Nonprofit Frequently Asked Questions
Introduction to Nonprofits
- Incorporating limits the liability of directors, officers, and members (provided you properly maintain the corporation).
- Incorporating builds credibility with donors and grantmakers.
- As you form your board of directors and elect officers, you can gain support and involvement from others committed to your mission.
A nonprofit must be properly set up and run to establish and maintain the “corporate veil” that protects its stakeholders from liability.
Learn more by reading “Nonprofit Governance”
Federal income tax exemption under 501(c) is just one of many tax exemptions available to nonprofits. You can also apply for state income tax exemption, state sales tax exemption, and local property tax exemption, to name a few.
After forming the nonprofit, you should have an organizational meeting of the incorporators or initial directors and adopt bylaws, which documents how the nonprofit will be run. You should keep company records, including meeting minutes and resolutions.
Some states require the nonprofit to file an annual report, filing fees, and "business" license for the continued authority to conduct business in that state. All states require the nonprofit to maintain a registered agent. Keeping up with statutory requirements is important to preserve the good standing of the nonprofit, liability protections, and to avoid government penalties (up to and including administrative dissolution of the nonprofit).
Choosing a Nonprofit
After your nonprofit is set up, you are responsible for running it in compliance with your statutory corporations code and 501(c) guidance. This often requires filing an annual report, filing annual tax returns (or tax exempt returns), and, in some states, remitting an annual franchise tax or license for the privilege of operating. Operating an organization in compliance with 501(c) is a lengthy topic, but an important one to keep tax exemption. Finally, many states require annual charitable registration. The costs to accomplish these tasks vary by state. In some states there is minimal cost and in others you may have to spend hundreds every year. Please contact us if you would like more information about the business compliance aspects of running your nonprofit.
Forming a Nonprofit Corporation
After forming the nonprofit corporation, the organization should register for federal and state tax IDs, hold an organizational meeting, adopt bylaws, issue membership certificates (if applicable), otherwise establish records, register for business licenses and permits, submit charitable solicitation registrations, and set up a foundation to ensure compliance with ongoing statutory and 501(c) requirements.
- Learn how to do it yourself
- Invest in the expense and expertise of an attorney or accountant
- Consider our affordable nonprofit formation service
Some start ups naturally have presence in multiple states from Day 1. If this is the case, we can help you file a domestic registration for your nonprofit in your preferred state as well as foreign registrations in each other state where the nonprofit will operate. Please contact us for a custom quote.
You must choose a name for your nonprofit that is distinguishable from all other registered entities in your state of formation. The name must contain a corporate designator that is approved by that state's corporations code. Certain words are restricted and either may not be used in the name or may only be used in the name with prior approval.
Before filing Articles of Incorporation, a name availability check should be conducted to ensure the desired business name is available. Most states have searchable public records. Every state has a slightly different search protocol. Some require a name reservation in addition to a name availability search.
Nonprofits that wish to have multiple names accomplish this by filing a fictitious name in addition to the corporate name. We can help you avoid the common mistake of filing the fictitious name under your personal name instead of under the corporation. Please contact us for a custom price quote.
About Our Service
Ordering your desired nonprofit package is easy. You probably already know all the information you need such as your desired organization name (if it's not available, we'll help you find one that is), a description of your purpose or mission, and the names of those starting the organization.
If you have all the information we need, we can file your nonprofit in 1-2 business day. During this time we will contact you with the results of your name availability search and may require your signature on certain documents.
State processing times vary. Some states permit us to form your nonprofit immediately online while others can take 10+ weeks to respond. We're experienced in the best ways to submit your nonprofit, advise you when to pay state expedite fees for a reasonable turnaround time, and we communicate directly with the state government to resolve any delays.
Some secretaries of state offer expedited processing for a fee, all the way up to 1-hour processing. If you're in a rush, contact us and a formation specialist can explain state rush options, take your order by phone, and, with your help, submit your formation documents in a matter of hours.