How to Obtain a 501(c)(3)

For those looking to start a nonprofit business, having a 501(c)(3) is essential to your organization. Here is a way to obtain your exemption.

Difficulty: Moderately Challenging

Instructions

Things You'll Need:

• Name of your Organization
• Bylaws
• EIN
• Incorporated
• Projected income figure (at least 2 years}
• 1023 Tax Exemption Form
• Budget of about $1000 (for IRS)
• Record book for keeping board minute meetings.

1. 
    

   You must check to make sure that your name is not used in your state by anyone. This is very important as you do not want to infringe on any one. You can run a name search in your state online for free. This could be considered one of your first meetings and must be kept in a record keeping or board minute meeting book.

2. Simply go to www.irs.gov and fill out a employee identification number application for nonprofits. This can be done online, mail or over the phone. For faster results try the online procedure. You can also download your 501(c)(3) application for exemption(form 1023) there. Publication 557 is a great resource and can be saved or visited since it is over 500 pages long.

3. 
    

   Your bylaws are simply your the rules and procedures of running your organization and can be changed at any time but for the application you must have a draft copy. Bylaws can be created by a member of your board of directors or hired Attorney to achieve the results that best fit your organization. (Depending on your state you must have a minimum of 3 on your board of directors. In some cases only one)

4. Now if you have not been an existing organization you must create a projected figure amount for business revenues and expenses for two full years. Remember they are only projected figures. For those with existing organizations you will need up to 3-4 years of bank records.

5. 
    

   No it's time to complete the 1023 form. Many people find this to be overwhelming and if so you may want to bring in a professional such as a lawyer or some one that handles this profession. This can be very simple for some but remember, if you paper work is not in order it can take years to be approved.

Tips & Warnings

• If your not sure always check the resource 557 publication located on irs.gov.
• Consult a professional for review.
• Budget up to $1000 for irs fees. Budget more for professional help.
• Make sure you keep receipts as those may also be needed for future use and it makes good booking sense.
• Keep a record of all meetings (Board minute meetings), even if they are done over the phone.
• This could become over whelming and if necessary please consult a professional. The objective is to get your exemption as quickly as possible and if your paperwork is not in order it can easily be rejected and cost months, years and money to straighten it all out. Good Luck!

[awhitte11]

on 4/20/2009 I'm going to try this--I hope it works. Thanks

[ellischristina]

on 10/20/2008 Thanks for a very informative article. You wrote it so an individual can tackle this on his own with a minimum of assistance. This is a great article for those who want to start a non-profit. 5 stars. Thanks