While you can hire an attorney to file the necessary paperwork for a 501(c)3 non-profit organization in Alabama, doing it yourself is not an onerous task and can save your charity money. Doing it yourself consists primarily of choosing a board, a name, producing bylaws, then filing the appropriate forms and paying required fees.
In order to obtain 501(c)3 status under the Internal Revenue Code, "no earnings may inure to any private shareholder or individual." That means the organization's net earnings can't benefit "a person having a personal and private interest in the activities of the organization," as defined by the IRS.
Alabama Nonprofit Organizations
Under Internal Revenue Service regulations, (p 3), a corporation, unincorporated association or trust is eligible to apply for 501(c)3 status. In Alabama, non-profit corporations may be organized for various purposes. These include:
- Cemetery operation
You cannot organize a labor union or any organizations subject to state insurance law provisions as a non-profit.
Begin by choosing your board of directors. State law requires a minimum of three. You must also choose a name for the non-profit and file a name reservation request form with the Alabama Secretary of State's office. The online form lets you know if your proposed name is available.
Prior to applying for formation of a non-profit corporation, you must compile bylaws outlining your organization's procedures and regulations. While you don't have to file these bylaws with Alabama officials, you must have them available. Your bylaws should include the following information:
- Size of the board
- Duties and roles of officers and directors
- Election of directors and appointment of officers
- Meeting requirements and procedures
- Conflict of interest policy
- Grant money distribution.
Certificate of Formation
You must complete the certificate of formation and file it with the office of the judge of probate in the county containing your corporation's registered office. You must also pay any necessary fees. The forms are available online for downloading, or you can pick up a copy at the county probate judge's office. The certificate form requires:
- Corporation name
- Official name reservation certificate from the Alabama Secretary of State's office
- Information on members or whether the corporation will not have members
- Principal office address
- Corporate purpose
- Names and addresses of incorporators
- Number, names and addresses of the Board of Directors.
Internal Revenue Service Filing
Once your certificate of formation is approved, you must file for federal and state tax exemption status. The IRS requires completion and filing of Form 1023, "Application of Recognition of Exemption." You must also request an Employer Identification Number, even if your organization doesn't have employees. Apply for the EIN online or via phone at 1-800-829-4933. When the IRS notifies you that the organization's tax-exempt status has been approved, your charity becomes eligible for Alabama income tax exemption.
Unless your non-profit organization is a public charity with annual gross receipts of less than $5,000, or a church or church auxiliary, the IRS will not recognize it as a 501(c)(3) entity without an application for official recognition of its status.