How to Incorporate a Non Profit
The incorporation of a non-profit entity carries several benefits unavailable for sole proprietors and partnerships. Non-profit organizations are eligible for 501(c)(3) tax exemption on state and federal returns after they fill out incorporation paperwork. This exemption frees non-profits from paying federal taxes outside of employment taxes as long as they stay compliant with the law's reporting guidelines. Your non-profit organization can save money for charitable purposes and operate more efficiently when you learn how to incorporate.
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Instructions
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Create a business name and logo for your non-profit before incorporation. Review articles of incorporation to determine limits on non-profit names including restricted words, organizational designations and copyright restrictions. Submit a trademark or copyright application with the U.S. Patent and Trademark Office to protect your name from infringement.
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Request an articles of incorporation packet from the state government to begin the incorporation process. Your state will require your operating name, contact information and a processing fee before you can be officially incorporated. Include any financial statements, business plans and other documents requested to ensure prompt processing. Check your state government's online portal for links to online articles of incorporation to eliminate delivery delays.
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Fill out IRS Form 1023 to apply for 501(c)(3) tax exemption for your non-profit organization. This exemption covers more than two dozen types of religious, educational and charitable organizations operating in the United States. You will need your approved articles of incorporation, a list of proposed activities and an account of employee salaries to get your tax exemption status reviewed.
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Meet with your attorney to develop corporate bylaws that meet state incorporation laws as well as federal tax-exemption requirements. Your corporate bylaws should cover the organizational structure, mission and operational guidelines of your non-profit organization. Spend time developing your organization's board appointment and accounting processes to avoid organizational problems down the road.
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Establish an executive board to oversee operations of your non-profit organization after incorporation. While state law may require just a few directors on the board, nominate as many directors as possible to create a vibrant discussion about the non-profit's future. Discuss the frequency of future board meetings, the chairmanship over each meeting and the potential for board subcommittees before adjourning.
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Call for a general meeting of your organization's staff and volunteers soon after your executive board meeting. Ask for questions and concerns about the corporate bylaws, using amendment procedures established by your executive board. Request nominations for president, vice president, treasurer and secretary to get started on the organization's daily business. Devote the last half of your meeting to defining the limits of these positions and creating a checklist of tasks to be completed before the next meeting.
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Assign a staff member to take minutes of every meeting held by the organization. Your non-profit organization can draw in more members and avoid discussions about improper use of donations by publishing minutes on the Internet.
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Tips & Warnings
Create a list of operating licenses, health inspections and other documents you will need to operate legally in your community. On top of your articles of incorporation, your organization will need to comply with local zoning, fire safety and health regulations to stay open. Consult with your city clerk to get a checklist of permits that must be in hand before your first day of business. Determine if your state requires a separate tax exemption form for its non-profit tax exempt program. States like California and Pennsylvania do not recognize the IRS tax-exemption for non-profits, requiring another layer of oversight to prevent taxpayer fraud.
Navigate around copyright laws and existing non profit organizations when submitting your articles of incorporation. The applicable department in your state will send back your forms if you have selected the same name as another registered organization. Conduct your own research on copyright and trademarked organization names to avoid legal problems.
Resources
- Photo Credit Photo by Mark Sebastian (Flickr)
