Establishing a new nonprofit organization will provide your group with many advantages like tax exemptions. But along these advantages are responsibilities to keep your group’s status as “nonprofit.” Knowing all these and more is included in the first steps of establishing a nonprofit organization. After understanding its nature, it will be time to register it. The process varies from what you need, the state, and your purpose. Below are the usual steps taken when registering a nonprofit organization:
- Write the organization’s mission statement. The mission statement should describe the organization’s charitable purpose. It should answer the question, “Why does the organization exist?” The statement must be reviewed and approved by the board members.
- Recruit enough board members. Get help from a state attorney if you want to incorporate the nonprofit organization to the state. You will be required to have a certain number of board members and their functions. If the organization will not be incorporated, then it’s still needed to form the board as the group’s guide.
- Hire a lawyer. You need someone to review all the documents before submitting them. The lawyer will help you through submitting articles, tax exemption application, and many other processes.
- Get a bank account. The bank should understand what new nonprofit organizations need in terms of banking.
- Hire an insurance agent. This is only important if you need help for insuring liabilities and properties. An insurance agent will be helpful also in case you will be hiring staffs to help you with the health insurance benefits, life insurance benefits, and worker’s compensation.
- Write the articles of incorporation. This is needed if the nonprofit organization will be incorporated to the state. Draft the articles first and then review them. Ask a lawyer to review the articles also and then have these signed by the board.
- Write the organization’s bylaws. These will describe how the nonprofit organization will operate and build the staff. Check the state requirements also to learn the necessary sections that have to be included in the bylaws.
- File the nonprofit organization as incorporated to the state. You’ll need to submit the articles and bylaws for this. The state will also require reports from the organization. Provide those, too, if needed and if available.
- File the tax exemption with the IRS. The nonprofit organization will be exempted from paying taxes if you filed for this. But before you do, the board must approve the application first. File for state tax exemptions after the IRS exemption is granted.
- Get a solicitation license. Nonprofit organizations are mostly run by solicitations. If you are planning to do the same, better check with the city if solicitation license is required. Process the mail permit also so you can enjoy discounts for bulk mailings.
- Apply for federal employer number. You need this when starting to hire employees. Get FICA also after hiring employees. Unemployment insurance requests will be needed also when hiring employees.
Read more about the state’s guidelines on running nonprofit organizations. It’s always best to check the legality of your actions and to accomplish activities required from the nonprofit organization. The group should also function based on the drafted mission statement or it will cease its reason for existence.