Create your own 501c3 organisation in 7 easy steps with our free nonprofit creation guide. To begin, just choose the state in which you want to establish your new firm.
Table of Contents
It is simple to establish a nonprofit organisation; just follow these steps:
Step 1: Give Your Nonprofit a Name
The first and most crucial step in establishing a nonprofit company is to choose a name for it. Make sure your name meets your state’s naming regulations and is readily searchable by prospective members and contributors.
Is the URL still available? We propose that you investigate if your company’s name is accessible as a web domain. Even if you don’t intend to create a company website right away, you may wish to purchase the URL to prevent others from doing so.
Step 2: Select a Registered Agent.
Your nonprofit is required to name a registered agent in your state. More information on selecting the appropriate registered agent for your small company may be found in our How to Choose a Registered Agent for Your Nonprofit guide.
What exactly is a Registered Agent? A registered agent is a person or corporate organisation that accepts vital legal papers on your behalf. Consider your registered agent to be your company’s point of contact with the state.
Who is eligible to be a Registered Agent? A registered agent must be a resident of your state or a company allowed to do business in your state, such as a registered agent service. You may choose someone from your organisation, even yourself.
Step 3: Choose Your Directors and Officers
A board of directors is made up of an organization’s directors. This board of directors is in charge of managing the nonprofit’s activities.
Officers are the president, secretary, and other members of a nonprofit who have specific roles and authority.
Your nonprofit’s organisational structure MUST have the following elements:
At least three directors who are not connected to one another
Step 4 Adopt Bylaws and a Conflict of Interest Policy
Your organisation must have the following two papers in order to petition for 501c3 status:
Conflict of interest policy bylaws
What exactly are bylaws? Bylaws are the guidelines that outline the nonprofit’s operational processes.
What is the definition of a Conflict of Interest Policy? A Conflict of Interest Policy is a set of guidelines in place to guarantee that any decisions made by the board of directors or executives benefit the organisation rather than individual members.
NOTE: The nonprofit must adopt its bylaws and conflict of interest policy during its first organisational meeting, when the board of directors and officials are formally appointed.
Step 5: Submit your Articles of Incorporation.
You must submit the Articles of Incorporation with your state to register your nonprofit.
To guarantee that your organisation is qualified to file for 501c3, you must expressly declare the following in your articles of incorporation:
1. Function
To be eligible for 501(c)(3) status, the organization’s purpose must be expressly confined to one or more of the following:
Charitable, religious, scientific, educational, literary, and other organisations promoting amateur sports competition on a national and worldwide scale, Preventing animal/child cruelty, Public safety testing,
2. Decomposition
You must indicate exactly what the organization’s assets will be used for and what will happen to the assets if the organisation is disbanded.
To be qualified for 501(c)(3) status, your organization’s assets must only be utilised for purposes authorised by Section 501(c) (3).
Section 5 of this sample IRS filing offers an illustration of these 501(c)(3) eligibility conditions.
Step 6: Obtain an EIN
What exactly is an EIN? The federal government uses an Employer Identification Number (EIN) or Federal Tax Identification Number (FTIN) to identify a company organisation. It is effectively the company’s social security number.
Why do I need an EIN? An EIN is necessary for the following activities:
To establish a commercial bank account for the firm
In terms of federal and state taxation
To recruit workers for the firm
How can I get an EIN? After founding the firm, the business owner obtains an EIN from the IRS (free of charge). This may be done both online and by mail.
Step 7: Obtain 501(c)(3) status.
Before applying for 501(c)(3) status, a charity must:
Choose at least three directors who are not linked to one another.
File the Articles of Incorporation with the necessary requirements (As covered in Step 5)
Adopt the bylaws as well as the conflict of interest policy.
Do you have an EIN?
Once these four prerequisites are completed, your organisation may file Form-1023 online to apply for 501(c)(3) tax-exempt status.
If your application is granted, the IRS will issue you a letter confirming that your organisation is tax-exempt under Section 501(c) (3).