Below is an outline of the steps needed to incorporate your nonprofit and become a tax exempt organization. In most states the incorporation process is done through the Secretary of State’s office. Tax exemption is granted by the IRS. If you need more details read through our “How to Start a Nonprofit” pages (links above and at the right).
Incorporating Your Nonprofit in Virginia
Be sure to thoroughly read through your states filing procedures or check directly with your state office to insure you are meeting all the filing requirements.
Step One: Choose a Name
The first thing you need to do is select a name for your organization. After you decide on a name check with your state to see that the name is available. Some states require that you “reserve” your name prior to incorporating, though most let you choose the name as part of the incorporating process.
- Nonprofit Ally “How to”: Choose a Name for Your Nonprofit
Step Two: File for Incorporation
The next thing to do is file your Articles of Incorporation. Some States allow you to do this online. Though, many states still require a hard copy(s) to be mailed to their office.
- Nonprofit Ally “How to”: File Articles of Incorporation
[Note: the filing fee for incorporating your nonprofit can range from $40 to $200. Some states can expedite filing for an added cost. Check with your filing office for more information.]
Step Three: Prepare Your Bylaws
Your bylaws are a set of rules adopted by you organization in order to regulate your affairs and the behavior of your members. Your bylaws should cover everything from the election of board members to the dissolution of your organization. If you intend to become a tax exempt organization it is important to have thorough bylaws. For more information, read our article on how to prepare your nonprofit bylaws at:
- Nonprofit Ally “How to”: Prepare Your Bylaws
Step Four: Hold First Meeting
After you incorporate you can officially nominate and seat your board of directors. This is done at your first meeting. Other orders of business that are typically included in the first meeting are: adopting your bylaws, selecting officers (president, vice president, secretary and treasurer), opening a bank account, etc.
- Nonprofit Ally “How to”: Hold your First Meeting
Step Five: Create a Records Book
Ideally your nonprofit will be around for many years. So, from the day of incorporation until the day of dissolution, you will need to keep record of all your meetings, your articles of incorporation, you bylaws, any amendments, resolutions, etc.
- Nonprofit Ally “How to”: Create a Records Book.
Step Six: Apply for Federal Tax Exemption
To get your IRS tax exempt status you need to fill out IRS Form 1023. This is a rather long form. Be sure that all of the steps above are completed and that all the necessary language has been included into your articles of incorporation prior to applying for tax exempt status.
- IRS Tax Information for Nonprofits: Charities & Non-Profits
- Nonprofit Ally “How to”: Federal Tax Exemption
Some Additional Steps
Now that the heavy lifting is done, there are two additional steps that you should take.
Step Seven: State Tax Exemption
Once you become a federally recognized tax exempt organization you should contact your state tax agency to obtain a state tax exemption form. Usually this is a simple form that verifies you have received your federal tax exemption. Not all states require this step.
Step Eight: Register as a Charitable Organization
Some states require that you register with their Attorney General in order to run fundraisers. This can vary depending on the size and/or purpose of your organization.