How to Incorporate a Nonprofit

How to Incorporate a Nonprofit

You’ve chosen a name, and you already have a mission and a vision for your tax-exempt 501(c)3 nonprofit – but do you know how to incorporate a nonprofit?

What is Incorporation, and Why Must I Incorporate my Nonprofit Organization?

One of the first steps in creating a charitable or nonprofit organization is to incorporate. The primary benefits to incorporating are two-fold: First, a Nonprofit Corporation offers reasonable levels of protection from liability for the organizers of the nonprofit, and second, it prepares the way for you obtain 501(c)3 federal tax-exempt status from the IRS. Federal Tax-Exempt Status can later be leveraged to become exempt from state taxes (such as sales tax) and local taxes as well.

Nonprofit incorporation is different from creating a for-profit corporation. Not only must a nonprofit filed at the state level take the additional steps of applying for 501(c)3 tax-exempt status, but special language must be attached to the original articles of Incorporation as recorded by the Secretary of State. If this is not done properly your IRS Form 1023 Application for Tax-Exempt Status will later be rejected or significantly delayed by the Internal Revenue Service.

Put simply, incorporating means creating the entity in your home state by filing Articles of Incorporation. There are several steps:

  1. Draft a Unanimous Consent resolution to authorize officers, activities and general responsibilities – download a sample here: https://heroes.do/nonprofit-501c3-resources/
  2. Create Your Articles of Incorporation: Some states allow a single incorporator, but if yours isn’t one of them ask a couple of friends to serve on your Founding Board. See this post on Recruiting your Founding Board.
  3. You’ll need two board members later to file for Tax-Exempt Status with the IRS.
  4. The process of incorporating varies from state to state. We’ve provided links to the relevant government agencies in your state: https://heroes.do/state-agencies-for-nonprofit-incorporation/
  5. Don’t forget, you’ll need to attach the proper language containing your organization’s Dissolution and Purpose Clause to your Articles of Incorporation before filing, or the IRS will reject your application for 501(c)(3) Tax-Exempt Status!

NOTE: If you get help from Yippiekiyay, you won’t need to know how to incorporate a nonprofit – because incorporation is included in our comprehensive InstantNonprofit service. It’s fast, inexpensive, and hassle-free: Check it out here!

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