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Overview
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501(c)(3) Exemption
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FAQs
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Learn more
Improving communities and changing lives
A nonprofit, or non-profit corporation, is a company or organization formed for purposes other than making a profit. Like standard for-profit corporations, nonprofits provide limited liability protection. The personal assets of directors and officers typically cannot be used to satisfy the debts or liabilities of the nonprofit. To start a non-profit organization, non-profit Articles of Incorporation must be filed with the state and applicable state filing fees paid.
Advantages of a nonprofit corporation
Nonprofit corporations typically offer certain benefits:
- Limited liability protection. Directors and officers are typically not personally responsible for the nonprofit’s debts and liabilities.
- Tax-exempt status. Nonprofits can apply for both federal and state tax-exempt status.
- Access to grants. Some nonprofits are eligible to receive public and private grants, making it easier to get operating capital.
- Tax-deductible donations. With 501(c)(3) nonprofits, donations made by individuals to the nonprofit corporation are tax-deductible.
Forming a tax-exempt nonprofit corporation?
Tax-exempt non-profits follow state laws that are very different from those of standard corporations — but the business formation process is very similar. In order for your non-profit corporation to become tax-exempt, Form 1023 must be filed with and approved by the IRS. Some states also require a state-level tax-exempt status filing.
Key Benefits
Outside of providing limited liability protection, non-profit incorporation can lend additional credibility to your organization, as others may feel you are “more legitimate” because you have taken the steps to formalize your non-profit with the state.
Understanding Nonprofit Formation
Keep in Mind
Some people think that just by creating a nonprofit corporation, the nonprofit is tax-exempt. That is not the case. Incorporating a nonprofit merely establishes it in the state of formation. To become a tax-exempt nonprofit, you must file for tax-exempt status with the IRS and be approved.
Filing for Tax-Exempt Status for Nonprofits
Essential Considerations
Since regulations differ across state and local jurisdictions, the registrations required for your business are unique depending on the location and your business operations. However, payroll tax and sales tax are common registrations for businesses in many state and local jurisdictions.
Section 501(c)(3) tax-exempt filing service
The most common way to become a tax-exempt nonprofit is by establishing the organization as a Section 501(c)(3) entity. These are public charities and private foundations that are created for religious, educational, charitable, scientific, literary, safety-oriented or amateur sports-related purposes. There are also a number of other types of organizations considered tax-exempt by the IRS, but not charitable. These may include trade associations, social clubs and certain advocacy organizations involved in political lobbying.
Some erroneously believe that just by incorporating a nonprofit, the resulting organization is automatically tax-exempt. In reality, incorporating a nonprofit simply establishes it in the state where it was incorporated. One must file for tax-exempt status in order to become a tax-exempt nonprofit. This can be a difficult process and professional help is often recommended.
BizFilings has experience setting up 501(c)(3) non-profits nationwide with our Vcorp tax-exempt services division. After we incorporate your business our tax-exempt specialists will guide you throughout the application process and provide thorough explanations to help with the completion of your tax-exempt filing with the IRS. Our premium service includes direct contact with a tax professional, preparation and filing on your behalf.
Our 501(c)(3) tax-exempt services include preparation and filing of:
- IRS Form 1023 with necessary schedules
- Amendments (if necessary) to the certificate of incorporation to comply with IRS regulations
- Review and formatting of proposed budgets
- Adoption of "Conflict of Interest Policy"
- "Detailed Narrative" describing the organization
- Customized Bylaws
- Specialized schedules and requirements for different types of organizations such as churches, schools, private foundations, charities, etc.
- Subsequent filings, such as registrations for charitable solicitation, state tax exemptions, amendments to tax status, and dissolutions.
How does it work?
