Nonprofit Insurance Program

How to Become a 501 c 3

By Alexa Connelly
September 17, 2013

If you’re thinking of starting a 501c 3 nonprofit organization you will first need to create a name you wish the organization to be known by. The name you choose should be original. Some States insist the name you choose should end with Corp, Inc, or Limited.

State filing office

Now visit your State filling office website and check to see if your chosen name hasn’t been taken. If the name is available you can now pay a fee to reserve the name until the Articles of Incorporation have been filed.

Mission statement

Next you’ll need to with the board of directors formulate a mission statement. The mission statement needs to be succinct expressing what it does, who it serves and how it dispenses its services.

Legal services

Now you’ll need to hire an attorney with experience in 501c 3 law. You legal representative will assist you with your submission of the Articles of Incorporation.

File supporting documents

File Articles of Incorporation, these are official statements that you are creating an organization, and are filed with a state’s corporation’s office.

Federal Employer Identification Number

The next step in becoming a 503 c 3 is to apply for a federal Employer Identification number. You’ll need this document even if you do not intend to hire employees.

Developing a Financial Structure

You may need to hire an accountant who has worked with 503 c3. Choose a firm with that matches the size of your organization. Write out a budget. A budget is the expression, in financial terms, of the plan of operation of an organization. New organizations may start the budgeting process with their accountants by looking at potential income and then deciding how much money they have to spend. The organization will need to keep accurate records for the IRS. Legally, the Board of directors will need to keep documents including minutes and financial statements.

Federal and State Tax Exempt Status as a Private Foundation

This is for recognition of tax-exempt public charity status. You’ll need to fill out either Form 1023 or 1024.  Submit financial statements for the current year as well as budgets for the next 2 years.

Every state has individual regulations that determine the minimum size of the board, which is typically 3, 5 or 7, the number of individuals who sit on the board should be determined by the needs of the organization.

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