Checklist: Starting a Nonprofit Coporation
You've traveled the world from Africa to Indonesia. You've lived overseas, fed the homeless, and put in countless hours at the Red Cross. Now, you want to start your own nonprofit. Whether you are hoping to cure cancer, help raise awareness for HIV/AIDS, or simply want to make sure low-income families are provided with basic needs such as food and shelter, forming a nonprofit corporation may be right for you.
Why Create a Nonprofit?
Why do people create nonprofits? Typically it is because they have a drive to make a difference about a cause that is close to their hearts or has affected them personally in some way. Simply put, nonprofits handle the hard issues and make the world a better place.
If you are thinking of starting a nonprofit corporation, below is a checklist of steps to take before you open for business. There are a number of reasons to incorporate your nonprofit, but the biggest may be that you expect your charitable organization to raise profits from activities unrelated to the corporation's stated purpose. Here, you will want to take advantage of tax breaks designed specifically for this situation.
Keep in mind that your nonprofit's start-up requirements might vary from the list below, depending on the specific type of business you are in, and where your business is located.
- Decide on a business name for your nonprofit corporation. Keep in mind that your state may require that your nonprofit corporation's name include an identifying word such as "incorporated," "limited," "corporation," or an abbreviation of such a term. (Learn more: Pick a Winning Name for Your Business)
- Search availability of your nonprofit's chosen business name, and for similarity to existing names. (Learn more: Make Sure Your Proposed Business Name is Available)
- Register your nonprofit's name (including as a "fictitious business name"). (Learn more: Registering Your Business Name)
- Decide where to incorporate your nonprofit. (Learn more: Deciding Where to Incorporate)
- Choose directors for your nonprofit corporation. (Learn more: Corporate Structure: Directors to Shareholders)
- Create and sign your nonprofit corporation's Articles of Incorporation. (Learn more: Writing and Filing the Articles of Incorporation)
- File your nonprofit corporation's Articles of Incorporation with your state's Secretary of State, and pay related filing fees.
- Write your nonprofit corporation's By-Laws. (Learn more: Writing Corporate By-Law)
- Apply for tax-exempt status from the federal and state government. (Learn more: Becoming a Tax-Exempt Organization)
- Obtain business licenses and permits for your corporation from:
- The federal government. (Learn more: Federal Start-Up Requirements)
- Your state government.
- Your local government. (Learn more: Local Start-Up Requirements)
- Open a separate bank account for your nonprofit corporation.
- Nonprofit Financial Statements;
- Top Five Tips to Keep Nonprofit Volunteers Coming Back;
- State Guide: Forms and Fees.
Hire a Lawyer
Incorporating can be a benefit to your new non-profit organization in the long run -- most notably if your business obtains tax-exempt status -- but the incorporation process can be complicated. To ensure that your new nonprofit complies with your state's legal requirements at all steps in the incorporation process, you may wish to consult an experienced business and commercial law attorney.
For more information, see FindLaw's Nonprofit Organizations section.