Follow these procedures to establish a charity in Alabama and get 501(c)(3) status:
Step 1: Give Your Alabama Nonprofit a Name
Step 2: Select Your Registered Agent; Step 3: Choose Your Board Members & Officers
Adopt Bylaws and a Conflict of Interest Policy in Step 4
Step 5: Submit your Certificate of Formation.
Step 6: Obtain an EIN
Step 7: Apply for 501(c)(3) status (3)
It is simple to establish a 501(c)(3) non-profit organisation in Alabama.
To establish a 501(c)(3) tax-exempt nonprofit organisation in Alabama, you must first establish a nonprofit under Alabama law and then apply to the IRS for 501(c)(3) status.
Step 1: Give Your Alabama Nonprofit a Name
The first and most crucial step in establishing your nonprofit company is deciding on a name. Make sure your name meets Alabama naming regulations and is readily searchable by prospective members and contributors.
1. Follow the naming conventions:
The organization’s name must: be distinct from other firms in Alabama.
Not imply that the nonprofit company was founded for a purpose other than that specified in the Certificate of Formation.
To learn more about naming an Alabama-based organisation, see the Alabama Business and Nonprofit Entities Code.
2. Does the name exist in Alabama? Do a name search on the State of Alabama Website to ensure that the name you choose isn’t already used.
3. Is the URL accessible? 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.
4. File a name change application with the state. In Alabama, all organisations must file a Certificate of Name Reservation.
Step 2: Select an Alabama Registered Agent.
Your charity must choose an Alabama Registered Agent for your organisation.
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 an Alabama resident or an organisation, such as a registered agent service, that is permitted to do business in Alabama. 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.
In Alabama, your nonprofit’s organisational structure MUST include:
At least three independent directors A president A vice-president
A secretarial assistant
A treasury official
NOTE: The roles of president and secretary cannot be held by the same individual.
Step 4 Adopt Bylaws and a Conflict of Interest Policy
Your organisation must have the following two papers in order to apply for 501(c)(3) 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 put in place to guarantee that any decisions made by the board of directors or officials 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 directors and officers are formally selected.
Step 5: Submit your Alabama Certificate of Formation.
You must submit the Certificate of Formation with the State of Alabama in order to register the nonprofit.
To guarantee that your organisation is qualified to qualify for 501(c)(3) status, you must expressly specify the following in the Certificate of Formation:
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 national/international amateur sports competition, preventing animal/child maltreatment, and testing for public safety
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.
Filing Via Mail
Send the following documents to the Alabama Secretary of State.
Original Formation Certificate
Cost of two extra copies of the Certificate of Formation State Filing: $200
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 online or in the mail. For additional information, see our EIN Lookup guide.
Step 7: Apply for 501(c)(3) Status Prior to applying for 501(c)(3) status, a charity must,
Elect at least three independent directors. File the Certificate of Formation with the necessary conditions (as covered in Step 5)
Adopt the bylaws as well as the conflict of interest policy.
Do you have an EIN?
Once these four qualifications have been completed, your organisation may file Form-1023 online to petition 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).
Steps to Take After Starting a Nonprofit
1. Establishing a company bank account:
Separates your personal assets from the assets of your firm, which is required for personal asset protection.
It simplifies bookkeeping and tax reporting.
You will normally need the following items to create a bank account for your nonprofit corporation:
The organization’s EIN
a copy of the organization’s bylaws
a copy of the formation certificate
2.Obtaining a business credit card:
It assists you in distinguishing between personal and commercial spending.
Creates a credit history for your firm, which may be used to obtain finance later on.
3. Obtaining the services of a company accountant:
Prevents your company from overpaying taxes while also assisting you in avoiding penalties, fines, and other expensive tax blunders.
It simplifies accounting and payroll, giving you more time to concentrate on your expanding company.
Aids in the successful management of your business’s finances and the identification of areas of unplanned loss or profit.
Business insurance allows you to control risks while focusing on building your company.
The following are the most popular forms of company insurance:
General Liability Insurance: A wide insurance coverage that protects your company against litigation. The majority of small firms get general liability insurance.
Professional Liability Insurance: A kind of business insurance that protects professional service providers (consultants, accountants, and so on) against allegations of malpractice and other business blunders.
Workers’ Compensation Insurance: A sort of insurance that covers workers who are sick, injured, or killed on the job.
Create a Business Website
Creating a website is a significant step toward legitimising your company. As a charity, your website will be the main means of communicating your goal and stories to supporters. Your nonprofit’s website should be a useful resource for anybody interested in future events, objectives, and news to help progress your cause.
Some people may believe that developing a company website is out of their grasp because they lack website-building skills. While this was a fair concern in 2015, online technology has made significant advances in recent years, making the lives of small company owners considerably easier.
Sign Legal Documents Correctly
Signing a document incorrectly as yourself rather than as a representative of the firm might expose you to personal responsibility.
To prevent issues while signing legal papers on behalf of your organisation, you might use the following formula:
Your organization’s formal name
Your signature is required.
Your name is
Your role as the company’s authorised representative