Securing Nonprofit Status in 12 Steps
Part of the Nonprofit Kit For Dummies Cheat Sheet
Before you can begin operating as the kind of nonprofit organization that receives tax-deductible gifts from donors, you need to secure 501(c)(3) nonprofit status in the eyes of the Internal Revenue Service (IRS) and your state. Take the following steps to gain that nonprofit status for your organization:
Choose a name for your nonprofit. (While you're at it, select and reserve a web domain name.)
Form your incorporating board of directors (often only three people are needed).
Write articles of incorporation including a statement of your purpose and submit them to the appropriate office in your state government with the required fee.
Wait for a response from your state. (In some states you can expedite the process by paying a surcharge.)
Obtain a Federal Employer Identification Number, submitting IRS Form SS-4.
Develop organizational bylaws — the rules by which you will operate.
Hold your first board meeting.
Review IRS Publication 557, instructions for filing for tax exemption.
File IRS Form 1023 if you're applying to become a 501(c)(3) tax exempt organization (preferably within 15 months of the date of incorporation). Other kinds of nonprofit organizations may file Form 1024.
File IRS Form 8718 and pay filing fees of $850 if you anticipate having revenue of more than $10,000 per year or $400 if you anticipate having revenue of less than $10,000 per year.
Sit back and relax. Celebrate when your letter of determination arrives!
Register as a charity within your state. While you're at it, check your state's laws: Some require you to apply for a separate (in addition to federal) tax exemption.