonprofit corporation may not conflict with any other registered name. Check availability of your desired name by conducting a name search.
Identify the nonprofit’s Colorado registered agent. A registered agent is a legal appointee who is responsible for receiving legal notices for your nonprofit. Your registered agent must be physically located in Colorado and maintain an office that is open during regular business hours.
We provide a convenient service to act as your Colorado registered agent. As part of that service, our local office in Boulder, CO receives your legal documents and sends you notifications. You view your documents in your secure online account. Registered agent is included in our nonprofit formation service or you can sign up for this service separately.
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Below is an overview of the paperwork, cost, and time to start an Colorado nonprofit.
File articles of incorporation to create your non-profit corporation.
Paper forms are not accepted. This is a sample: Form ARTINC_NPC: Articles of Incorporation for a Nonprofit Corporation
The IRS requires specific language in the articles of incorporation to qualify for 501(c)(3) federal tax exemption. These provisions are not always included in state articles of incorporation templates. Refer to IRS Pub 557 for guidance and sample language.
Nonprofit must keep corporate records and accounting records in compliance with CRS §7-136-101. Your
filed articles of incorporation is the first document for your nonprofit corporate records. Your
corporation will generate many other official records such as bylaws, meeting minutes, and your
Office supplies intended for a nonprofit corporation will help you stay organized and save time. Optionally, get a company record book, seal, and document templates.
Draft bylaws which is the governing document for the nonprofit. The bylaws of a nonprofit corporation may contain any provision for managing and regulating the affairs of the nonprofit corporation that is not inconsistent with law or with the articles of incorporation. (CRS §7-122-106(2)). You will review and ratify the bylaws at your first board of directors meeting.
The Board should create and adopt a conflict of interest policy. This document is submitted to the IRS at the time they apply for 501(c)(3) tax exemption.
Hold the first meeting of the board of directors or incorporators (CRS §7-122-105). At this meeting, the nonprofit should approve the bylaws, elect additional directors, appoint officers, and approve initial resolutions such as opening a company bank account. Keep minutes of this meeting.
Your nonprofit must obtain an EIN regardless of whether it will hire employees.
Colorado offers a consolidated state tax registration application online or you can file two registrations by mail.
To apply for a sales tax account and/or wage withholding account:
If your nonprofit has employees and withholds income, then you must obtain an unemployment insurance tax account number and rate:
Applying for 501(c) tax exemption is often the most complex and time-consuming steps in setting up a nonprofit. It is also one of the most important, as obtaining a tax exemption is what is enables an organization to successfully raise funds, apply for grants, be exempt from IRS income tax, and enjoy a variety of other benefits exclusively available to nonprofits.
501(c) is the chapter of the Internal Revenue Code that regulates nonprofit organizations. Most nonprofits are 501(c)(3)s, including charities and foundations. There are a few forms used to apply for federal tax exemption. 501(c)(3) nonprofits apply using Form 1023 or Form 1023-EZ. Not all organizations however are eligible to file the streamlined Form 1023-EZ. Other types of nonprofits, including 501(c)(4)s and 501(c)(6)s, apply using Form 1024.
Seeking the help of a professional with this step is common. Choosing the right form to file is just one consideration. A great deal of expertise, time, and preparation goes into creating a successful application. The IRS estimates over 100 hours are spent on researching and preparing the application. If you're looking for professional assistance, check out our formation services to help you with your 501(c) application and the rest of the process. Our nonprofit specialists will help you from start to finish.
The IRS will return a Determination Letter which officially recognized your exemption.
Upon obtaining your IRS Determination Letter, your organization is automatically exempt from Colorado corporate income taxes. No application or notification is necessary.
"If a corporation is exempt from federal income tax it is generally exempt from Colorado income tax and from filing a Colorado income tax return."
Colorado Department of Revenue website
Colorado charitable organizations can apply for exemption from state sales tax and state-administered local sales tax for purchases made while conducting regular charitable functions and activities.
Before soliciting any funds or hiring solicitors, you must complete your charitable organization
registration in each state where you will raise funds.
If you need to register in many states, review our guide “Charitable Solicitation Registration using the Unified Registration Statement (URS)”. 39 states accept the URS, but Colorado does not.
Any charitable organization that (1) solicits contributions in Colorado, (2) has contributions solicited in Colorado on its behalf, or (3) participates in a charitable sales promotion must register in Colorado:
To run your business legally, you must obtain applicable licenses and permits. The easiest way to navigate the wide range of federal, state, and local requirements is to search by your business type and locality using the Small Business Administration Business License & Permit look-up tool.
Bingo and raffles are regulated by the Colorado Secretary of State. Apply for a bingo and raffle license by filing Form LE7-8_COMB ($100 state fee).
You must file federal and state tax returns. You must also file:
Filing fees depend on your individual situation. We do our best to calculate your filing fees upfront and collect those fees today so we can get started. Your specialist will determine your exact filing fees and invoice additional fees if required.