About 1.6 million charitable organizations operate in the United States. They range in purpose, but all have one thing in common. They are registered in the state where they operate, and they have applied for tax-exempt status through an IRS 501(c)(3) Application.
This guide will walk you through the process of starting your own charity and applying for tax-exempt status.
1. Choose a Name
The first step in forming any organization is to choose a name. Legally, the name you choose cannot be the name of another corporation registered in your state. It also needs to end with the term “Corporation,” “Incorporated,” “Limited,” or any abbreviated version of these words.
In the state of Florida, you can perform a search of currently registered corporations. This helps you ensure that your chosen name is available. Then for a small fee, you can reserve your chosen name while you file the articles of incorporation.
Choose the Directors
This is also a good time to select your initial directors. You’ll need at least three directors that aren’t related to each other.
Appoint a Registered Agent
You will also need to appoint someone to be a registered agent for the organization. This is the person that will be the agent for service of process during legal proceedings. The agent needs to have a physical address and not a P.O. box. You can change who the agent is later.
2. File the Articles of Incorporation
The articles of incorporation are what outline all of the basic information about your charity. You’ll need to file these with your state’s corporation filing office. It’s smart to employ the assistance of an attorney for this task. While preparing the document isn’t difficult, you will need to use specific language to ensure you can secure tax-exempt status. Your attorney will prepare your articles to comply with both state and federal requirements.
3. Submit Your IRS 501(c)(3) Application
To successfully secure IRS tax-exempt status, your corporation must have specific language. The statement of purpose needs to meet the IRS requirements. It should state that your nonprofit won’t engage in activities that are unrelated to the exempt status or in prohibited political or legislative activity. Finally, it needs to state that upon dissolution, the corporation’s assets will get transferred to another 501(c)(3) organization or government entity.
Do not solely depend on using Florida’s articles of incorporation template as it doesn’t address the IRS requirements. You will also need to submit IRS Form 1023 and provide a filing fee of $70. For smaller nonprofits, there’s a simplified Form 1023-EZ.
4. Draft the Bylaws
To comply with Florida laws, your corporation needs bylaws that outline the rules and procedures. It should outline how you’ll hold meetings, elect officers, and handle formalities. You’ll then hold your first board meeting to approve the bylaws, officers, accounting, and initial transactions.
5. Obtain an EIN
Your nonprofit organization needs a federal employer identification number (EIN). There’s no filing fee to obtain your number, and you can obtain one by filling out an online form on the IRS website.
6. Florida State Tax Exemption
Once you receive your 501(c) determination letter from the IRS, your corporation is also exempt from Florida state corporate tax. However, you’ll need to also file with the Florida Department of Revenue to receive exempt status from the state sales tax.
File Your IRS 501(c)(3) Application
You’ll need to complete several steps and communicate with several government agencies when forming your charitable organization and then applying for tax-exempt status. Working with an experienced attorney can make the process smoother.
Schedule a consultation today and let our skilled attorneys assist you in establishing your charitable organization.
