Non-profit corporations can take several weeks to months to setup. A non-profit corporation is one setup exactly as its name suggests – to not make a normal profit, but instead, serve as a community service or special interest corporation.
Typically, you think of a non-profit as a charity or organization you donate money to which works in the community. Though there are thousands of these types of non-profits, there are hundreds of other types of non-profits. You may want to setup a non-profit association for a certain profession or business type, or you may just need to setup a new philanthropy organization in your community. Whatever your requirements, we’re going to step you through the process required for your new corporation to become a non-profit.
Incorporate in Your State
The first step to becoming a non-profit corporation is to incorporate in your state. Some states have special forms and requirements for corporations intent on becoming a non-profit. In our free How to Incorporate tutorial, we provided contact information for all of the state offices responsible for incorporation in the United States. You may want to review this tutorial to understand the incorporation process and contact your Secretary of State to determine the specific requirements in your state.
IRS Requirements for a Non-Profit Corporation
Currently the IRS requires two forms to be submitted to be recognized as a non-profit: form 1023 (Application for Recognition of Exemption Under Section 501(c)(3) of the Internal Revenue Code) and form 1024 (Application for Recognition of Exemption Under Section 501(a)). Each of these forms contains instructions and checklists to form your non-profit corporation or association.
The IRS requires every non-profit organization (like all businesses) to register for an Employer Identification Number (EIN). This can be registered for online at or via the telephone, refer to this IRS page for more information about obtaining an EIN: http://www.irs.gov/businesses/small/article/0,,id=97860,00.html
The IRS requires you submit your “Organizing Documents” – your Articles of Incorporation, Articles of Association, Trust Indenture, Constitution, or other enabling documents. If you have not formed an association, corporation, trust, or other business formation, you will not be able to claim non-profit status.
You should include your Bylaws if you have them developed, however, these will not suffice as a substitution for your formation documents.
IRS Requirements
In addition, the IRS requires non-profits to submit a description of the activities and purposes of your non-profit. You must also submit your non-profits financial data including your receipts and expenditures from the prior three years. You should also include any other accounting and budget documents you have for the non-profit.
Information Returns
Most non-profit associations must file an annual information form with the IRS (the exception are mostly church or religious related institutions). There are several forms that must be completed each year. We recommend you hire a tax professional with experience in non-profit tax status to assist you in the filing process and with each year’s information forms.
Other Important Information
You may also need to file forms with your local and state taxing authorities to gain tax exempt status within your state. Typically, your tax attorney can help you with this process.
More information about becoming a tax exempt non-profit can be found on the IRS website at this URL: http://www.irs.gov/pub/irs-pdf/p557.pdf
This site provides a great deal of valuable information about becoming a non-profit: http://www.nonprofits.org/
