The benefit of starting a 501(c)(3) corporation is that the company is exempt from paying federal taxes. Before you start, however, you must make distinct that the intent of the corporation is to be nonprofit. A company that sets out to make a profit and doesn't is not considered "not-for-profit." Examples of non-profit companies include religious organizations, youth sporting associations, retirement homes and alumni associations. The process is similar to starting a for-profit corporation, the only major difference is applying for tax exempt status.
Instructions
1. Contact the appropriate state office to obtain information about state-specific laws for starting a 501(c)(3) company. The office will vary depending on the state, but is typically handled by the Department of Treasury or Secretary of State. They provide an information packet detailing the process and requirements specific to your state.
2. Create a name for your business. A 501(c)(3) company must be designated with a corporate modifier (Incorporation, Inc., Corporation, Corp, Limited, Ltd.). An example would be "Your Town Little League, Inc." Some words are prohibited from use for a 501(c)(3). These are Bank, Cooperative, Federal, National, United States or Reserve.
3. Draft bylaws. These are the rules by which your corporation will governed and will detail who has the authority to make decisions and act on behalf of the company.
4. Contact the same state office from Step 1 to verify that the name is available. You do not want to get all of your paperwork together only to find your chosen name is unavailable.
5. Appoint directors prior to registering as some states require that you list the directors prior to filing. The information packet notes if it is necessary for your state.
6. File your articles of incorporation. This is essentially a registration that you are a corporation permitted to do business in your state of operation. Typically, you need to pay a filing fee that varies in amount from state to state.
7. Apply for tax exempt status from the IRS. The application is available online or at your local IRS office. This step must be done after filing the articles of incorporation as you will need to provide a copy with the application.
8. Apply for tax exempt status from your state, though this is not required in all cases. Check with the Secretary of State or Department of Treasury in your state to confirm. The information is typically provided in the information packet provided by your state.
