Nonprofit Corporations Checklist
Learn the Legal Steps for Nonprofit Compliance
If you’ve decided that forming a nonprofit corporation is right for your company, we’ve provided the following checklist below of things to do or to consider doing before, during, and after the nonprofit incorporation process. At Active Filings, we want to help ensure your nonprofit corporation is not only IRS compliant, but also as effective and successful as possible.
These steps will help get and keep you on the right path to reap all the benefits a nonprofit corporation can provide. Rules and compliance laws for nonprofit corporations vary between states and depend on the type of nonprofit corporation you are running.
✔ Create the nonprofit corporate bylaws, which are the rules and guidelines that govern the nonprofit corporation’s operations, typically discussed in the organization’s first corporate meeting. While it’s not required to have specific IRS language in your nonprofit bylaws, it’s important to reference your organization’s purpose and nonprofit structure as a best practice.
✔ Create organizational resolutions. These organizational resolutions are a list of items to be discussed and completed at the initial corporate meeting which helps organize the company and make important decisions. Examples of organizational resolutions include the approval of the nonprofit bylaws or the appointment of directors.
✔ Obtain business licenses or permits. Check with the State Department of Consumer Affairs to see if your nonprofit corporation will require any licenses or permits to operate.
✔ Register a license to fundraise. Your nonprofit corporation may need to register with the state and maintain this license, often called the Charitable Solicitation Registration. Check your Secretary of State website for more details.
✔ Check the availability of your nonprofit corporation’s business name. At Active Filings, we provide a free business name search. Your nonprofit corporation’s name can’t already be in use, and will need to follow other naming guidelines specific to your state. Similarly, you’ll want to look into filing a DBA (“Doing Business As”) for your nonprofit corporation as well.
✔ File the nonprofit Articles of Incorporation with your Secretary of State to become legally incorporated. Your nonprofit Articles of Incorporation are where you will provide important information such as your business name, purpose, director and officer names, and registered agent information. If your nonprofit intends to seek 501(c)(3) tax-exempt status for public charities and private foundations, your articles should also include the language and special provisions for 501(c)(3) organizations required by the IRS. These important filings can get complex, and you may want the professionals at Active Filings help you with forming your nonprofit corporation.
✔ Obtain a federal EIN (Employer Identification Number). The IRS provides EINs for nonprofit corporations by filing Form SS-4. You will be required to have an EIN, and it’s free to obtain. An EIN serves as a tax ID for businesses, and is under the umbrella term TIN (Tax Identification Number). Contact your state’s tax board for information to see if you’ll also need to obtain a state tax ID number.
✔ Prepare IRS Form 1023 “Application for Tax-Exempt Status.” Most nonprofit corporations apply for tax-exempt status under section 501(c)(3). This is a complicated process and can require help from a professional. At Active Filings, we can help you get a leg-up by including the proper IRS tax-exemption language on your nonprofit Articles of Incorporation needed for your separate Form 1023 submission.
✔ Contact the state Attorney General’s Office. Reporting or registering with the Attorney General instead of the Secretary of State’s office may be required. Many states have requirements such as providing prior notice to the Attorney General if they intend to transfer substantial assets, merge, or dissolve.
✔ Open a nonprofit corporation banking account. Setting up a bank account for your nonprofit corporation will help you manage your nonprofit’s finances. Different banks have different policies for nonprofit corporation accounts, and it’s important to do your research on your local banks. At minimum, you’ll most likely need your nonprofit Articles of Incorporation and your tax ID number.
✔ Keep books and records for your nonprofit corporation. This includes tracking donations, expenditures, and classifications of income. A periodic finance report should be provided to the Board of Trustees and Membership. Some examples of records to keep include expenses, grants, revenue, bank statements, and previous tax filings.
✔ File your annual federal and state business tax returns. Nonprofit corporation taxes can get complicated and messy, and may require the help of a tax professional. We have business formation pages for each state and US territory with basic information about federal and state business tax returns.
✔ File your nonprofit corporation’s annual or biennial report. These reports are typically filed to the Secretary of State to keep your company in good standing with the state. The report updates the state with any changes your nonprofit corporation may have made during the previous fiscal year. Our business formation pages also provide basic annual and biennial report information for each state and US territory.
You can use this list as a reference to come back to while you set up your nonprofit corporation. Incorporating your nonprofit association and gaining tax-exempt status can be highly beneficial in the long run, and is usually worth the time and hard work to set up, as well as the rewarding feeling you’ll have at the end of each day.
To ensure your business’s success through these complex and time-consuming steps, hire Active Filings to help you incorporate your nonprofit. We are the 3rd oldest incorporation service, filled with an experienced, knowledgeable, and friendly staff. We have the forms you need, a speedy turnover time, and plenty of tips and knowledgeable professionals to help you be as successful as possible.