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How to Start Your North Carolina Nonprofit Guide

How to Start a Nonprofit in North Carolina


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.


1 Confirm a New Nonprofit is Necessary

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...

  • Research if an organization already exists in your area that serves your cause. By working together you avoid diluting the effect of fundraising dollars and volunteer hours available in your geography.
  • Consider fiscal sponsorship, in which an umbrella 501(c) organization incubates your charitable nonprofit. Fiscal sponsors permit your cause to receive tax-deductible donations and often handle administrative paperwork.
2 Understand the Benefits of Incorporating

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:

Nonprofit corporation
A North Carolina nonprofit corporation is overseen by directors and officers and may or may not have members. Incorporating is accomplished by filing Articles of Incorporation with the North Carolina Secretary of State (explained more below). The laws that govern your nonprofit corporation are N.C.G.S. Chapter 55A: North Carolina Nonprofit Corporation Act.
Unincorporated nonprofit association
An unincorporated association lacks the formalities of a corporation and does not provide limited liability for its managers. This type of structure can be appropriate for short-term fundraising and one-day community projects. The laws that govern your nonprofit association are N.C.G.S. Chapter 59B: Uniform Unincorporated Nonprofit Association Act.
Trust
A North Carolina trust is generally used by a benefactor bequeathing a sum of money in support of a cause. The laws that govern your nonprofit trust are N.C.G.S. Chapter 36C: North Carolina Uniform Trust Code.

The rest of this article assumes you are creating a nonprofit corporation.

3 Check Name Availability

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.

Name Search:
NC Department of State Corporate Name Search
Name Reservation:
Optional
Suffix:
In North Carolina, the name of a corporation must contain the word "corporation", "incorporated", "company", or "limited", or the abbreviation "corp.", "inc.", "co.", or "ltd.". (N.C.G.S. § 55D-20(a))
4 Recruit Incorporators and/or Initial Directors
  • Identify the incorporators. These individuals will execute the articles of incorporation and submit them to the state. North Carolina only requires a minimum of one incorporator.
  • Recruit initial directors for your nonprofit board of directors. In North Carolina, a minimum of one director is required (but more are recommended). Stating the names and addresses of the initial directors in the articles of incorporation is optional.
  • Nonprofits often begin working with us before they incorporate and select a board. We help you understand state and IRS requirements as you select your board members.
5 Appoint a Registered Agent

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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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

Learn By Video

6 File North Carolina Nonprofit Articles of Incorporation

File articles of incorporation to create your non-profit corporation.

Agency:North Carolina Secretary of State - Corporations Division
Form:

Form N-01: Articles of Incorporation for Nonprofit and Form N-14: Tax Exempt Status Information and Cover Sheet for Corporate Filings

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.
Adding 501(c) provisions into your articles

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.

7 Establish Organization Records

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 nonprofit records kit.

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.

8 Hold First Meeting of the Directors

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.

9 Get a Federal Employer Identification Number (EIN)

Your nonprofit must obtain an EIN regardless of whether it will hire employees.

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.

10 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.

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11 Apply for 501(c)

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.

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

IRS Fee:

$400 or $850

Turnaround:

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

The IRS will return a Determination Letter which officially recognized your exemption.

12 Apply for North Carolina Tax Exemption(s)

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.

Submit to:
North Carolina Department of Revenue
http://www.dornc.com/
Form:
Form CD-345: Corporate Franchise and Income Tax Questionnaire for Nonprofits (mailed to you)
Guidance:
Nonprofit Education

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.

Guidance:
Nonprofit Education
More information:
North Carolina Department of Revenue
http://www.dor.state.nc.us/

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).

13 Register for Charitable Solicitation / Fundraising

Before soliciting donations or hiring professionals solicitors, you must register in each state where you will raise funds.

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.
Disclosures:

Yes, North Carolina requires a disclosure when communicating with donors.

Online fundraising:

North Carolina follows the Charleston Principles regarding when your nonprofit needs to register due to online fundraising.

Accepts URS:Yes

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

14 Obtain Business Licenses & Permits

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:

  • 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. ยง 14-309.15).
* Ongoing Filings to Maintain Your Nonprofit

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!

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.

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