- 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 Rhode Island.
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 nonprofits name.
The name you select for your non-profit,
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 Rhode Island.
You'll need to check Rhode Island'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 Rhode Island.
For more information on what makes the name distinct, check
out our other video, "How to Name Your Business
in Rhode Island", linked below.
Once you have a name selected do a name search
to make sure it's available in Rhode Island.
After doing a Rhode Island 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 Rhode Island.
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 together to make
up the organizational structure of your nonprofit.
An officer may also be on the board of directors
and surf wealth 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 articles of incorporation.
To form a nonprofit corporation you will need
to file official papers with Rhode Island.
In Rhode Island, this is called the articles
of incorporation.
Some possible information in the articles of incorporation
you may have to include is entity name, duration, purpose,
registered agent and registered office, management,
incorporator, effectiveness of filing and execution.
For more information on the sections of Rhode Islands
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 started 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 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 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.
Your organization will need to apply for a state taxpayer
identification number online or
by using the business application and registration form
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 1023EZ
with a fee of $275.
You can check your eligibility with the link
in the description below.
Once your organization receives the IRS determination
letter, it will automatically be exempt
from Rhode Island state corporate income tax
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 nonprofits behalf.
If you want to form an organization or company
in Rhode Island 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 Rhode Island.
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.