Have you ever dreamed of making the world a better place? One way of doing that is by starting a 501(c)(3) organization and making a positive contribution to your community, state, nation or the world. Filing for tax-exempt status takes time and effort, but here are a few simple steps to get you thinking about how the process works.
1. Choose the initial directors for your corporation. Each state has its own requirement of how many directors you are required to have so check the rules before you select your board. Most states require a minimum of either one or three directors.
2. Choose a name for the nonprofit. If you haven’t already, start thinking about the name of your nonprofit organization. You’ll want to make sure that the name is available in the state in which you intend to file.
3. Prepare and file your nonprofit articles of incorporation. After you’ve made sure your name is available, you’ll need to file your articles of incorporation that include basic information about your organization. Most states require information such as: name, address of the corporation's registered office, information on its registered agent for service of process, the nonprofit’s purpose, name and mailing address of the incorporator, etc.
4. Prepare bylaws. Along with filing your articles of incorporation, you’ll need to have bylaws that comply with state specific law. There are also certain provisions you’ll want to include in preparation for filing your tax-exempt application with the IRS.
5. Hold a meeting for the board. The first board meeting is the organizational meeting of the board and at that meeting, you’ll need to conduct business that establishes the board and approves how the nonprofit will do business, etc. You’ll want to record the meeting via minutes. After doing all of the above, you will file for your tax-exempt status.
6. File your Form 1023 or 1023EZ federal tax exemption application. In order to obtain federal tax-exempt status from the IRS, you’ll need to file your Form 1023. This long and detailed form asks for a wealth of information about your organization, its history and how it is run. Smaller nonprofits can file the streamlined Form 1023EZ if they have projected annual gross receipts of less than $50,000 and assets totaling less than $250,000. Both forms can be found at IRS.gov.
7. File for state tax exemption. After the nonprofit qualifies for 501(c)(3) status from the IRS, it may be exempt from state corporate income tax. You’ll need to check on whether your state requires a separate filing.
For more information on things to consider when forming your nonprofit organization, give us a call at (703) 319-7868 or schedule an introductory strategy session online at graceleelaw.com.