Starting a tax-exempt non-profit organization under the the IRS Code section 501(c)(3) is a wonderful way to give back to your community and make an impact globally. The process for starting a non-profit is similar to that of starting a business. The key difference between starting a business and a non-profit is that you must meet specific guidelines in order to qualify for tax exemption and undergo a lengthy application process to obtain tax exempt status. Below is a brief list of some of the first steps you will need to take, from a legal perspective, in order to start off right.
CREATE YOUR ORGANIZATIONAL PLAN
The first step in creating your organization is to develop an organizational plan. It is a critical step and will be essential in establishing your organization's tax-exempt status. The organizational plan will need to include: detailed information on your organizational program; contact information and compensation information for your board of directors, officers, employees, and independent contractors; an annual budget projected out four years; fundraising and financing strategies; and any political activities of the organization.
DEVELOP POLICIES
The beginning stage of any organization is a critical time to develop policies that the organization will utilize in its decision making process. Policies should include: conflict of interest, employment, director compensation, fundraising, ideological, membership, and organizational control and management.
INCORPORATE
The first step in this process is deciding upon a name for the organization and performing a name availability search to ensure that the name is not already in use in the location where you will be operating. Secondly, the non-profit will draft its Articles of Incorporation and file them with the Secretary of State. Third, the organization will need to draft and approve bylaws by the board of directors.
APPLY FOR TAX-EXEMPT STATUS
To apply for your 501(c)(3) tax-exempt status you will need to have completed steps 1-3 above. Your organization will first apply for tax exempt status through the IRS and then once obtained seek its tax exempt status from the State Franchise Ta board. This tax-exempt status obligates the organization to meet certain reporting requirements to its stakeholders, donors, and various state and federal agencies in order to maintain the tax-exempt benefits.
PROTECT YOUR INTELLECTUAL PROPERTY
In a competitive world, it is important to assess whether it is necessary to protect your brand and products with trademarks, copyrights or patents. It is also important to ensure that your new business does not infringe upon other companies protected rights.
ENSURE COMPLIANCE WITH LOCAL, STATE AND NATIONAL LAWS
Finally, your organization will need to ensure that it is in compliance with employment, wage and hour laws, licensing requirements, solicitation and fundraising regulations among other laws.
At the Law Office of Becki Kammerling, we can assist your organization with every step of this process. Contact us today for an initial consultation.
Disclaimer: This article does not constitute legal advice and does not create an attorney client relationship.
