The name cannot be the same as the name of any other corporation on file with the state’s corporations division. About half of all states require the name to end with a corporate designator, such as Corporation (Corp. ), Incorporated (Inc. ) or Limited (Ltd. ). Your name cannot contain certain designations reserved for the state, such as United States, Reserve, Federal, National, Cooperative or Bank.
Visit your state’s filing office website or call your state’s corporations division. Ask to see if the name is available or if it is already taken. If the name is available, then you can usually pay a small fee that will reserve the name for you until you’ve filed your Articles of Incorporation. If the name is taken, then create another name.
The mission statement is a concise expression that covers in one or two sentences the name of the organization, what it does, for whom it performs services and where it dispenses service. It should also portray how your organization is distinct from others like it. Make your mission statement compelling. It will be used in all published materials, funding requests and public relations handouts. Use some of these mission statements as examples: “The mission of St. Jude Children’s Research Hospital is to advance cures, and means of prevention, for pediatric catastrophic diseases through research and treatment. " “The National Mental Health Association is dedicated to promoting mental health, preventing mental disorders and achieving victory over mental illnesses through advocacy, education, research and service. " “The National Consumer Supporter Technical Assistance Center’s purpose is to strengthen consumer organizations by providing technical assistance in the forms of research, informational materials, and financial aid. " “The mission of Texas Mental Health Consumers is to organize, encourage, and educate mental health consumers in Texas. TMHC supports and promotes the mental health recovery process through peer directed and operated services, advocacy, economic development, and participation in public mental health policy design. "
Hire someone with 501(c)(3) experience to help you file your state and federal exemption forms. You’ll save both time and money in the long run. Most paralegals and attorneys have little experience with nonprofits. You can usually check out these services via the state bar association, references from fellow nonprofit owners or the Better Business Bureau.
Articles of Incorporation protect both board and staff from legal liabilities incurred by the organization, making the corporation the holder of debts and liabilities instead of placing responsibility with the individuals and officers who work for the organization. The specific requirements governing how to incorporate are determined by each state. You can obtain the information you need to proceed with this step from your state Attorney General’s office or your Secretary of State’s office. These official documents may have different names in different states. For example, you may see names like “corporate charter,” “trust instrument” or “articles of association. " Before you spend any money, consider consulting with an attorney who is experienced in the area of nonprofit law. This step will help you to avoid many major mistakes that people make when they try to incorporate without legal representation.
This number is used to identify the organization when tax documents are filed and is used not unlike an individual’s Social Security number. If you received your number prior to incorporation, you will need to apply for a new number under the corporate name. Ask for Form SS-4 when applying for your EIN.
Look for an accountant who has experience with organizations like yours. Someone who’s never worked with a 501c3 may not have the experience to handle the nuances of the process. Make sure that you feel comfortable with the person. The person should be reliable, should listen to your concerns and should respond to requests as soon as possible. Choose a firm that matches the size of your nonprofit. If you’re a small 501c3, then choose a CPA who works alone or a small firm. For large nonprofits, choose a large firm with a good reputation. Take time to make your choice. Look for referrals and references and interview different candidates so that you make the best choice from a pool of available accountants. [2] X Research source
You’ll have to preserve your important corporate documents, including board meeting minutes, bylaws, Articles of Incorporation, financial reports and other official records. You should contact your appropriate state agency for more information on what records you are required to keep in the official files.
You have to establish a system of controls (checks and balances) when establishing the organization’s accounting practices. Make sure that your system meets both your current and your anticipated future needs. The organization needs to open a bank account and decide whether to use the accrual or cash method of accounting. The difference between the two types of accounting is when revenues and expenses are recorded. In cash basis accounting, revenues are recorded when cash is actually received and expenses are recorded when they are actually paid (no matter when they were actually invoiced). In accrual basis accounting, income is reported in the fiscal period it is earned, regardless of when it is received, and expenses are deducted in the fiscal period they are incurred, whether they are paid or not.
Submit financial statements for the current year as well as budgets for the next 2 years in Part XI of Form 1023. If an attorney is representing you, fill out Form 2848 to designate power of attorney. Either can be obtained from your local IRS office or the IRS website. The filing fee will depend upon the size of your organization’s budget. This application is an important legal document, so seek the assistance of an experienced attorney or certified public accountant (CPA) when preparing it.
For applications sent by regular mail: Internal Revenue Service P. O. Box 12192 Covington, KY 41012-0192 For applications shipped by express mail or delivery service: Internal Revenue Service 201 W. Rivercenter Blvd. Attn: Extracting Stop 312 Covington, KY 41011[3] X Trustworthy Source Internal Revenue Service U. S. government agency in charge of managing the Federal Tax Code Go to source
Bylaws should be drafted with the help of an attorney and approved by the board early in the organization’s development. Depending on who you use to assist in the process, some firms require that your bylaws are sent to the IRS.
Each state has regulations that determine the minimum size of the board, which is typically 3, 5 or 7, but the optimum number of people who sit on the board should be determined by the needs of the organization. Based on what your organization would like to accomplish, you should decide what special skills and qualities you will require of the individuals on your board. Identify qualified individuals who are supportive of your mission and are willing to give of their talents and time. Include the community at large, not just your specific community of focus (e. g. the mental health community). Consider the religious community, local service clubs, legal professionals and colleges and universities as sources for a prospective Board of Directors. Do not overload people who already serve on many committees so that you can seek a balance between old and new leadership.
Usually compliance involves obtaining a permit or license and then filing an annual report and financial statement. Contact the state Attorney General’s office, the state Department of Commerce, state and local Departments of Revenue and county or municipal clerk’s offices to get more information. [5] X Research source
While first-class postage rates for nonprofits remain the same as those for the for-profit sector, second- and third-class rates are substantially less when nonprofits mail to a large number of addresses. For more information on eligibility, contact the U. S. Postal Service and ask for Publication 417, Nonprofit Standard Mail Eligibility. [6] X Research source
