How to start a nonprofit

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Step 1: Incorporate. Register with the State of Colorado as a nonprofit

The first step is reserving your organization name and business type with your Secretary of State.  With this filing, you must attach the proper IRS, State and Nonprofit Industry Standard clauses when completing the application.  Not doing this in the initial step can cost you time and money. This establishes a nonprofit, corporate entity by the filing of Articles of Incorporation.

SOLUTION:  I can help you set this up.

Step 2: Obtain a Nonprofit IRS EIN number

The IRS requires that your organization name match the state nonprofit registration status.  Also, you must obtain a nonprofit EIN, not a different business type.

SOLUTION:  I can help you register this correctly.

Step 3: Complete the 1023 Application to become a 501(c)(3)

This is a 28 page document with 100 pages of instructions.  The IRS says that an organization who has not filled this application out will expend 100 hours of time and at least 12 months.  Fortunately, you have 27 months to complete the application.  However, if information is not provided correctly you risk delaying the approval or being declined completely.  On average, the IRS declines 40% of all applications, approves with questions/delays 40% of applications and only approves 20% of all applications.

SOLUTION:  I can help you through the long process of the application by making it easier to apply. Ninety percent (90%) of applications I have submitted are approved  without additional questions and/or delays.  I provide all the documents and guide you through the process.

Step 4: State Compliance Issues

While obtaining 501(c)(3) status grants your new nonprofit federal tax exemption, there are several other important parts to complete.
  • Charitable Solicitations Registration – This is a required registration in 40 states and is usually administered through a division in the Attorney General’s office or Secretary of State.  Most states require registration prior to soliciting donations.
  • State Corporate Tax Exemption – Most states recognize the federal 501(c)(3) status as valid for state corporate tax exemption.  California is an acception requiring its own application and review process for charity status.  Several other states also require a separate application.
  • State Sales Tax Exemption – Many states grant an exemption to charities that allows them to purchase items for use by the organization without having to pay sales tax.  Applying for exemption usually requires a nonprofit to have already obtained 501(c)(3) status.

Understanding Nonprofit Industry Standards

There are many facets of running a nonprofit that you must know about as you move forward including Organizational Management, Board Development, and Capacity Building.

SOLUTION: I help you understand these terms and how to set up and improve your organization.  I do this as part of the 1023 Application process and can assist other organizations who need this type of consulting work.