You can request a quote by calling or when ordering our non-profit packages. Once your business is official our tax-exempt specialists will contact you to discuss your specific 501(c)(3) application requirements, answer questions and provide you with the cost for obtaining tax-exempt status. We provide three tiers of service:
| Online | Deluxe | Premier |
|---|---|---|
| Complete your application for tax exemption online. Follow our easy step-by-step program that guides you through the 501(c)(3) application process. Once complete, you will receive the application form with instructions for submission to the IRS. | Our specialists will prepare your application for 501(c)(3) tax exempt status on your behalf. Includes all necessary documents, explanations, preparation of the narrative of activities, and a review of all budgets to help identify potential red flags. You will then submit the completed application to the IRS who will contact you if any further information is required. | Our specialists will prepare the entire application and work with you throughout the review period, so you can remain focused on your mission. This is the best route to attain 501(c)(3) status with minimal effort on your part. Our specialists will monitor your application’s progress, speak to the IRS reviewer as necessary, and prepare responses to the initial IRS questions at no additional fee. |
Keep in Mind
Some people think that just by creating a nonprofit corporation, the nonprofit is tax-exempt. That is not the case. Incorporating a nonprofit merely establishes it in the state of formation. To become a tax-exempt nonprofit, you must file for tax-exempt status with the IRS and be approved.
Filing for Tax-Exempt Status for Nonprofits
Essential Considerations
Since regulations differ across state and local jurisdictions, the registrations required for your business are unique depending on the location and your business operations. However, payroll tax and sales tax are common registrations for businesses in many state and local jurisdictions.
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What is a nonprofit corporation?A nonprofit corporation (also called nonprofit, non-profit, NPO or not-for-profit) is an entity formed for purposes other than making a profit. Non-profit corporations are formed pursuant to different state laws than standard for-profit corporations, but the process of forming a nonprofit is very similar.
Like standard for-profit corporations, nonprofits provide limited liability protection. The personal assets of the directors, members and officers typically cannot be used to satisfy the debts and liabilities of the nonprofit. -
How does my non-profit corporation gain “tax exempt” status?To be considered tax-exempt, nonprofits must apply for federal and state (if applicable) tax-exempt status. Tax-exempt status is not automatically granted once the nonprofit is formed. To apply for federal tax-exempt status, Form 1023 must be filed with the Internal Revenue Service (IRS). For state requirements, it is best to contact the department responsible for taxation in the state of formation.
Please note: You can request a quote for this filing service when ordering a nonprofit incorporation package. -
What paperwork is required for starting a non-profit?Starting a non-profit organization begins with preparing and filing non-profit Articles of Incorporation, which conform to state law, with the proper state authorities – along with paying any filing fees and any applicable initial franchise taxes or other initial fees.
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Do I need an attorney to form a non-profit?No, when starting a non-profit, an attorney is not a legal requirement to form a non-profit corporation. You can prepare and file the Articles of Incorporation yourself; however, you should understand the requirements of your intended state of incorporation.
You can use BizFilings' service to form a non-profit and save money on attorney fees. However, if you are unsure if incorporation will benefit your organization, consult an attorney or accountant. -
What steps need to be taken to form a nonprofit?The first step when starting a non-profit organization is to file non-profit Articles of Incorporation with the proper state agency. It is important that the Articles of Incorporation contain the required clauses to ensure your non-profit will qualify for tax-exempt status. For more help on how to form a non-profit, BizFilings prepares and files non-profit Articles of Incorporation in every state.
After the non-profit Articles of Incorporation are filed, tax-exempt status must be applied for at the federal level and sometimes at the state level. To apply at the federal level, a timely filing of Form 1023 must be made with the IRS. To determine what form needs to be filed at the state level to obtain tax-exempt status, contact the state department responsible for taxation.
Additionally, the non-profit must comply with corporate formalities and hold annual meetings of directors, members and officers. Bylaws must also be adopted. Documents that help you comply with these corporate formalities are contained in BizFilings' Compliance Kit & Seal. -
What should I name my non-profit corporation?As with naming any business or organization, naming a non-profit is an important business step when starting a non-profit organization. Pick a name that will project the image you want for your new non-profit. Legally, the name must not be "deceptively similar" to any existing corporation in your state of incorporation or must be "distinguishable on the record" of your state. It is possible that the name you select will not be available—that's why we ask for a second choice on our incorporation order form.
