Key Steps to Forming and Operating a Nonprofit, Tax-Exempt Charity



Formation: Clear proposed organization name for corporate and trademark purposes; Finalize name; select initial board of directors and officers; Create and file (with applicable state) articles of incorporation; Create bylaws for approval by initial board of directors; Create board resolutions (of initial board of directors) naming officers, approving the bylaws, and authorizing certain persons to act on behalf of the corporation to obtain an employer identification number (“EIN”) from the Internal Revenue Service (“IRS”), open bank accounts, and apply for tax exemption; Obtain an EIN from the IRS; File an application for recognition of tax-exempt status under Section 501(c)(3) with the IRS (Form 1023). Ancillary forms that may be required are Form 2848, Form 8718, and Form 872-C; File an application with the U.S. Patent and Trademark Office to obtain all possible rights in and to the organization’s name and other marks; File applications for authorization to do business in state(s) where offices are located if state(s) is/are different from the state of incorporation; Register in all applicable states for payroll taxes and obtain new state tax identification numbers (if necessary); Open bank accounts in the name of the new corporation; Purchase adequate directors and officers liability insurance and other applicable insurance; Register with state(s) for charitable solicitation where required; Create an employee handbook and other internal policy documents (e.g., conflict of interest policy, whistleblower protection policy, etc.).

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Published In: Business Organization Updates, Tax Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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