How to Form a 501(c)(3) Nonprofit Corporation

Here's how to form a nonprofit corporation and receive a 501(c)(3) tax exemption.

Forming a nonprofit corporation is much like creating a regular corporation, except that nonprofits have to take the extra steps of applying for tax-exempt status with the IRS and their state tax division. Here is what you need to do:

1. Choose an available business name that meets the requirements of state law. (check availability of name here http://www.ss.ca.gov/business/corp/corp_naav2.htm#avail)

2. File "articles of incorporation," pay filing fee of $30. Information from the state about forming a non profit can be located here, along with sample articles of incorporation, etc.: http://www.ss.ca.gov/business/corp/pdf/articles/corp_artsnp.pdf .

Also, use this as a reference: http://www.ss.ca.gov/business/corp/corporate.htm

The original and at least four copies of the Articles of Incorporation should be included with your submittal. The Secretary of State will certify two copies of the filed document without charge, provided that the copies are submitted to the Secretary of State with the document to be filed. Any additional copies submitted will be certified upon request and payment of the $8.00 per copy certification fee. Documents can be mailed or hand delivered for over-the-counter processing to the Sacramento office at:
Business Programs Division (11th Street
Sacramento, CA 95814
Attention: Document Filing Support Unit

 

Phone is: (916) 657-5448 1500

To facilitate the processing of documents mailed to the office, a self-addressed envelope and a letter referencing the corporate name as well as your own name, return address and telephone number should also be submitted.

 

 

2.5 Be working on your bylaws.

 

3. Apply for your federal and state tax exemptions.  Application for a determination of exemption must be made after incorporation by mailing the attached Exemption Application (FTB Form 3500,  located at the link listed in item 2, along with an endorsed copy of the Articles of Incorporation and any other supporting documentation, to
Franchise Tax Board
Post Office Box 942857
 Sacramento, California 94257-4041. Information regarding franchise tax exemption can be obtained from the Franchise Tax Board’s Internet Web site or by calling the Franchise Tax Board at (916) 845-4171.

Apply for Your Federal 501(c)(3) Tax Exemption: After the corporate filing office returns a copy of your filed articles, you can submit your federal 501(c)(3) tax exemption application to the IRS. (The IRS requires you to submit a copy of your filed articles with your application.) This is a critical step in the formation of your nonprofit organization since most of the real benefits of being a nonprofit flow from 501(c)(3) tax-exempt status.  To apply for your exemption, you must complete IRS Form 8718, User Fee for Exempt Organization Determination Letter Request, and IRS Package 1023, Application for Recognition of Exemption. For instructions on filling out these forms, read IRS Publication 557, Tax-Exempt Status for Your Organization. (You can obtain all of these items for free by calling 800-TAX-FORM, or you can download them from the IRS website at www.irs.gov.). After the IRS reviews your application, it will send you a letter indicating that it has approved your nonprofit status, or it might ask you for more information about your organization. The IRS can also deny your application outright. If this happens, see a lawyer who specializes in nonprofits.

4. Draft Corporate Bylaws

You must create bylaws, the internal rules that govern your nonprofit corporation. Bylaws contain rules and procedures for holding meetings, voting on issues, and electing directors and officers. To create bylaws, you can either follow the instructions in a self-help resource or hire a lawyer in your state to draft them for you. Typically, the bylaws are adopted by the corporation's directors at their first board meeting. See Forming a Non-Profit Corporation in California (Nolo Press) for further info.