Additionally, the name you choose to form a non-profit must show your non-profit is incorporated. Many states require that the non-profit name be followed by "Corporation," "Incorporated," "Company" or an abbreviation of those terms, such as "Corp." or "Inc." -
What are the IRS classifications of non-profit corporations?BizFilings prepares Articles of Incorporation for nonprofits pursuant to section 501(c)(3) of the Internal Revenue Code. Nonprofits formed under 501(c)(3) must be formed for some religious, educational, charitable, scientific, literary, testing for public safety, fostering of national or international amateur sports, or prevention of cruelty to animals or children purpose. Nonprofits may also be formed for other purposes pursuant to different sections of the Internal Revenue Code. If you want BizFilings to form your nonprofit pursuant to a different provision of the Internal Revenue Code, please let us know the Internal Revenue Code section in the purpose portion of our order form.
To determine if your nonprofit needs to be formed pursuant to another provision of the Internal Revenue Code, please consult the IRS Organization Reference Chart. For specific advice on how to form a non-profit with the proper IRS classification, please consult an attorney or accountant. -
What is the correct term for the owner(s) of a nonprofit?Because nonprofits are formed for purposes other than making a profit, the entity is a non-stock entity. As a result, there technically are no owner(s) of a nonprofit corporation like there are for for-profit corporations.
Nonprofits are similar to for-profit corporations, in that they are overseen by a board of directors. The nonprofit directors are responsible for making the major decisions for the nonprofit, and also appointing and supervising the officers of the nonprofit. The officers are then responsible for the everyday management of the nonprofit. Nonprofits also may have members, and some states require you to indicate on the nonprofit Articles of Incorporation whether directors and/or members will be involved in the nonprofit. -
How many directors are nonprofits required to have?Most states require nonprofits to have a minimum of three directors; however, some only require one director.
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Where should I form a nonprofit?Once the decision has been made to incorporate a nonprofit, the next step is to decide where to incorporate. You are not required to form the organization in the state where it will be physically located, as it can be incorporated in any state or Washington D.C. But there are factors to consider when evaluating which state is best: the cost of incorporating in the home state versus the cost of incorporating in another state, and taxation and nonprofit laws governing the states.
If the non-profit has few owners and will undertake most of its activities primarily within a single state, local incorporation is often preferable. The cost of local incorporation will usually be less than incorporating and starting a non-profit in another state and qualifying to do business as a foreign non-profit in the state, which is called foreign qualification. (A non-profit is considered foreign in every state other than the state of incorporation.) A foreign non-profit that qualifies to do business in another state is subject to taxes and annual report fees from both the state of incorporation and the qualifying state. Another disadvantage of incorporating outside of your home state is the possibility of having to defend a law suit in another state. For advice regarding which state is optimal for starting a non-profit, consult an attorney or an accountant. -
What is a registered agent?When you form a nonprofit corporation or register one to transact business in another state (a process called foreign qualification), you are required to name a registered agent for your nonprofit. The registered agent is responsible for receiving important legal and tax document on behalf of your nonprofit. Additionally, the registered agent must have a physical address in your state of incorporation (post office boxes are not allowed) and be available during normal business hours.
BizFilings provides Registered Agent Service as part of its incorporation service packages. As your registered agent, BizFilings not only satisfies the legal requirements for registered agents but also provides a number of benefits at no additional charge to you. Registered Agent Service customers also receive Registered Agent Watch─our monthly compliance email with information specific to your nonprofit, access to BizComply─our online compliance management tool, electronic Service of Process (notice of litigation) delivery, online access to your account and more.
Having BizFilings as your registered agent is important if you:- Want to avoid the risk of non-compliance. You have enough to worry about with running your nonprofit. Let compliance experts help you address the compliance requirements imposed on your nonprofit by your state of incorporation. BizFilings will help you maintain your company's good standing in your state of incorporation and/or qualification.
- Value privacy. When an organization is served with a Service of Process, it is often delivered by local law enforcement. Most business owners do not want police officers showing up in front of clients, employees or neighbors (in the case of a nonprofits located within neighborhoods), to serve them notice that their nonprofit is being sued. Having BizFilings as your registered agent service provider ensures you receive any Service of Process promptly and privately.
