How to Open a Non Profit Organization
A nonprofit organization may form to achieve the fulfillment of a charitable, educational, scientific or religious cause. Profits generated by a nonprofit organization are used to help the organization reach its goal, not for the personal gain of the organization's board members and officers. Nonprofit organizations are required to obtain a federal tax ID number from the Internal Revenue Service as a means of identifying the organization for tax purposes. Furthermore, a nonprofit organization must obtain licenses and permits to legally operate.
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Instructions
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Conduct a name availability search. A nonprofit organization may not share the same business name as an existing business in the same state where the organization operates. Confirm business name availability using the secretary or department of state website. The name of a nonprofit organization must not imply the organization has an affiliation with a bank or government agency.
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Select directors to act as board members of the organization. The organization's board members are responsible for selecting officers to manage the nonprofit's daily affairs, as well as allocating the organization's resources to ensure the nonprofit is able to achieve its purpose. Some states such as Pennsylvania may require a nonprofit organization board of directors to consist of at least three members, while other states allow a single person to serve on the organization's board.
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Submit non-stock articles of incorporation to the secretary or department of state where the nonprofit organization operates. Print fill-in-the-blank articles of incorporation from the secretary or department of state website. State the purpose for organizing the nonprofit, list the names and addresses of each initial director, as well as the legal name and address of the organization. The cost to submit articles of incorporation may vary depending on the state where the nonprofit is organized.
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Write bylaws. States do not provide nonprofit organizations with specific criteria in terms of how to write bylaws. However, a nonprofit organization's bylaws may contain information such as the criteria for selecting board members and the duties of the organization's officers. Instead of filing bylaws with the state, a nonprofit organization must keep its bylaws at the primary business location as a document of reference.
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Obtain a federal tax ID number from the Internal Revenue Service. Apply online using the IRS website, or call 1-800-829-4933 to speak with an IRS assistor. The fastest way for a nonprofit organization to receive a federal tax ID number is to apply online or by telephone. State the length of time the organization has been in existence, the nature of the organization's activities and the number of people employed by the nonprofit. The IRS will issue a nonprofit's federal tax ID number immediately following the online or telephone interview.
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Apply for federal tax-exempt status with the IRS. Print and download Form 1023, Application for Recognition of Exemption, from the IRS website, or call 1-800-829-1040 to have Form 1023 sent to the organization's business location. Provide information, such as the date the organization became incorporated, the purpose for organizing the nonprofit and the business address. Supply the IRS with a copy of the organization's articles of incorporation and bylaws to prove the nonprofit organization is an incorporated entity. As of August 2010, a nonprofit organization that generates less than $10,000 per year must pay $400 to file Form 1023, while a nonprofit organization that generates more than $10,000 must pay $850.
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Register for tax exemption with the state's taxation agency. The state department of taxation or department of revenue may automatically grant a nonprofit with state tax exemption if the IRS has granted a federal tax exemption to the organization. However, states such as Maryland require a nonprofit organization to complete an application or submit a letter of request regardless of the IRS' determination. Supply the state taxation agency with a copy of the IRS determination letter, the organization's bylaws, articles of incorporation and financial statements.
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Obtain licenses and permits. Most nonprofit organizations are required to obtain a general business license from the city or county where the organization is located. Furthermore, certain nonprofit organizations may be required to obtain building and zoning permits depending on the location of the organization. Contact the city or county clerk where the organization operates to ensure the nonprofit has all the local licenses needed to operate.
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References
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