Welcome to our Connecticut 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 Connecticut 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 Connecticut. Let’s get started!
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:||Connecticut Secretary of State - Commercial Recording Division
Shall contain the word “corporation”, “incorporated” or “company”, or the abbreviation “corp.”, “inc.” or “co.”, or words or abbreviations of like import in another language. GSC §33-1045.
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.
|Connecticut director requirements:||
|Connecticut officer requirements:||
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 Connecticut registered agent office is located in Glastonbury, CT. We offer registered agent service independently or as part of our nonprofit formation packages.
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:||Connecticut Secretary of State - Commercial Recording Division|
Mail or fax
$50 + optional $50 expedite fee
~3-5 business days. ~24 hours for $50 expedite fee.
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)|
Mail, phone, fax, or online.
Immediately online or by phone. 4 business days by fax. 4-5 weeks by mail.
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.
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.
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.
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.
Connecticut offers a consolidated state tax registration application. You will obtain a Connecticut Tax Registration Number. State business taxes include corporation business tax, business entity tax (BET), sales and use taxes, income tax withholding, and motor vehicle fuels tax.
|Submit to:||State of Connecticut - Department of Revenue Services
|Form:||Form REG-1: Business Tax Registration Application|
|Instructions:||Instructions for Form REG-1|
|Guidance:||IP 2006(11): Getting Started in Business - Understanding Connecticut Taxes|
|Filing Method:||Mail, in-person, or online|
|Fee:||See license and permit fee schedule. A sales tax license is $100.|
|Turnaround:||~15-20 business days online. ~2-3 weeks by mail. Immediately in-person.|
|Notes:||Nonprofit organizations that make sales of goods or services are generally required to obtain a Connecticut Sales and Use Tax Permit and to collect sales tax on those sales. However, a nonprofit organization may make sales at up to 5 fundraising events per year without collecting sales tax. See Guide SN 98(11).|
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)|
$275 for organizations filing Form 1023-EZ and $600 for organizations filing Form 1023.
1023-EZ average: <1 month. 1023 average: 3-6 months.
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!
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:
|Agency:||Connecticut Department of Revenue Services|
Exemption from Connecticut income tax is obtained by submitting a copy of your IRS Determination Letter when submitting Form REG-1.
To file to obtain exemption from state sales tax:
Upon receiving an IRS determination letter, Connecticut nonprofits are automatically exempt from state sales tax. Organizations must follow the guidelines in Guide SN 95(10). This includes providing sellers with a copy of CERT-119: Purchases of Tangible Personal Property and Services by Qualifying Exempt Organizations.
For more information on other Connecticut tax exemptions and using your exemptions, see TSSN-38: State Tax Guide For Nonprofit Organizations.
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.
|Agency:||Connecticut Department of Consumer Protection|
Connecticut General Statutes § 21a-190a et seq.
|Exemption Eligible Organizations:|
Exemptions do not expire as long as the organization continues to qualify under the exemption criteria.
Mail or online
Mail or online
Renewal is due annually eleven (11) months after the organization’s fiscal year ends. For example, organizations with December fiscal year-ends are due by November 30.
Fiscal year can be changed during the standard renewal process. Submit the last 990 prior to change and include the short year 990 as well.
To fundraise nationally or online, please see our Fundraising Compliance Guide. Our services manage your initial, renewal, and exemption filings in every state.
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 can also obtain Connecticut licenses by starting at Connecticut’s License Info Center (CLIC), and use their "Starting a Business Checklist" to identify licensing requirements.
In Connecticut, obtaining a bingo permit is overseen by the Department of Consumer Protection - Charitable Game - Bingo section. If your organization has never conducted bingo in the past, it must complete a CGB-1, CGB-4 and CGB-4B application, a Bingo Price Sheet and a Bingo Prize sheet.
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 Connecticut nonprofit compliance guide to learn more!
Harbor Compliance® proudly partners with The Alliance: The Voice of Community Nonprofits to provide insightful resources and compliance solutions to nonprofits in Connecticut.
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