Articles of incorporation: Why It’s Important to Prepare

Articles of incorporation: Why It’s Important to Prepare

In order to avoid making paperwork mistakes that lead to costly delays, it’s best to be prepared for every step along the way as you navigate how to start a nonprofit organization. And it starts with your articles of incorporation. This legal document needs to be focused and specific—as well as error-free—when you file it with your state, as it’s the all-important paperwork that secures your nonprofit’s name and establishes your outpost in the world. Our Yippiekiyay team brings years of experience to help you reach your goal of starting a nonprofit.

If done correctly and approved, the articles of incorporation set you on the path to obtaining an EIN, which is a federal Employer Identification Number that allows you to begin the good work you’re so eager to do in the world. What follows are the pitfalls you’ll want to avoid by adequately preparing your articles of incorporation.

Do you want to pay more taxes?

Articles of incorporation are typically filed with the secretary of state’s office in the state where your nonprofit will operate. While this might seem like a minor exercise in bureaucratic paperwork, it’s essential that you prepare this document carefully and accurately. Your nonprofit will seek 501(c)3 tax-exempt status, and this document is your way of showing that you qualify. Think of it as planting a flag into the soil and claiming your place on the nonprofit landscape.

In your articles of incorporation document, you should clearly state that your nonprofit’s revenue is not intended to benefit you or another private individual, but rather the stated recipients. In defining your mission and purpose, you will lay out who is to receive the profits of your nonprofits’ good work in the world.

Do you want to get bogged down in a name challenge?

When you’re deciding on the name you’d like to use for your nonprofit, take the necessary time to make sure it’s not already in use somewhere else. You need to sit down with a cup of coffee and a notepad, searching nonprofit databases and the web to check whether the name you’d like to use is not already claimed. It’s worth remembering that even unregistered names have rights. If a nonprofit, organization, or business is already using a particular name, then that entity has claim to an enforceable trademark. Simply by using the name, it has created the trademark ownership regardless of whether it’s registered the name or not. Tread carefully here to avoid legal challenges.

Do you want to pay state taxes too?

By registering with the secretary of state in your state, you might be able to avoid state sales taxes or property taxes. Demonstrate that the mission of your nonprofit is consistent with the requirements that will qualify for tax exemptions in your state and any state where your nonprofit will operate. In many states, state tax exemptions are automatic for nonprofits that have established federal tax-exempt status. As you file, keep an eye not only on federal exemptions but state ones too.

Do you want to scrape together a team?

Finding the best people to join you on your mission takes time and patience. Building a board of directors is essential to the success of your nonprofit. Before filing your articles of incorporation, you should take the time to pull together a group of dynamic leaders who share your passion and commitment to the nonprofit’s cause. Not everyone shares your willingness to put in long hours and exhausting labor. Make sure you invite a range of talents to the table, and that they’re willing to put in the hours and sweat you desire. Otherwise, you might be saddled with a board of indifferent participants whose lack of enthusiasm muddles your mission and dilutes your efforts. Enthusiasm, commitment, and talent are key attributes you should look for when lining up your nonprofit’s board of directors.

Do you want to go back and file forms again?

Take your time and get the language just right. Otherwise, you might have to scrap your first try and start over again, which costs money and time. When it comes to presenting your nonprofit’s mission, lay it out in language that’s as clear as possible. In writing your mission statement, you’re articulating the nonprofit’s goals and how it will achieve them. If you don’t have a clearly defined sense of what you want to accomplish, your articles of incorporation might not win approval. And even if they do, your organization could later lose that nonprofit status if your mission shifts from your originally stated goals. You’ve got to have a solid understanding of your purpose, articulate it as clearly as possible, and then stick to it as your organization matures. Among the information you should convey in the articles of incorporation are exactly who benefits—the target community you’re going to serve, the services you’re going to provide, and the ways you’re going to provide them. Include how you plan to raise funds too.

These are just some of the pitfalls you might encounter if you don’t take the time to prepare your articles of incorporation thoughtfully and thoroughly. Contact a Yippiekiyay expert today and let us help you follow the steps that will lead to your establishing your nonprofit’s much-needed place in the world.

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