Starting a Non-Profit Organization
Do you want to start a Non-Profit, but aren’t sure where to begin?
At McCormick Law & Consulting, our team is full of passionate people who want to help establish, grow, and sustain your organization. We are dedicated to providing turnkey solutions for all of your Non-Profit needs through an efficient and streamlined process.
Non-Profit Purpose
First consider the purpose you have in mind for establishing a Non-Profit. Will you provide a good or service? Will you serve a particular population or demographic? Is this a solo operation or do you wish to expand the project? Will you partner with other businesses? Is your organization better suited as an alternate entity, or is the Non-Profit the perfect fit?
These are some of many issues to consider before diving into Non-Profit formation, and we would love to discuss and solve them with you!
The Set-Up Process
Next, you must establish your Non-Profit with the state. In Virginia, Non-Profits are governed by Title 13.1, Chapter 10 of the Virginia Code, while in North Carolina, Chapter 55A of North Carolina General Statues controls. Luckily, the process in both states is very similar and we can guide you through it.
The list below reviews the general steps while highlighting key distinctions across both states:
- Choose Initial Directors and Officers
- Directors oversee the Non-Profit operations and vote on organizational issues together as a Board. The best practice is to select at least three directors so that a majority is easily achieved when conducting official business.
- Officers have individual duties related to managing the organization’s activities and usually have defined duties within the organization’s bylaws. Examples of officers include a president, vice-president, or secretary.
- Choose a Name
- In both North Carolina and Virginia, Non-Profit names must be available and distinguishable, not misleading about the Non-Profit mission, and not contain patently offensive language.
- Select a Registered Agent
- All Non-Profits must have a registered agent in the state of filing. This registered agent acts as a business point of contact with the state and receives important legal documents, such as service of process, on the Non-Profit’s behalf.
- File Your Articles of Incorporation
- In Virginia, Non-Profits are established as Non-Stock Corporations. A Non-Stock corporation is one that does not issue or authorize the distribution of shares in the company. The Articles of Incorporation for a Non-Stock Corporation must include a corporation name, corporation purpose, list of directors and members, director election process, registered agent, and a process for corporate dissolution.
- North Carolina law does not require the formation of a Non-Stock corporation to establish a Non-Profit. Non-Profit owners should follow the instructions, including Articles of Incorporation requirements, under the North Carolina Nonprofit Corporation Act.
- Write Your Bylaws.
- Non-Profit bylaws define the organization’s management process and the powers delegated to its directors and officers. Both Virginia and North Carolina require Non-Profit bylaws be consistent with the filed Articles of Incorporation.
- Obtain an Employer Identification Number (EIN)
- All Non-Profits must apply for an EIN with the IRS for tax and banking purposes.
- File IRS Form 1023 to Obtain Federal Tax-Exempt Status
- The IRS recognizes statuses 501(c)(2) – 501(c)(27) as tax exempt, but the most common by far is the 501(c)(3). A Non-Profit can only apply for this exemption after having elected directors, registered its Articles of Incorporation, adopted bylaws, and obtained an EIN.
- Review State Tax Exemption Status
- In both North Carolina and Virginia, Non-Profits that meet the federal requirement for tax exempt status automatically qualify for state tax exemption.
- File Other Required Registration(s)
- Non-Profits may need to file additional documents with the state, such as registering to receive charitable solicitations or applying for a business license.
Ongoing Requirements
In addition to getting your Non-Profit up and running, we can assist you in maintaining your Non-Profit throughout its lifetime. Consider a few of the most important ongoing requirements:
- File an annual report with the state to remain in good standing;
- Hold annual member meetings, keep recorded minutes of all meetings, and document changes of registered office or agent; and
- File a yearly accounting with the IRS for income and expenses, noting the year’s activities and accomplishments, structure and operations, and information about larger donors.
If you are interested in starting a Non-Profit, we can help ensure it starts with the right foundation and remains compliant with state and federal law.
Contact us today to start!
Also, take a look at a couple of our articles and videos related to establishing and growing your organization:
Detailed Guide to Starting a Nonprofit Organization in Virginia
Structuring your Non-Profit Board of Directors to Comply with the IRS
How to Build the Best Board of Directors for your Corporation or Non-Profit Organization
The Role of the Board of Directors for a Nonprofit Organization