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 Jersey.
(upbeat music)
If you're not sure what a non-profit 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 New Jersey.
You'll need to check New Jersey'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 Jersey.
For more information on what makes a name distinct,
check out our other video,
"How to name your business in New Jersey," linked below.
Once you have a name selected,
do a name search to make sure it's available in New Jersey.
After doing a New Jersey 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 Jersey.
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 a nonprofit,
such as the president or secretary,
are individuals with responsibilities
and the authority to execute based on their job description.
Together, the officers and 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.
A president, a secretary, and a treasurer.
Four, file the New Jersey Public Records Filing
for New Business Entity.
To form a nonprofit corporation,
you will need to file official papers with New Jersey.
In New Jersey,
this is called the New Jersey Public Records Filing
for New Business Entity.
Some possible information
in the New Jersey Public Records Filing
for New Business Entity you may have to include is,
entity name and type, business purpose, duration,
contact information, management, and incorporator.
For more information on the sections
of New Jersey's Public Records Filing
for New Business Entity,
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 for 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.
Within 60 days of filing as a new business entity,
your organization will need to apply
for a New Jersey Taxpayer Identification Number
using form NJ-REG Business Registration Application
linked below.
You can file online or mail in the application.
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 New Jersey Public Records Filing
for New Business Entity with 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.
As a registered incorporated nonprofit,
your organization is automatically exempt
from the New Jersey Corporation Business Tax.
You may request an official confirmation of this
from the New Jersey Department
of Treasury Division of Taxation.
Option two,
the second way to form a non-profit
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-profits behalf.
If you want to form an organization or a company
in New Jersey 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 Jersey.
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.