Determine what type of nonprofit organization you are starting by analyzing the primary objective.

It is to support some issue or matter of private interest or public concern such as the arts, charities, education, politics, religion, research, or some other endeavor for non-commercial purposes. There are different legal statuses for nonprofits, one of them being a 501(c)(3), which is exempt from income and (sometimes) property tax, and able to receive tax-deductible charitable contributions. Formulate a mission statement. As a non-profit organization, you exist to accomplish your mission, which should be crafted based upon your purpose, services and values. The mission statement is a concise expression that covers in one or two sentences who the organization is, what it does, for whom and where. It should also be compelling, as it will be used in all published materials, funding requests and public relations. It should also portray how your organization is distinct from others. Form a Board of Directors. Forming a board requires careful thought and extensive recruitment efforts. Each state has regulations that determine the minimum size of the board, typically three, five or seven, but the optimum number of people who sit on the board should be determined by the needs of the organization. Based on what your organization would like to accomplish, you should decide what special skills and qualities you will require of the individuals on your board. Identify qualified individuals who are supportive of your mission and are willing to give of their talents and time. What to look for in a board member: Look for individuals whose values reflect your statement of purpose. Although it is recommended that the majority of your board be consumers, include the community at large, not just your specific community of focus (e.g. the mental health community). Consider the religious community, local service clubs, legal professionals, and colleges and universities as sources for a prospective Board of Directors. Do not overload people who already serve on many committees – seek a balance between old and new leadership.

Although bylaws are not required to file for 501(c)(3) status. Develop an accounting system. Articles of Incorporation are official statements of creation of an organization filed with the appropriate state agency. Draft bylaws. Develop a record-keeping system. Bylaws are simply the "rules" of how the organization operates. They are important to protect both board and staff from legal liabilities incurred by the organization. their funders (contributors). Creating a budget is often one of the most challenging tasks when creating a nonprofit organization. A budget is the expression. and it is vital . they will help you in governing your organization. in financial terms. It is necessary to preserve your important corporate documents. you must save all Board documents including minutes and financial statements. making the corporation the holder of debts and liabilities. The specific requirements governing how to incorporate are determined by each state. government granting bodies. and. not the individuals and officers who work for the organization. in some instances. financial reports. Develop a budget.File Articles of Incorporation. and other official records. it is best to work with an accountant or bookkeeper familiar with non-profit organizations. New organizations may start the budgeting process by looking at potential income – figuring out how much money they have to spend. bylaws. Nonprofits are accountable to the public. of the plan of operation designed to achieve the objectives of an organization. Legally. including board meeting minutes. Articles of Incorporation. If your board does not include someone with a financial or accounting background. You should contact your appropriate state agency for more information on what records you are required to keep in the official files.

000 or less do not need to apply for tax exemption to be considered tax-exempt organizations. Application for Recognition of Exemption Under Section 501(c)(3) of the Internal Revenue Code (“Form 1023”).gov/businesses/small/article/0. Regardless of whether or not you have employees. It is important to file your 1023 within 27 months of the date when your organization was established. Ask for Form SS-4 when applying for your EIN. You may obtain an EIN online: at: http://www. Available from the IRS. obtain Form 1023 (application) and Publication 557 (detailed instructions) from the local IRS office or the website. Although the IRS may approve an additional extension under certain circumstances. Responsible financial management requires the establishment of an accounting system that meets both current and anticipated needs. Fill out Internal Revenue Service Form 1023. If you received your number prior to incorporation. Apply for a federal employer (EIN) identification Form 1023 can be found on the IRS’s website here: http://www.irs.pdf. Churches and organizations that are not private foundations and have gross annual receipts of $5. nonprofits are required to obtain a federal Employer Identification Number (EIN).irs. The filing fee depends upon the size of the organization’s budget. you will need to apply for a new number under the corporate name. . The IRS requires all tax exempt organizations have an EIN. this number is used to identify the organization when tax documents are filed and is used not unlike an individual’s Social Security To apply for recognition of tax-exempt.. public charity status.html The website will provide you with an EIN instantly and the IRS will mail an official statement of your EIN to the address you provide. missing the deadline may result in your charity or foundation not getting 501(c)(3) recognition retroactive to its incorporation date. or when your Articles of Incorporation were establish a system of controls (checks and balances) when establishing the organization’s accounting practices.

