How to form a 501(c)(3) nonprofit corporation.
A nonprofit corporation is purpose-driven.
A company whose goal is not to make profit for themselves.
Typically, they are an organization
that wants to make money
in order to help further a social cause
or provide a public benefit.
Let's get you started on the right path
to forming a nonprofit corporation in New York.
If you're not sure what a nonprofit is,
check out our other video,
what is a nonprofit?
Linked below.
How do you form a nonprofit corporation?
There are two ways.
You can do it yourself
or you can hire a service
to do it for you.
Let's take a look at both options
and help you decide how to go
about forming your own nonprofit corporation.
Option one, do it yourself.
If you want to save money,
you can form a nonprofit corporation on your own.
Let's take a look at the steps
to forming a nonprofit corporation on your own.
One, choose and secure your nonprofit's name.
The name you select
for your nonprofit will establish its brand.
It's the first thing most people will learn
about your organization.
It's important to pick a name
that both aligns with your mission
and follows the rules
of naming guidelines in New York.
You'll need to check New York's specific naming requirements
but in general, follow these rules when choosing a name.
The name you pick
for your organization should not include any words
or terms that could be considered grossly offensive
or misleading.
The name must be distinct
from that of any other corporation in New York.
For more information on what makes the name distinct,
check out our other video,
how to name your business in New York,
linked below.
Once you have a name selected,
do a name search to make sure it's available in New York.
After doing a New York name search,
you'll want to do a domain search to see
if your name is available as a URL.
Even if you don't plan on making a website today,
you may want to secure the URL
so someone else doesn't take it.
Two, appoint a registered agent.
The registered agent can be an individual
in the company including yourself
or you can hire a professional service authorized
to do business in New York.
They will send and receive legal papers on your behalf.
These documents include official correspondence
like legal summons and document filings
which your registered agent will receive
and forward to you.
Your registered agent will also help remind you
to file the necessary reports.
Failure to properly maintain your nonprofit can result
in fines and dissolution
so this assistance is valuable.
Three, choose your organization type.
Before moving forward,
New York-based nonprofits need to determine what type
of corporate structure they will have.
Choose from the following,
religious corporation.
There are separate rules and regulations that apply
to religious corporations operating
in the state of New York.
To learn more about the requirements
to start a religious corporation in New York,
access the Consolidated Laws of New York.
Non-religious corporation.
If your nonprofit's purpose is related to any
of the definitions found in section 404,
you must obtain approval
from the appropriate governing body.
This approval must accompany
your Certificate of Incorporation application.
You can find section 404 linked below.
If your nonprofit does not fall
into one of these categories,
you are not required to submit approval letters
along with your Certificate of Incorporation.
Four, select directors and officers.
Your nonprofit corporation will be made up
of some number of directors and officers.
The directors of a nonprofit are responsible
for overseeing the operations of the organization.
Together, they form the board of directors.
The power and influence of the directors
over the organization comes from them as a board.
The directors themselves do not have any authority
as individuals.
The board typically creates the policies
that govern the nonprofit.
They also oversee management level hiring
such as the company officers.
The officers of the nonprofit such as the president
or secretary are individuals with responsibilities
and the authority to execute based
on their job description.
Together, the officers on the board will come together
to make up the organizational structure
of your nonprofit.
An officer may also be on the board of directors
and serve both roles
if allowed to do so by the organizational bylaws
which we will discuss later.
If your organization plans to apply
for 501(c)(3) status for federal tax exemptions,
it must elect at least three directors not related
to each other, a president,
at least one vice-president, a secretary
and a treasurer.
Five, file the Certificate of Incorporation.
To form a nonprofit corporation,
you'll need to file official papers with New York.
In New York,
this is called the Certificate of Incorporation.
Some possible information
in the Certificate of Incorporation
you may have to include is,
corporate name, purpose, county location,
directors, registered agent and registered office,
tax exemption provisions and incorporator.
For more information on the sections
of New York's Certificate of Incorporation,
check out our page linked below.
