Developing a Nonprofit Tax Exempt Organization - Outline of First Steps

Developing a Nonprofit Tax Exempt Organization – Outline of First Steps

1. Form the initial, incorporating board of trustees, minimum number of 3 people 18 years old or older
2. Incorporating board members donate funds to pay initial fees
3. Approve the agenda for the first meeting of the board of trustees
4. Approve the membership of the initial board
5. Approve a mission statement for the organization
6. Develop a business plan for the organization for the first 1-3 years
7. Approve a registered agent
8. Approve name of organization and file reservation of name with state. (Fees vary from state to state $50-$60)
9. Approve the state incorporation papers, signature(s) and file with state, and be sure to use the language that both your state and the federal government require; they complement each other. Your state may require that the approved incorportion papers are a public document. (Fees vary from state to state, about $75; you may receive a state identification number that you will need to have available for correspondence and filing with your state, but the state may use the Federal Employer Identification Number - FEIN, see #s 10 and 13 below)
10. Approve filing for Federal Employer Identification Number
11. Prepare and approve minutes of all meetings, dated and signed by secretary or other officer following approval
12. Develop and approve bylaws in conformity with both state and federal laws
13. Approve opening bank account in name of the corporation and signatories (You will need the FEIN and Certificate of Incorporation from the state; DO NOT open the account in any person's name as that will make the deposit taxable to that peson as income)
14. Complete developing the (membership if there are to be members) board and elect officers following the bylaws; form committees as required or desired
15. Secure all necessary Federal forms and publications for filing with the Internal Revenue (see future blogfor your library list)
16. Secure documents for recognition as a tax exempt organization
17. Prepare IRS Form 1023, approve signature and filing with the IRS (Fee $300-$750 on February 1, 2006); save at least one copy with original signatures. This will be a public document along with many others.
18. Upon recognition by the IRS, file for sales tax exemption with the state if there is such a tax
19. Approve and file all other necessary forms at the local, county and state level (e.g., zoning, building codes, games of chance, etc.)
20. Develop and approve necessary policies, procedures and recordkeeping for all mission activity, fiscal and administrative records and for grant compliance
21. Approve and file all necessary annual reports on time

And there is more...