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Welcome to our North Carolina nonprofit resource guide! This free guide will help you understand how to start your nonprofit in North Carolina 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 44,000 nonprofit organizations in North Carolina 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.
Your options in North Carolina:
The rest of this article assumes you are creating a nonprofit corporation.
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 North Carolina 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 North Carolina and maintain an office that is open during regular business hours.
We provide a convenient service to act as your North Carolina registered agent. As part of that service, our local office in Raleigh, NC 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 North Carolina nonprofit.
File articles of incorporation to create your non-profit corporation.
Filing of the articles of incorporation by the NC Secretary of State is proof that the nonprofit has fulfilled the minimum statutory requirements to incorporate. They will stamp the articles with the date the corporation is created. The signed original will be retained by the state and a copy will be returned to the incorporator.
Articles of Incorporation are not required to be filed with the NC Register of Deeds.
Your filed articles of incorporation are the first document for your nonprofit corporate records. Your corporation will generate many other official records such as bylaws, meeting minutes, and your EIN.
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. 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. 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.
The NC Secretary of State automatically notifies the NC Department of Revenue of your incorporation. The Department of Revenue send you a six-part questionnaire (Form CD-345) to be used for determination of tax status in regards to corporate and franchise taxes.
For other state taxes, North Carolina offers a consolidated state tax registration application:
Additional registrations might be required for other NC business tax types.
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 incorporation, the NC Secretary of State automatically notifies the NC Department of Revenue of your incorporation. The Department of Revenue send you a six-part questionnaire (Form CD-345) to be used for determination of tax status in regards to corporate and franchise taxes. Your nonprofit is subject to NC Corporate Income Tax until it obtains an exemption. The state will issue your organization a formal letter of tax exemption if you receive exemption. NC does not issue tax exempt numbers.
NC does not provide sales and use tax exemption on items nonprofits purchase, but rather semiannual refunds for qualified purchases made by qualified organizations (G.S. 105164.14). To register, the organization must complete Form NC-BR (see Step #10 above). There is no fee for registering.
Apply for NC property tax exemption, if qualified, under the Machinery Act (G.S. 105282.1(a)).
Certain nonprofit organizations that purchase and use motor fuel may receive a quarterly refund for the excise tax paid by applying with Form Gas 1200, Application for Refund of Road Tax Due on Motor Fuels (G.S. 105449.106).
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, including North Carolina.
To file only in North Carolina:
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.
North Carolina nonprofits who wish to raise funds by hosting charitable gambling should be aware:
You must file federal and state tax returns. You must also file: