A non-profit is an organization whose main objective is to support an issue or area of concern, such as a charity, an educational program or a religion. In the U.S., most non-profits are established with 501(c)(3) tax status, meaning they are exempt from paying income tax and are able to receive charitable contributions that are tax-deductible. In certain cases, a non-profit may also be exempt from property tax.
Create a mission statement for your non-profit. A mission statement expresses what your non-profit does and for whom. In other words, in one to two sentences, describe the goals of your organization.
Form a board of directors. State requirements as to the minimum number of board members varies, so be sure to contact your state's Secretary of State office and determine its requirements first. Generally, you need a minimum of three board members. Your board of directors should consist of like-minded individuals that can help you attain your organization's goals by giving of their talent and time.
Draft bylaws. While bylaws are not generally required to form a non-profit, you may find them useful to define the "rules" of how your organization will operate, such as board members' duties and how you will distribute the money you raise.
File Articles of Incorporation. These are official statements that must be filed with your Secretary of State, and the requirements vary state to state. Articles of Incorporation serve to protect board members and staff from legal liabilities that may be incurred by an organization.
Create a budget. You'll need to have a working annual budget for your non-profit, and should include start-up costs in your initial budget. A good place to start is by figuring out how much money you have to spend now, and where you can acquire potential income.
Institute a bookkeeping/record-keeping system. It's necessary to retain all corporate documents including financial reports, bylaws and board meeting minutes. Responsible accounting is not only a good practice, but also necessary for accountability to the public, as well as to private and government grant sources.
File for tax-exempt status with the IRS. You need to file for 501(c)(3) status with the Internal Revenue Service. To apply, obtain Form 1023 ( the application) and Publication 557 (detailed instructions) from the IRS, which are available to download from the IRS website.
Apply for a FEIN, or Federal ID Number. The Federal Employer Identification Number is required, and is used to identify the organization on tax documents. You'll need IRS Form SS-4 to apply.
File for state tax-exempt status. You need to contact your state's Department of Revenue to apply for exemption from income, property and sales taxes. Your county or local municipality may require that you file exempt status with them as well.
Find out about charitable solicitation requirements. Fundraising is a generally accepted activity used by most non-profits to acquire ongoing income for their organizations; however, many states regulate how non- profits can solicit funds. Check with your state's Attorney General's office or Department of Commerce for solicitation requirements.
Apply for a mailing permit. The U.S. Postal Service, or USPS, allows non-profit organizations to send bulk mailings at a reduced rate with the proper permit. For more information, request a copy of Publication 417 (Nonprofit Standard Mail Eligibility). The publication is available at the USPS website.
- It is highly recommended that you consult with an attorney who has experience with non-profit incorporations before filing any official documents.
- Non-profit organizations can use the .org domain extension for their websites, as opposed to .com or .net.
- Mission statement
- Board of directors
- Articles of Incorporation
- Organizational budget
- Bookkeeping/record-keeping system
- Federal Tax ID (FEIN)
- State tax-exempt status
- USPS mailing permit
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