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The following is provided as educational material and not legal, nor legal advice.
For any legal questions, please contact your state bar association for lawyer referrals.
In forming a legal nonprofit, one must file specific documents to legally operate in their state(s) and certain steps you want to take to safely secure your nonprofit.
Setting up a nonprofit requires individuals to jump through many hoops, some of which are legally required to operate their nonprofit business. These various steps vary from business to business depending on their state, what has or needs to be done, et cetera.
While there is no set order as to how these steps must be carried out, the following is what we have found to be the most efficient in helping clients create successful nonprofits.
Step 1- Creating Your Nonprofit Name
Before filing Articles of Incorporation with your Secretary of State, researching a considered name is crucial to avoid conflicts, confusion, misrepresentations, and the like.
Many of our clients have come to us stumped, unable to think of a nonprofit name that captures their ideas, goals, and beliefs succinctly.
Others have changed their name after seeing how that name will pop off just right in their logo design.
Names are a dime a dozen, but finding a unique name is like finding a diamond in the rough, a treasure we help our clients find.
To do so, we speak to our clients about any potential business names as it is important to make sure their nonprofit’s moniker is unique, unreserved, and not protected.
As such, that requires us to fully research any desired name online from domain names, brand names, trademark names, etc.) and see how such names may appear on any logo design that our clients may wish.
Step 2- Creating a Business Plan
For newly formed nonprofits, creating your business plan is the most exciting and crucial step. This business plan is your guide to how your business will be structured, run, and grown. A properly prepared business plan will help you explore how to reach your goals and ensure the best impact your nonprofit can make.
A business plan is also good to see what future financial needs you may have and be able to attract lenders and investors to fund your nonprofit. It also helps determine your target market.
Step 3-Reserving Your Nonprofit’s Name and/or Trademark
Once you have your nonprofit’s name, you can choose to reserve it with your Secretary of State and create domains (a .org and/or .com).
If your nonprofit has a trademark it is seeking to represent its nonprofit, then that trademark must be researched to determine if in use by someone else and/or protected.
Once you create or possess an unregistered and unprotected trademark, it is wise to register it with not only your State but also with the Library of Congress.
We offer our clients services to help them create a unique, unregistered, and unprotected trademark and file the necessary documents to reserve their rights of ownership.
Step 4 Filing an SS4 Form EIN Number Request
Now it is time to get your nonprofit a Federal Employee Identification Number (EIN). To do so, one must submit an SS4 form to the IRS.
We provide our clients with the service of filing to acquire an EIN Number for their use.
Step 5 Acquiring a DUNS Number
A DUNS number helps your nonprofit by establishing a business credit score, along with negotiating payment terms with suppliers that may better benefit you. This number is also necessary to apply for some government contracts, grants, and loans.
To apply for a DUNS number, you will need the following:
· Your legal business name, phone number, and address.
* If your business has multiple locations, each location needs to apply for its own DUNS number.
· Name of the CEO, president, or business owner
· The legal business structure of your nonprofit and the date it was formed
· What is your primary industry, and how many full- and part-time employees do you have in total
Step 6 Acquiring a Registered Agent
A registered agent is something all 50 states in the US require, and you’ll need one in any state you plan to operate in.
The primary need for a registered agent is to receive and manage legal business documents on behalf of the business and to alert you to these important documents.
Some states allow you to be your registered agent if you hold a physical address in the state.
You are not allowed to use a Post Office Box (PO Box) as the address for your registered agent. It is not advisable to use the physical address of a PO Box as your state may not accept this.
It may behoove you to utilize a service for your registered agent, as retaining this service helps give the image of your nonprofit sticking around for years to come.
Step 7 Creating Your Nonprofit’s Bylaws and Articles of Incorporation (AOI)
Now it’s time to create your nonprofit’s Bylaws and Articles of Incorporation (AOI). These are founding documents that outline how your organization operates. Each state has guidelines on what sort of information these should include.
