Starting A Non-Profit? Your First Steps
So, you want to start a non-profit organization? Kudos to you! This is an excellent idea. However, you may be clueless as to where you need to start. Well, prior to starting your tax-exempt organization, you need to understand what even qualifies as a non-profit. Some people tend to assume that any organization can qualify, but this is not true. As a general rule, organizations that can qualify as a non-profit as those that engage in charitable, religious, educational, literary, or scientific endeavors that tend to benefit the society in some way. Once you understand this and you're good to go on that front, here is what you need do next.
1. Decide About Incorporation
There are two different types of incorporation for non-profit organizations: incorporated and unincorporated. There are more benefits for incorporated non-profit organizations, though, such as limited liability protection. If you believe you may be at increased risk of liability, then it is recommended that your organization consider opting for incorporated status.
2. Choose a Name
Being a non-profit organization is just like being a business. Therefore, you must choose a name that helps to identify your organization, its goals, etc.
3. File the Necessary Paperwork for Incorporation
If you choose to incorporate, there is paperwork involved. This paperwork will need to be filed with your state. In some cases, you may need to file articles of incorporation in addition to the standard paperwork.
4. Apply for Tax-Exempt Status
One many benefit of being a non-profit organization is that you will receive tax-empty status from the federal government; however, this is only if you file the necessary paperwork with the Internal Revenue Service (IRS). Depending on what state you live in, you may also need to file with the state for tax-exempt status.
5. Open a Bank Account
It is important that you don't mix business with pleasure, so you will want to open a separate checking/savings account for your non-profit organization. It makes things easier come tax time, and it just keeps things less complicated all the way around.
While these steps may not seem complicated, there is a lot more to forming your non-profit—the above is just a basic outline. And if you don't get the paperwork filed properly, you may wind up with legal issues. To make sure that you complete all the necessary steps and the paperwork is completed and filed as it should be, reach out to business lawyers like Richard L Wise, Counselor at Law.