How to Start a 501c3 Nonprofit Organization

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Start a 501c3 Nonprofit Organization
Start a 501c3 Nonprofit Organization (Image: 990accountant.com)

Do you want to do something with your life that will help people or animals in need? Has it always been your dream to run a charitable organization that will support an issue near and dear to your heart? If so, then think about starting a 501c(3) nonprofit organization. This type of organization is exempt from income tax and usually from property taxes, and it can receive tax-deductible donations from companies and individuals.

Things You'll Need

  • 3 or more directors
  • Article of Incorporation
  • IRS Forms 1023 and SS-4
  • U.S. Postal Service Publication 417

Create a mission statement that clearly outlines the goals and reflects the values of your organization. It should state what the organization will accomplish and for whom. The more compelling it is, the more donations you might receive!

Create a board of directors. It should have a minimum of three people who support the mission of the organization and are willing to donate their time and efforts to the cause. The board of directors is responsible for drafting the bylaws (rules) for how your organization will be run.

Create a budget. This should be as detailed as possible and include start-up costs, monthly expenses and possible long-term expenses. You need a budget to apply for 501c(3) nonprofit status. Along with the budget should be a record-keeping system. As a charitable organization, you must be extremely careful with your records, especially in the case of donations.

Create an accounting system. This is best done with the help of an financial consultant, if your board of directors does not include one. A good accounting system will keep your organization accountable to the public and the government.

File Articles of Incorporation with your state. This just means that you tell the state that you are officially establishing a nonprofit organization. Contact your state's attorney general or secretary's office to obtain the necessary paperwork. Some states require a small fee.

File for 501c(3) status with the IRS. You must fill out Form 1023 using the instructions in Publication 557. You also need to pay a fee based on your proposed budget. You can obtain the forms at the link below.

Get a federal employer identification number, or EIN. This is a requirement for all nonprofit organizations. This number identifies you when you are filing tax documents as a tax-exempt organization. The form you need is SS-4.

Tips & Warnings

  • Find out your state's charitable solicitation law requirements from the state attorney general's office, so you can be sure to follow them!
  • Don't forget to apply for a nonprofit mailing permit. This allows you to send mail to a large group of people for a discount, as long as it is second or third class. Fill out publication 417, available from your local post office.
  • Check to see if you qualify for state and local tax exemption. To do this, contact your county clerk offices, and your state's department of revenue.
  • When filling out state or federal paperwork, it is always a good idea to consult with a lawyer.

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