The difference between the two types of accounting is when revenues and expenses are recorded. county. whether they are paid or not. income is reported in the fiscal period it is earned. or city. Usually compliance involves obtaining a permit or license and then filing an annual report and financial statement. . In cash basis accounting.Fulfill charitable solicitation law requirements. be aware that many states and few local jurisdictions regulate organizations that solicit funds within that state. For more information on eligibility.S.and third-class rates are substantially less when nonprofits mail to a large number of addresses. In accrual basis accounting. Postal Service and ask for Publication 417. and expenses are deducted in the fiscal period they are incurred. revenues are recorded when cash is actually received and expenses are recorded when they are actually paid (no matter when they were actually invoiced). If your organization’s plans include fundraising. Nonprofit Standard Mail Eligibility. contact the U. Design a logo and tag-line that will help distinguish your organizations from others and be representative of what your mission is. While first-class postage rates for nonprofits remain the same as those for the for-profit sector. Bank Account The organization needs to open a bank account and decide whether to use the accrual or cash method of accounting. The federal government provides further subsidies for nonprofits with reduced postage rates on bulk mailings. second. Apply for a nonprofit mailing permit. regardless of when it is received. You may want to secure a domain name that matches the name of your proposed organization.

00. It must consist of at least two members and be registered under state law. organizations not filing Form 1023 within twenty-seven (27) months of formation. a Corporation is considered a separate taxpaying entity. low income housing. an LLC must file as either a Sole Proprietor.pdf to determine which Schedule(s) your organization must complete. or Corporation. Your check or money order must be made payable to the “United States Treasury” and included with your Form 1023. Partnership. For tax purposes. In order to be approved for Non Profit Status. universities. and others. colleges. Successor’s to other organizations.Organize your entity. Your $20 is being held in trust. An example of a simple trust is giving the babysitter $20 to buy pizza for your children’s dinner. A Corporation is owned by shareholders who exchange money and property for the Corporation’s capital stock. See the chart located on page 3 of the IRS Instructions for Form 1023 located at http://www. where an investment company manages employer and employee contributions made for the later benefit of the employee. Under the Internal Revenue Service (“IRS”) Code. Determine your user fee. to obtain exemption from federal income taxes: o o o o A by the babysitter. or federal tax exemption. . An unincorporated association is a group who has not incorporated under state law. It conducts pays taxes. An example of a trust which may apply for tax exempt status is an employee retirement plan. for the benefit of another. A Limited Liability Company (“LLC”). an entity must be organized properly at the state level. For federal tax purposes. An unincorporated association.irs. The fee schedule can be found on the IRS’s website at: http://www. A Trust is a relationship in which property is held by one Section 509(a) supporting organizations. homes for the elderly or handicapped. Organizations such as churches.html. and then passes on any profit to its shareholders. if required in its state or origin. hospitals. Complete all required Schedules. An LLC is a form of organization recognized by some state laws. must complete specific Schedules. realizes a profit or loss.irs.. it must be organized as one of the following. in order to qualify for federal tax exemption.

201 West Rivercenter Blvd. Attn: Extracting Stop 312. and your user fee to the IRS at. articles of organization or incorporation.O. with all attachments and Schedules. KY 41012-0192. KY 41011. If you are using a delivery service or express mail. your organizing document. mail to Internal Revenue Service. Box 192.. P. Send the IRS Form 1023. Internal Revenue Service. Covington. Things You'll Need     IRS Form 1023 Instructions for IRS Form 1023 Your organization’s Organizing Document Your organization’s Articles of Organization or Incorporation . Covington.Send in your forms.


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