Starting a business can be somewhat of a difficult task. There’s paperwork, regulations, approvals and various other documents you’ll need to submit and apply for. However, starting nonprofits can be even more difficult due to how they need to be set up. Let’s break down how to start a nonprofit organization and how nonprofits differ from your standard LLC structure.
What Are Nonprofits?
Nonprofits are organizations that have a public or mutual benefit. For instance, churches are nonprofits as they serve the community by spreading religious values. Any business or organization that supports people and groups without intent for financial gain and profit can become a nonprofit and tax-exempt.
Some categories that nonprofits fall under are:
- Animal organizations
- Testing for public safety
Nonprofits are very similar to creating a corporation. The only real difference is that in order to start a nonprofit, you will need to jump through a few more hoops to get a tax-exempt status — such as a 501(c)(3) status — with the IRS, along with filling out some additional forms to get approved and up and running.
Now, we should back up a little when talking about profits. Without bringing in money, the nonprofit may not survive. The term “nonprofit” simply comes down to what they do with the money they collect. Money brought into the nonprofit is to be put back into the organization, not put in the pocket of the people (unless the nonprofit is paying employees).
Otherwise, any profits are to be used for expanding their reach through marketing or events, fundraising for a cause and a means to grow their organization within the community it serves.
You’ve likely heard of at least one of the examples listed below. These are all major nonprofit organizations that span across the nation. Some of them include:
- Better Business Bureau (BBB)
- Big Brothers Big Sisters of America
- Boy Scouts of America
- Red Cross
- Special Olympics
- World Wildlife Fund (WWF)
How to Start a Nonprofit Organization
Here are the steps you need to take in order to start a nonprofit organization, or at least submit all the documents for approval. Assuming everything goes through and is approved, you could be off to the races, helping change lives in no time.
- Choose a business namethat has not already been taken.
- Pay for and file your articles of incorporation.
- Complete the application for state and federal tax exemptions.
- Create your corporate bylaws (these outline your operating rules and procedures).
- Apply for an EIN(Employer Identification Number).
- Assign directors for the nonprofit.
- Apply for any business licenses and/or permits needed.
If you are wondering how much it will cost you to get your nonprofit up and running in your state, you can check out the helpful guide over at NonprofitHub.org.
Arizona is one of the Best States for Starting a Nonprofit
As with anything where governing bodies oversee states, you will have some states that are more relaxed with regulations and other states where things are incredibly tight and regulated.
Arizona is a great state for starting nonprofits as they tend to have the fewer regulations, making it slightly easier to get your nonprofit up and running.
Here’s the cost information to start a nonprofit in Arizona. The information was pulled from the NonprofitHub.org.
- Incorporation:$40 (optional $35 expedite fee)
- Publishing of incorporation:~$200 (vary based on publication and length of copy)
- Arizona state taxes:$12 per license/location
- 501(c):$400 or $850 IRS fee
All in all, if you have an idea that could help change lives and/or the world around you, a nonprofit organization is a great way to turn your idea into reality and help give back.
This article was originally published on the Incfile Blog.
Written by: Matt Weik, Weik Fitness
Matt Weik is the Founder/Owner of Weik Fitness, LLC and is a well-respected fitness expert/author with a global following. He’s a certified strength and conditioning specialist, personal trainer, and sports nutritionist. His work has been featured in over 85 fitness magazines and over 1,500 websites.