Ten Steps in Forming a 501(c)(3) Nonprofit Organization
by Craig White and Paul Castelloe
Center for Participatory ChangeDownload brochure
There are ten basic steps in creating a nonprofit organization (a 501(c)(3)) in North Carolina. These are:
1. Clarify your mission, vision, and goals.
2. Recruit an initial board of directors.
3. Define your purpose, and create your bylaws. You may want to review the bylaws of several other organizations to get an idea of what you would like yours to look like.
4. Hold an initial board meeting; approve bylaws and elect officers.
5. Incorporate as a nonprofit corporation in NC by registering with the Secretary of State. Call (919) 733-4201 for forms and fee information. Ask for a copy of Nonprofit Corporation Guidelines. It takes around a month from the time you first call to the time you get back your incorporation papers. Apply for tax exemption as a 501(c )(3) nonprofit organization. You need this before you can get grants or tax-deductible contributions (unless you have a fiscal agent). Call the IRS (800-829-3676 or 800-829-1040) and request the following forms: Form 1023, Form SS-4, and Publication 557. You can also request these from the IRS website (http://www.irs.gov/). This whole process takes from 4 to 12 months. (It took 5 months for CPC.) Most folks recommend that a lawyer or CPA look over your bylaws and IRS application. Save the letter that you finally get from the IRS; you’ll submit it along with every grant proposal.
6. If you will have paid employees, get a State Withholding Identification Number from the NC Department of Revenue (919-733-4626).
7. File with the Employment Securities Commission (919-733-3098) for unemployment taxes when you have at least 4 full or part-time employees working a total of 20 weeks in one calendar year.
8. Once you receive tax-exempt status from the IRS, apply to the NC Department of Revenue (919-733-7983) for exemption from state sales tax.
9. Apply for a local property tax exemption by contacting your local County Tax Office. You still have to file a property listing by Jan. 31 even if property tax exemption is granted.
10. Apply for a Charitable Solicitation License through the NC Department of Human Resources (919-733-4510) if you will be raising $25,000 or more.
These ten steps get you started. Once you complete these steps, you can begin raising money for your work — you can begin applying for grants and soliciting tax-deductible contributions. Still, there is still much more to do beyond these ten steps. Look in the Toolbox for other strategies and techniques!
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