Non-profit businesses play an invaluable role in society. Their charitable, religious, educational, public service, trade promoting, research and health care missions contribute to the public good. It is for this reason that the Internal Revenue Service and state tax boards grant them tax-exempt status, effectively allowing these organizations to reinvest as much of their funds as possible into their operations. Establishing a non-profit takes some work but results in a business capable of positively impacting lives.
Identify who the non-profit's founding directors will be and how many you will have initially. Most states, like California, require at least one director upon the filing for incorporation of your non-profit.
Select a name for your organization and check it against your state's registry of corporations to make sure it's available. Every state maintains a list of existing corporations; most make the list available online through the secretary of state's website. Some states, like California, require you to send a written inquiry to the secretary of state's office in order to check your proposed name. If the name is taken, then you will need to revise it.
Draft articles of incorporation which meet your state's requirements and file them with the secretary of state's office. Articles of incorporation should clearly state the organization's charitable, educational, religious, public service, research or trade-promoting nature that qualifies it for non-profit status. Check with the secretary of state's office for required fees and any cover application that should accompany the articles.
Receive the state-stamped official copy of your articles of incorporation and file them. You will also need a copy of the approved articles to include with your applications for tax exemption.
Draft corporation bylaws that detail your organization's structure, officers and operations. Other topics addressed in the bylaws can be finances, budgets, the identification of responsible parties, the frequency of director meetings, and organizational structure. Only a few states, such as Delaware, have any specific requirements to the content of bylaws, but all states require a corporation to have bylaws. Although no state requires them to be filed with the secretary of state's office, you must keep the bylaws on file at your organization's primary place of business.
Apply for non-profit status with the Internal Revenue Service under tax code 501(c)(3). To do this, you will need to download and complete two forms: Form 1023 Application for Recognition of Exemption Under Section 501(c)(3) of the Internal Revenue Code, and Form SS-4, the application for an employer identification number. These forms can be filed simultaneously and should be accompanied by a copy of your official, state-approved articles of incorporation.
Additionally, if you want to appoint a third party representative, such as an attorney or accountant, to handle these matters with the IRS, then you will also need to complete and file Form 2848, which grants power of attorney, and Form 8821, which authorizes the IRS to communicate about your filing with someone other than a corporation director. Enclose these forms with your filing.
Apply to your state tax board for tax-exempt status using forms available on the board's website. Include a copy of your IRS tax-exemption approval letter as states usually make their determination based on the IRS's decision.
Open a bank account for your corporation using your approved articles of incorporation and tax-exemption approval letters. While the letters are not usually a legal requirement for opening an account, it's a smart idea to make sure the bank has your non-profit status on file.
Begin having board meetings if there are multiple directors and start conducting business. Keep minutes of board meetings as they are required if you are ever audited or face legal problems.