Start a 501(c)(3) Non-Profit in 5 Steps

With the popularity of terms like social entrepreneurship, social innovation, and non-profit entrepreneurship it is clear that the non-
profit sector identifies itself squarely in the realm of business enterprise.  And it's a good baseline to start from because the law views
non-profit organizations as businesses too.  And whether a business is powered by revenue or social change, it must complete the
needful to hold itself out as a legal entity.  Here are 5 steps to start a 501(c)(3) non-profit organization.

1. Register as a non-profit with your state (Townsend Building). 

After you have settled on a business name for your organization, you can begin the process for applying with the state.  You will have
to compile articles of incorporation (sometimes called articles of organization, certificate of incorporation, charter, or certification of
formation) and the document with the state department of corporations or secretary of state. 

Be sure to seek a sample articles of incorporation, which may be available from the corporate filing office.  It is essential that you
include the correct language so that your organization will be eligible for federal tax-exempt status.  The good news is that the filing
office may have a fill-in-the-blank version of the articles of incorporation which can simplify the process.  Just, be sure you use the
right language and meet federal tax-exempt status, or else you find yourself in the unenviable position of trying to backtrack or paying
taxes.

2. Apply for federal 501(c)(3) tax exemption.

After registering with the state, expect to receive a copy of the filed materials.  Once you have that in hand, it will be time to seek
federal exempt status with the Internal Revenue Service (IRS).   Fill out an IRS Form 8718, also known as User Fee for Exempt
Organization Determination Letter Request.  And, also complete IRS Package 1023, Application for Recognition for Exemption. 

Once you submit these to the IRS, it will reply with a letter indicating that your organization's tax exempt status has been approved, or
requesting additional information.  There is also a chance that your application might be denied, in which your next stop should be to
an attorney who is experienced in non-profit incorporation.

3. Apply for state tax exemption (if necessary).

For the majority of states, once your you receive the IRS approval letter indicating your 501(c)(3) exempt status, state tax exemption
will be automatic and there will be nothing further required on your part to secure it.  In other states, you will have to simply mail in a
copy of the IRS letter to the appropriate state tax agency.  Finally, in California, Montana, North Carolina, and Pennsylvania, you will
have to complete a separate application to acquire state tax exemption.   Consult state tax agencies to find out about your state's
requirements.

4. Complete those corporate formalities.

If the paperwork up to this point hasn't dissuaded you from incorporating as a 501(c)(3) non-profit, then the next step will be simply
another nicety in the process.  As with any corporation, your non-profit will have engage in corporate formalities to complete the
process.  This will require you to do the following:

 develop corporate bylaws

 select a board of directors

 conduct your first meeting of board of directors

 record meeting minutes and file with your non-profit records

5. Acquire any necessary licenses and permits.

With the incorporation paperwork and formalities out of the way, you are almost ready to get down to business.  Since you are a
business, you will have to give a little initial thought to any kind of licenses or permits you may need.  Some of these may not be
easily apparent, so feel free to consult your city council or local chapter of your state department to determine what kinds of licenses
and permits your 501(c)(3) non-profit organization will need to operate, if any.
The entrepreneur's road is not easy.  And doing it all for social enterprise unfortunately involves more steps, rather than fewer. 
However, if you are committed enough to the cause to contemplate creating an entire organization to address it, you likely have the
dedication needed to do it right--step by step.