Your Articles of Incorporation serve as your business’s constitution and lays out what your officers’ and members’ responsibilities and rights are. These break down the basic structure of your business and act as laws on how your company is to be run.
Bylaws typically are more detailed than your Articles of Incorporation. This document entails points such as how directors are chosen, how many, and how long they serve.
They also include how meetings are conducted, voting requirements during such, and other pertinent information on how your business is set up for day-to-day operations.
Step 8 Filing Articles of Incorporation (AOI) with the Secretary of State.
Every Secretary of State’s Office has their filing forms for Incorporating a nonprofit within any given state. Having your nonprofit’s AOI documents completed will assist you with completing your State AOI.
Step 9- Applying for 501(c)(3) Status With the IRS
To become an IRS Letter Determined and Recognized 501(c)(3) Organization, your nonprofit will have to file a 1023 Application with the IRS.
Many startup nonprofits choose to file a 1023-EZ if they meet the requirements.
This does have its’ disadvantages, however, as filing the normal 1023 gives your nonprofit more structure and better projections.
Step-10- Filing and Registering as a Charitable Organization
Many states and the District of Columbia require you to register your nonprofit in some fashion. Delaware, Iowa, Indiana, Idaho, Montana, Nebraska, South Dakota, Vermont, and Wyoming do not currently have registration requirements for charities.
California, for example, requires you to register with the State Attorney General’s Registry of Charitable Trusts within 30 days of receipt of money or property for charitable purposes. It is also a requirement to file annual forms and pay fees based on the venue your business earned each fiscal year.
We can assist you in finding out if and how you will be required to register your nonprofit, including helping to file the paperwork necessary to do so (ex. California’s CT-1 form).
This page lists the states requiring registration and links to the relevant registration lookup.
Step 11- Creating a Nonprofit Bank Account
Once your nonprofit is established, it’s a good idea to set up a business banking account. This makes it easier to accept donations, pay vendors, and put money forth to reach your goals and achieve your mission.
It may be more beneficial to choose a Credit Union for your banking needs as they tend to offer lower fees and higher rates for savings. Though they may not have a 24/7 call center, they are more customer-friendly than bigger, national chains.
Another thing to note is that Credit Unions are in nature and reality, nonprofits themselves. Even though they aren’t exempt under 501(c)(3), they are under other portions of the Internal Revenue Code (if federally chartered, they fall under 501(c)(1), or 501(c)(14)(a) if by a State).
A good idea when looking for a company to bank with is to research the various credit unions’ goals and values and see if any resonate with what you are doing.
Some businesses do establish accounts with like-minded financial institutions, such as a nonprofit that wants to better the environment selecting an institution that offers eco-friendly activities and services.
Step 12- Getting a Post Office Box
Establishing a Post Office Box (PO Box) for your nonprofit is an ideal way to keep your personal and business mail separate. Mail and packages can be delivered regardless of time.
All it takes is finding the box size that works for you at a convenient location filling out the online application, then bringing the completed form and two forms of identification along with your payment to the post office.
If you prefer getting your box in person, you can find the PS Form 1093 online, fill it out, and bring that with the identification and payment to the location of your choice and set up a box.
Step 13- Application to Mail at Nonprofit USPS Marketing Mail
Prices
The United States Postal Service offers reduced pricing for mailing articles to nonprofits who are granted tax exemption federally under section 501(c)(3), 501(c)(5), 501(c)(8), or 501(c)(19).
To apply for nonprofit USPS marketing mail prices, one must obtain and complete a PS Form 3624, along with providing founding documents and other proof of nonprofit status as needed.
This process can also be completed online, which leads to the application being processed quicker, as mailed-in forms tend to take two weeks to be approved.
Once you have received approval, if you have done any nonprofit mailings that you have receipts for, there is a form to submit for a refund of the difference in prices.
To maintain your status, it is recommended to send nonprofit mail at least once every two years.
Coalition for True World Change (C4TWC)
PO BOX 342, Jamul, California 91935, United States
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