Starting a bakery can be challenging and more so when you are dedicating the business to a particular cause. Along with compassion and commitment, you need good research and planning to make your bakery business and your cause a success. As a not-for-profit bakery, your business belongs to the community and not to you, and as such you are not entitled to sell it. According to the Internal Revenue Service, which is the governing authority for non-profit organizations, you should in no way benefit from a not-for-profit activity except in the form of your salary.
Prepare a business plan. It should explain your nonprofit cause and the products your bakery would produce. It should provide details like your competition, the cause the business is involved in as well as details like how your business can deliver better. It should also focus on the financing, equipment and talent as well as the name and location of your bakery.
Register your business with the state. Contact your secretary of state office for information on materials (forms, documents, etc.,) required for incorporation. You would also have to prepare and file Articles of Incorporation (you can get samples of these docs to help you from your state). You would have to apply for Employer Identification Number for tax purposes. Remember to ask if there are other materials governing the formation, employee recruitment or tax registration, and other activities of a nonprofit bakery in your state.
Apply to the IRS to obtain not-for-profit status for your bakery. Getting this status is very important because without this, contributions from donors would not be eligible for tax deductions. Most non-profit organizations apply for 501(c)(3) tax exempt status, which allows complete tax deductions for donors. The IRS scrutinizes the public support for your cause during the initial five-year operating period of the business.
Raise funds. Research all the potential funding resources including federal, state and local government grants as well as private or other funding options. Present your well-researched business plan to your to prospective fund providers. If you are looking to approach the public for funding your bakery, you would need to register as a charitable solicitor in several states. Contact your secretary of state, attorney general or other relevant authority for details on the procedure and forms for registration.
Form a board. In order to qualify as not-for-profit bakery, you would have to form a board of members with assigned responsibilities of fundraising, recruiting and mentoring the organization. These members should not include your friends or people with whom you do business.
Prepare bylaws, which provide direction on how your bakery should operate. The bylaws document is critical as the IRS uses it to assess the veracity of the nonprofit purpose of your business. You can obtain sample forms from your secretary of state. You should also convene an organizational meeting to adopt the bylaws and elect your board of directors for formal acceptation of your non-profit bakery.
Open a checking account with your local bank, purchase bakery equipment and start hiring employees. Hire experienced bakers and administrative assistants. You can hire bakers certified by organizations such as Retail Bakers of America.
Promote the bakery actively. Distribute business cards and brochures and advertise in newspapers and TV. Open your bakery on the designated date and invite your customers, appealing to them with delicious menu items.
Call the IRS’s toll-free helpline number: 877-829-5500. This number connects you to the IRS Cincinnati office and you can get answers to all your queries on nonprofit organizations.
Hire an attorney to guide you with the legal procedures.