Six, operating procedures and housekeeping.
Once your nonprofit corporation has been formed,
you'll want to start getting the structure of it together
and determine how your nonprofit will be run.
Starting with the bylaws
and conflict of interest policy.
Your bylaws are the rules that determine
how your organization will be governed and run.
You can think about it as a constitution
for your nonprofit.
It makes the rules
and priorities clear for everyone involved.
In your bylaws,
be sure to include how the non-profit will be governed,
the roles of directors and officers,
how meetings are held,
voting procedures,
electing officers or directors,
how records will be kept and managed,
how disputes will be handled
and how bylaws will be added and amended in the future.
When you're ready to get started,
check out some bylaws templates linked
in the description below.
The conflict of interest policy are the rules set
to ensure that decisions being made
for the nonprofit are based
on what is best for the organization
and not being motivated
by what is best for individuals.
You'll want to make sure you have a draft
of both the bylaws and conflict of interest policy
before your organizational meeting.
We have templates of both bylaws
and conflict of interest policy linked
in the description below.
An organizational meeting is the first official meeting
of your nonprofit.
Some of the things that are discussed
in a typical organizational meeting are,
taking attendance to show you have a quorum,
appointing temporary officers and chairman,
adoption of bylaws
and adoption of conflict of interest policy.
It's important to record minutes of the meeting
and have it signed by all attending directors.
We have some corporate minutes templates linked below
to help you get the ball rolling.
After your nonprofit has been formed,
you'll need to apply for an EIN
or Employment Identification Number.
An EIN is like a social security number
for your nonprofit
and it's used for things like filing
for 501(c)(3) status, opening a bank account,
applying for tax-exempt status
and submitting tax returns.
For more information on EINs,
check out our other video linked below.
You will need to register for all applicable tax accounts
with the state of New York
and the city of New York
if you'll be conducting business there.
Read the state's tax guidance
for new businesses linked below
and file for the appropriate state
and or city account.
Seven, apply for 501(c)(3) status,
federal tax exemption.
What is federal tax-exempt status
and why do you want it?
When a corporation generates income,
that corporation has to pay a federal income tax.
As a nonprofit, your goal is to generate income
that is used to help further a cause
rather than fill the pockets
of the company employees.
Because of this, the federal government allows
that nonprofits' income not be taxed
so that more of the money can go
towards the cause that the nonprofit is supporting.
Before your nonprofit can apply for 501(c)(3) status,
it must file the Certificate of Incorporation
with the required provisions,
adopt the bylaws and conflict of interest policy
and have an EIN number.
In order to file for tax-exempt status,
most organizations will need to file Form 1023 online
or by mail and pay a fee of $600.
If your organization's annual gross receipts
are below $50,000,
then you may be able to file Form 1023-EZ
with the fee of $275.
You can check your eligibility
with the link in the description below.
Once you've received your 501(c)(3) determination letter
from the IRS,
you can file for corporate franchise tax exemption
using Form CT-247.
Option two.
The second way to form a nonprofit
is to hire a professional service
to create your nonprofit for you.
Hiring a professional service to file your forms
and act as your registered agent
for the nonprofit will cost you an additional 50 to $150.
This fee only covers formation
of a nonprofit corporation.
If you wish for the professional service
to file for 501(c)(3) status,
the cost may go up to as much as $1,700
plus filing fees.
However, there are several benefits
to working with a pro.
A hired registered agent helps
with getting your reports filed on time,
helps you stay organized
by keeping your business mail separate
and is available at all regular business hours
to accept official mail
and legal papers on your nonprofit's behalf.
If you want to form an organization
or company in New York
with the purpose being to help a cause
rather than make a personal profit,
a nonprofit corporation is the best way to do that.
Now you know all the steps
to form a nonprofit in New York.
For a more detailed guide,
visit our site at startupsavant.com.
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If you have questions or encounter any roadblocks,
leave a comment below.
Good luck in starting your nonprofit.