- Have irregular business hours. The registered agent for a business must be available during normal business hours to accept important documents as they are delivered. If you set your own hours, or you are often away from your nonprofit's office, having BizFilings as your registered agent ensures that you never miss these important communications.
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How do I designate BizFilings as my registered agent?Our nonprofit incorporation service packages include three months of Registered Agent Service for free, and you can also avoid interruption of this valuable service with our convenient auto-renewal program. For $220, your Registered Agent Service will automatically be renewed to help ensure your company remains in good standing with the state. You also have the option to renew for multiple years and save over the single year price. You can renew your Registered Agent Service at two years for $320 (save $120) or three years for $420 (save $240).
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How do I get started with the incorporation process?After deciding to form a non-profit corporation, non-profit Articles of Incorporation must be filed with the state government and initial fees must be paid. After your Articles of Incorporation are filed, your non-profit must hold an organizational meeting where bylaws are adopted and the incorporation process is completed. Other business decisions made during the organizational meeting, such as the determination to open a bank account for the non-profit should be documented. All of this information, the bylaws and the articles of incorporation should be kept in a non-profit record book. Our Compliance Kit & Seal for non-profits can assist you with starting a non-profit organization after incorporation. Our Compliance Kit & Seal is included in our Standard and Complete Incorporation Service packages and can be added to our Basic Incorporation Service package.
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What is the Rush Filing Service for nonprofits?BizFilings' Rush Filing Service for non-profits allows you to decrease the incorporation filing timeframe to 24- to 48-hours in certain states.
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Is Rush Filing Service available for every state?No. BizFilings’ Rush Filing Service for nonprofit corporations is available in the jurisdictions listed in the chart below. The turnaround time listed is the time it will take us to receive verification that your incorporation documents have been filed with the state, following the name approval or consent. The timeframe excludes weekends and holidays. Total time for receiving your state-approved incorporation documents from the state and returning them to you may take around a week after verification.
State Turnaround Time State Turnaround Time Alaska 24 hours Michigan 48 hours Arkansas 24 hours Montana 24 hours California 48 hours Nevada 48 hours Colorado 24 hours New Jersey 24 hours Connecticut 48 hours New Mexico 48 hours Delaware 24 hours New York 24 hours Florida 24 hours North Carolina 48 hours Hawaii 48 hours Ohio
48 hours
Kansas 24 hours Texas
24 hours
Maryland 48 hours Virginia 48 hours Massachusetts 24 hours
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How soon will I receive my documents if I select Rush Filing Service?The 24- or 48-hour filing time is for the formation of your non-profit only. It typically takes longer for the states to produce the filed formation documents. Once BizFilings receives your formation documents from the state, we will ship them to you via FedEx Overnight delivery. This means you should have your documents in hand anywhere from just a few days to one week after filing to form a non-profit corporation. We will also scan and make them available in our Online Status Center, providing you with access before you receive the originals.
Note: some states require your signature on the incorporation documents when someone other than BizFilings is acting as registered agent. In these cases, the filing timeframe of 24- to 48-hours begins after we have received the signed documents and received any applicable prior approvals or consent. -
Why should I include Rush Filing Service with my nonprofit incorporation order?Using BizFilings' Rush Filing Service secures the name of your nonprofit corporation and its filed date (the official date of its incorporation) in as little as 24 hours. This service is particularly valuable when you need proof of incorporation to open a bank account for your nonprofit or secure a contract.
Is a Nonprofit Corporation Right for You?
The following Learning Center materials can help you understand nonprofit incorporation:
- Understanding Nonprofit Formation
- Filing for Tax Exempt Status for Nonprofits
- IRS Organization Reference Chart
- What is a Registered Agent?
- Information Required When You Form a Nonprofit With BizFilings (Nonprofit Corporation Datasheet)
Explore BizFilings’ services
The following products/services are included in our incorporation service packages or are available as add-ons:
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