How to Start a Non Profit Corporation
A non-profit corporation with 501(c)(3) status can receive special tax consideration. Non-profits reinvest or spend any profits left after from revenue generated to fund their regular activities. Much of the work organizing a non-profit corporation is identical to organizing any other business.
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Instructions
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Make a business plan. Research the local need and find a niche that's not already being met. Plan how the company will generate revenue, what qualifying non-profit activity it will engage in, and the corporate structure of the organization. A good business plan helps keep the business focused, and it can also show how to raise funds through donations and/or loans.
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File for incorporation. Choose an available name, then file the appropriate organizing documents with the appropriate agency, usual the state corporations department. This process is the same whether a business is for profit or non-profit.
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File for tax exemption. The IRS requires Form 8718, the User Fee for Exempt Organization Determination Letter Request, and IRS Package 1023, Application for Recognition of Exemption. States with income taxes, including California, Montana, North Carolina, and Pennsylvania, will have additional requirements. Publication 557, which is available along with all these forms through the IRS' website, can help with the details of this paperwork. Copies of the company's incorporating documents are typically required with an application for non-profit designation.
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Obtain licenses or permits as necessary. Some forms of business and some states or municipalities might require occupational, business, or other licenses.
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Tips & Warnings
Be familiar with the process of obtaining tax-exempt, non-profit status prior to filing Articles of Incorporation to minimize the risk that the IRS application will be declined.
Non-profits are more likely to be audited than other businesses and can easily lose their tax exemption if they stray from their business plan and the strict rules of the IRS. Do not assume that 501(c) designation lasts forever!
