- [Male Narrator] 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 Utah.
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 Utah.
You'll need to check Utah 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 Utah.
For more information on what makes the name distinct
check out our other video, How to Name Your
Business in Utah, linked below.
Once you have a name selected do a name search
to make sure it's available in Utah.
After doing a Utah named 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 Utah.
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 disillusion.
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 or 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 article of incorporation.
To form a nonprofit corporation you will need
to file official papers with Utah.
In Utah this is called the articles of incorporation.
Some possible information in the articles of
incorporation you may have to include is
name of corporation, purpose, registered agent,
incorporators, voting members, assets,
principal address, and directors.
For more information on the sections
of Utah's 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 non-profit 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 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 501c3 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.
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 the fee of $275.
You can check your eligibility with
the link in the description below.
To be exempt from Utah corporate income tax
You must file form TC-161 linked below.
Once you receive the IRS determination letter
you must submit the following to the Utah State Tax
Commission to receive your sales tax exemption number.
Form TC-160 and a copy of the IRS determination letter.
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 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
at all regular business hours to accept official mail
and legal papers on your non-profit's behalf.
If you want to form an organization or company
in Utah 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 Utah.
For a more detailed guide visit our
site at startupsavant.com.
Give the video a like if you found it useful
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If you have questions or encounter any
roadblocks leave a comment below.
Good luck on starting your nonprofit.