How to form a 501c3 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 Georgia.
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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 six 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 Georgia.
You'll need to check Georgia'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 Georgia.
For more information on what makes a name distinct,
check out our other video,
"How To Name Your Business in Georgia," linked below.
Once you have a name selected,
do a name search to make sure it's available in Georgia.
After doing a Georgia 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 Georgia.
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, 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 501c3 status
for federal tax exemptions,
it must elect at least three directors,
not related to each other.
Four, file the Articles of Incorporation
and Transmittal Information form.
There is no official form
for the articles of incorporation,
but here's the information you must include when filing.
Corporate name, nonprofit statement, registered agent,
membership, principal office address,
supplemental provisions, and execution.
You will also need
to fill out the transmittal information form
that can be found linked below.
For more information on the sections of the Georgia articles
of incorporation, check out our page linked below.
Five, 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 nonprofit 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 chairmen,
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 is used for things like filing for 501c3 status,
opening a bank account, applying for tax exempt status,
and submitting tax returns.
For more information on EIN's,
check out our other video linked below.
Six, apply for 501c3 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 501c3 status,
it must file the articles
of formation 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 a fee of $275.
You can check your eligibility
with the link in the description below.
If your nonprofit gets approved
for 501c3 status by the IRS,
include copies of the IRS determination letter
with your nonprofit's state tax return.
This will allow your organization
to be exempt from income tax at the Georgia state level.
Option two, the second way to form of 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 501c3 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 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 Georgia 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 Georgia.
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.
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