Starting a Nonprofit

We regularly receive requests for information on how to “start a nonprofit.” Here are answers to the basic questions.

The following information is intended for general consideration ONLY. We strongly advise that you contact us or your own experienced attorney (the word “experienced” is important here–not all attorneys are created equal) before proceeding.

Incorporate your organization at the state level

This usually is a simple, quick process, done through the Secretary of State’s office for the state in which you want to do business (although you can incorporate in another state). Check the website for the state in which you reside to understand the exact process. Normally you will incorporate as a “nonprofit” corporation as opposed to a for profit corporation, but check in your state to be sure.

Remember: State incorporation does NOT get you exemption from income taxes. To learn more, read on.

Obtain a federal tax identification number – an “FEIN”

This is a simple process that can be accomplished by contacting the Internal Revenue Service. You can appliy online, by phone, by fax, or by mail. To learn more visit www.irs.gov and type “FEIN” into the search box.

Apply for “tax exempt” status if you wish

To become exempt from federal and state corporate income taxes, you must apply for and obtain tax exempt status from the Internal Revenue Service. This is accomplished by filing form 1023. The process may be easy or difficult, depending upon a number of factors related to your goals and how you complete the application. Be aware it is a somewhat time-consuming process and there is a $500 fee to apply.

NLI strongly recommends the engagement of an experienced attorney or other professional resource for this process, although this is not required. You can go through the process on your own. However an experienced professional can help you avoid pitfalls which may derail your application.