Start Your North Carolina Nonprofit

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How to Start a Nonprofit in North Carolina

Welcome to our North Carolina 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 41,000 nonprofit organizations in North Carolina 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 North Carolina. 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: North Carolina Secretary of State - Corporations Division
    Name search
    Suffix:

    The name of a corporation must contain the word "corporation", "incorporated", "company", or "limited", or the abbreviation "corp.", "inc.", "co.", or "ltd.". NC General Statutes § 55D-20(a)

  2. 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.

    North Carolina director requirements:
    • Number: minimum 1
    • Qualifications: Natural person. No residency requirement. No membership requirement.
    • Term: 1 year
    • Quorum: majority
    • Committee: minimum 2 members
    North Carolina officer requirements:
    • Defined in bylaws or board resolution.
    • Two or more offices may be held by the same individual. This person may sign instruments in only one capacity when the signatures of two officers are required.
  3. 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 North Carolina registered agent office is located in Raleigh, NC. We offer registered agent service independently or as part of our nonprofit formation packages.

  4. 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:North Carolina Secretary of State - Corporations Division
    Form:

    N-01: Articles of Incorporation for Nonprofit

    Instructions:

    Incorporating Your Nonprofit in North Carolina

    Filing method:

    Mail, in-person, or online by uploading the signed document

    State Fee:

    $60 + optional $100-200 expedite fee

    Turnaround:

    ~5-7 business days. 24 hours for $100 expedite fee. Same day for $200 expedite fee (submit by noon).

    Law:

    North Carolina Nonprofit Corporation Act

    Notes:
    • If the corporation is a charitable or religious corporation, NC statute requires a statement to that effect (N.C.G.S. § 55A-2-02). Typically any organization that will apply for 501(c)(3) should include this statement.
    • Explicitly declare whether or not the corporation will have members (N.C.G.S. § 55A-2-02). A member votes to elect directors.
    • You may include an optional provision limiting or eliminating the personal liability of any director for monetary damages arising out of an action whether by or in the right of the corporation or otherwise for breach of any duty as a director.
    • 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.
  5. 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

    Guidance:

    IRS Pub 1635: Understanding Your EIN

    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.

  6. 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. Consider purchasing a Nonprofit Records Kit that makes it easy to keep track of documents.

  7. 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.

  8. 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.

  9. Get North Carolina State Tax Identification Numbers/Accounts

    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:

    Submit to: North Carolina Department of Revenue
    http://www.dornc.com/
    Form: Form NC-BR: Business Registration Application for Income Tax Withholding, Sales and Use Tax, and Machinery and Equipment Tax
    Guidance: Nonprofit Education
    Filing Method: Mail or online
    Fee: $0

    Additional registrations might be required for other NC business tax types.

  10. 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

    State Fee:

    $275, $400, or $850, depending on form and annual gross receipts

    Turnaround:

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

    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.
  11. 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:

    Agency:North Carolina Department of Revenue
    State fee:

    $0

    Notes:

    Send your Articles of Incorporation, Bylaws, and other organizational documents along with your IRS Determination letter to the Department of Revenue.

    To file to obtain Sales and Use Tax Exemption:

    Notes:

    North Carolina currently does not offer an exemption from sales tax. However, the state offers semiannual refunds for qualified organizations. You will file Form E585: Nonprofit and Governmental Entity Claim for Refund with the North Carolina Department of Revenue.

    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).

  12. 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.

    To file in North Carolina:

    Agency:North Carolina Secretary of State - Charitable Solicitation Licensing Division
    Exemptions:

    Nonprofits required to register must do so prior to soliciting. The most common registrations exemptions are:

    1. <$25,000 contributions per year. File 131F-3(3) Exemption Request Form for recognition under this exemption.
    2. Religious organizations
    3. Educational institutions (complete the state form exemption questionnaire)

    Check the law for the full list of exemptions and exemption criteria.  See Exemptions from Charitable Licensing Requirements. Exempt organizations need not file, but the benefits of filing are obtaining an exemption letter for your records and being listed in the on-line search registry.

    Form:

    Initial / Renewal License Application for Charities or Sponsors

    Filing method:

    Mail

    State fee:

    $0-200, depending on contributions

    Law:

    North Carolina General Statutes §§ 131 F-2 to 131f-8. CSL Statute and Rule Reference

    Notes:
    • Note the list of attachments required.
    • The CFO / treasurer must sign and it must be notarized.
    • Some North Carolina counties and municipalities may require charities that solicit in-person to register prior to fundraising.
    URS:No

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

  13. 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.

    North Carolina nonprofits who wish to raise funds by hosting charitable gambling should be aware:

    • NC regulates bingo to prevent commercialized gambling. Nonprofits must apply for a NC Bingo License.
    • NC limits raffling. Your nonprofit may hold two raffles per year with prizes limited to $5,000 cash or $25,000 personal property per raffle (N.C.G.S. § 14-309.15).


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 North Carolina 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 North Carolina nonprofit.


Paperwork
  • Form N-01: Articles of Incorporation for Nonprofit
  • Form N-14: Tax Exempt Status Information
  • Bylaws
  • IRS Form SS-4: Apply for EIN
  • IRS Form 1023: Application for 501(c)(3) Exemption
  • IRS Determination Letter
  • Form NC-BR: Business Registration Application for Income Tax Withholding, Sales and Use Tax, and Machinery and Equipment Tax, if applicable
  • Form CD-345: Corporate Franchise and Income Tax Questionnaire for Nonprofits
  • NC Solicitation License Application - Charitable or Sponsor Organization, if required

Cost
  • Incorporation: $60 + optional $100-200 expedite fee
  • 501(c): $400 or $850 IRS fee
  • North Carolina charitable registration: $0-$200 depending on gross contributions ($0 if exempt)

Time
  • Incorporation: ~5-7 business days. 24 hours for $100 expedite fee. Same day for $200 expedite fee (submit by noon).
  • 501(c): 2 weeks to 3 months

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This page was last fact-checked March 29, 2016.

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