What Steps Need to be Taken to Form a Nonprofit Corporation?

​What Steps Need to Be Taken to Form a Nonprofit Corporation?

From animal rescues to protecting the environment to teaching kids about art — there are countless ways that a nonprofit can create a positive impact both locally and around the world. Here are the steps to determine whether a nonprofit is the right type of entity for you, and if so how you can start a nonprofit organization.

Why Should I Incorporate My Nonprofit?

If you are passionate about a certain cause and are already making strides to help those in need, then you may be wondering whether you should take the next step to form a legally-recognized nonprofit. For example, let’s say that Jenny volunteers to teach art in her child’s classroom one afternoon each week. She discovers that this is not only a great way for children to build self-confidence, but it also helps kids with special needs express themselves. This causes Jenny to consider starting a nonprofit to focus specifically on these unique children who have the potential to connect with others through art.

Jenny realizes that she’ll need funding for a place to conduct these art classes, and she knows that donors will give more if their contributions are tax deductible. In this case, becoming a 501(c)(3) gives Jenny the credibility necessary to run the organization on a larger scale and make a bigger difference for more students. There are additional “perks” to being a nonprofit as well, such as lower cost postage or advertising, which can help Jenny get the word out about her classes and events.

What Qualifies as a Nonprofit?

Before you start your nonprofit, there are certain requirements you should consider. First of all, a nonprofit is just that: not for profit. You can sell t-shirts that have your organization’s name on them to raise money, but all profits have to be put back into the organization to help pay salaries, purchase supplies, and address other bills you accrue. No one person can own the charity, and no one can make a profit from it.

Here are a few types of nonprofits:

  • Public charities: Help the community through minimal-fee or low-cost services using public donations. Examples include health clinics, food banks or homeless assistance programs.
  • Social advocacy organizations: Have specific goals and use donations and membership dues to promote a particular social cause, such as environmental protection.
  • Foundations: Are funded by for-profit corporations but raise additional money to better the community and beyond. One example is the Bill and Melinda Gates Foundation, which funds smaller charities both in the U.S. and around the world for a variety of purposes (like improving education and health services).

Choosing the Right Name for My Nonprofit

One of the first and most important decisions you need to make concerning your nonprofit is what to name it. You want it to be something that people remember and that can grow as your nonprofit grows. Doctors Without Borders, ARF (Animal Rescue Foundation) and Save the Whales all tell you exactly who/what they help, and interested parties won’t forget the name.

The second step toward choosing a name is to make sure that no one else has it (or that the acronym isn’t already a common name for another business — this can make it confusing for donors to find you). Organization name generators can help you see if your name is unique and what website domains are open. If you choose to start a nonprofit with Incfile, all packages of incorporation services include an unlimited name search so you can make sure your chosen name is available in your state’s corporation database.

​What Steps Need to Be Taken to Form a Nonprofit Corporation?

How to Start a Nonprofit

The next action to take toward establishing your nonprofit organization is to incorporate in your state, which consists of filing your organization’s articles of incorporation with your secretary of state. It’s important that your organizing documents contain the required language and specific clauses (such as a detailed exempt purpose statement) to ensure that your nonprofit will meet the requirements to qualify for Federal 501(c)(3) tax-exempt status. Nonprofits are not automatically tax exempt; they have to submit the correct forms for the IRS to approve it first.

You’ll also need to detail how you plan to run your agency, including how you’ll choose your board of directors, what responsibilities they’ll have, how often your board will meet and so on. Once you’ve chosen your board, you’ll then need to appoint a president, treasurer and secretary and hold your first meeting to determine yearly goals, discuss finances, create a mission statement and outline the other necessary guidelines for running a nonprofit.

Confused? Don’t worry. You can choose to incorporate your nonprofit through Incfile by completing a simple online order form. Incfile will prepare and file your organizing document for as little as $49 plus state fees. You’ll also have access to legal professionals who will aid you through this extensive process to ensure that you’re filling out the right forms and completing them correctly. You can choose to have Incfile outline your bylaws and articles of organization so you can focus on building your nonprofit and serving your mission. Contact us today; we’re ready to help you get started.

Christina​ Morales

Christina Morales graduated from California State University, Sacramento with her B.A. in History and her credentials in secondary education. After teaching high school for several years, she started her own freelance business. She combined her love of creating content with her fascination of technology and since then has had the privilege of writing for a vast array of companies in the business, law, app, cloud computing, and marketing industries. When Christina isn’t writing, you can find her reading on her Kindle, watching HGTV or the Food Network, or crafting with her two little girls.