How to Start a Nonprofit Company
Some people do not understand that having a nonprofit company is similar to having a regular business. It requires much planning and strategic implementation to make it work. It is all well and good to have a passion about a specific cause, but it takes following through to make it a working reality. Unlike a regular business start up, there are certain distinctive steps you must take to start a nonprofit organization. Some of these steps are a requirement according to state laws.
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Instructions
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The Process
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Do some research to know if your cause will serve a need in the community or if it would be better to partner with another organization that compliments your cause. Use the help of an attorney who specializes in nonprofit law to assist you. The attorney will let you know what legal document requirements are mandatory.
If your organization should be classified by the federal government as a "for profit," venture, you will have to pay federal taxes on any income earned. The attorney will know exactly how to specify the nature of your organization and prevent any misinterpretation by the federal government.
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After choosing an appropriate name for your nonprofit organization, you then need to formulate a business plan that is well thought out. You also should apply for an Employer Identification Number (EIN) for your organization, which is used to identify a business entity.
You should also be aware of any perks that you can get with a tax exempt status. For example, the federal government through the U.S. Postal Service offers an application for mailing permit status. As a nonprofit organization, you can complete one of these applications for reduced and discounted prices on mass mailings.
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There are certain legal requirements that you have to consider. However, you first need to find out if your cause qualifies you for nonprofit status. You must incorporate your organization in order for the IRS to give you tax exempt status. This protects all the board members from assuming any liability.
Some states ask that you apply for a permit or license to get solicitation status for fundraising efforts. With this license, you will have to complete and submit an annual financial statement and report on the funds that you have collected through fundraising.
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When you have incorporated your organization, create your bylaws. This will assist you in running your organization appropriately. Choose all of your boar members. To be considered a charity organization, the Internal Revenue Service (IRS) requires that you complete Form 1023. Grab a copy of Publication 557 from an IRS office in your local area or download it from the IRS website.
This will give you instructions on how to complete this form. You will be required to pay a filing fee, which depends on how large your organization will be. Seek an attorney's help if possible to complete this important legal form.
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Put in an application for any permits or licenses you may need. When you have received your articles of incorporation from the government, it is now time to file a "501 (c)(3)," which will give you a nonprofit (tax exempt) status.
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Tips & Warnings
You should have written fundraising goals. Use those goals to begin your fund raisingefforts to raise money for your nonprofit organization. Your goals should include how much money you want to raise, what you will use the money to do and who will be involved in the effort.
Put your board members to work. Each individual has a unique skill, experience and talent. Use these to build your nonprofit organization. There is a reason why they were chosen to sit on the board.
References
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Comments
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patmcaudel
Sep 24, 2009
lots of hoops to jump thru but worth it for a good cause good job
