Follow these procedures to establish a charity in California and get 501(c)(3) status:
Step 1: Give Your California Nonprofit a Name
Step 2: Select Your Registered Agent; Step 3: Choose Your Board Members & Officers
Step 4:Adopt Bylaws and a Conflict of Interest Policy
Step 5: Submit your Articles of Incorporation.
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 California.
To establish a 501(c)(3) tax-exempt nonprofit organisation in California, you must first establish a nonprofit under California law and then apply to the IRS for 501(c)(3) status.
Step 1: Give Your California Nonprofit a Name
The first and most crucial step in establishing your nonprofit company is deciding on a name. Make certain that the name you chose conforms with California naming rules and is readily searchable by prospective members and contributors.
1. Follow the naming conventions:
The following words must not appear in the name of your organisation:
Words associated with the US Olympic Committee, such as ‘Olympic,’ ‘Olympiad,’ or ‘Citis Altius Fortius.’
Financial institution terms include ‘bank,’ ‘band and trust,’ and ‘trust corporation.’
Any words or phrases that might be seen as very insulting
Unless authorization and approval are acquired, the name should not be deceptively similar to another company operating in the state of California.
The name should not in any way mislead the public.
2. Does the name exist in California? Do a name search on the State of California website to ensure that the name you desire 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.
Step 2: Select a California Registered Agent.
A California registered agent must be designated by your charity.
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 California citizen or a company, such as a registered agent service, that is permitted to do business in California. 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 California, your nonprofit’s organisational structure MUST include:
At least three independent directors A president A secretary
A treasurer, sometimes known as a chief financial officer.
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:
Bylaws
Policy regarding conflicts of interest
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.
Step 5: Submit the Articles of Incorporation to the State of California.
You must submit the Articles of Incorporation with the State of California to register your nonprofit. It should be noted that the state of California has eliminated nonprofit formation costs from July 1, 2022 to June 30, 2023.
To guarantee that your organisation is qualified to qualify for 501(c)(3) status, you must expressly declare the following in the 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:
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).
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
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 Articles of Incorporation 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).