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 Montana.
If you're not sure what a non-profit is.
Check out our other video.
What is a nonprofit, link 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 nonprofits 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 Montana.
You'll need to check Montana 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 Montana.
For more information on what makes the name distinct,
check out our other video,
how to name your business in Montana, link below.
Once you have a name selected, do a name search
to make sure it's available in Montana.
After doing a Montana 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 Montana.
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 formed 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 or individuals with responsibilities
and the authority to execute based on their job description.
Together the officers in 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 SelfWealth 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,
a secretary, and a treasurer.
Four, filed the articles of incorporation.
To form a nonprofit corporation,
You will need to file official papers with Montana.
In Montana, this is called the articles of incorporation.
Some of the possible information in the articles
of incorporation you may have to include
is the name you selected for your organization,
information on the registered agent,
information on the directors you selected,
information on the purpose of the organization
and information on dissolution.
For more information on the sections of Montana's articles
of incorporation, check out our page, link 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,
link in the description below.
The conflict Of interest policy or 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,
link 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 qourum,
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 link 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, link below.
Six, 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 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 1023ez 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 online for Montana state income tax exemption
with the Montana department of revenue.
Option two.
The second way it's a 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 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 non-profits behalf.
If you want to form an organization or company in Montana
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 Montana, for a more detailed guide,
visit our site startupSavant.com.
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If you have questions or encounter any roadblocks
leave a comment below,
good luck in starting your nonprofit.