How to Form a Nonprofit Corporation

Step 1: Choose Your State of Formation

Most nonprofits incorporate in the state where they'll actually operate, rather than a state chosen for favorable corporate law, since nonprofits generally don't get the same out-of-state tax-planning benefits that sometimes draw for-profit companies to incorporate elsewhere. Operating in a different state than your state of formation can also mean registering as a foreign entity there, adding a second state's paperwork. Unless you have a specific reason to do otherwise, incorporate where your organization is actually based.

Step 2: Choose a Name and Appoint a Registered Agent

Your name has to be distinguishable from other entities on file with your state, and in some states must include a corporate designator; see our guide on how to choose a nonprofit name for the specifics. Every state also requires a registered agent, a person or entity at a physical address in your state of formation who can receive legal notices and official mail on the organization's behalf. Texas, for example, requires the registered agent to be either a Texas resident individual or an authorized organization, per its Form 202 instructions; Georgia similarly requires the agent to be located in Georgia, per the Georgia Secretary of State.

Step 3: File Articles of Incorporation

File your articles of incorporation (sometimes called a certificate of formation) with your state's Secretary of State or equivalent filing office. The specific form, fee and requirements vary by state. Two examples:

• Texas: Form 202, Certificate of Formation for a Nonprofit Corporation, costs $25 and requires a minimum of three directors, per the Texas Secretary of State.
• Georgia: articles of incorporation cost $110 by mail, require a Georgia-based registered agent, and must be followed by publishing a notice of intent to incorporate in the legal organ of the county where the registered office is located, within one business day of filing, per the Georgia Secretary of State.

Your articles should also include the purpose clause and dissolution clause the IRS requires for 501(c)(3) eligibility (see our guide on nonprofit articles of incorporation for what those need to say), even though the state form itself doesn't require tax-exemption language.

Step 4: Draft Bylaws and Hold an Organizational Meeting

Bylaws are your organization's internal operating rules: how the board is elected, how often it meets, what officers it has, and how amendments happen. Once your articles are approved, the initial directors hold an organizational meeting to adopt the bylaws, elect officers, approve opening a bank account, and handle other startup business, documented in meeting minutes that your bank and the IRS may both ask to see later.

Step 5: Get an EIN

Apply for an Employer Identification Number directly through the IRS's website at no cost. You need an EIN before you can open a bank account or apply for 501(c)(3) status, and the IRS's own application process asks whether you already have one.

Step 6: Apply for 501(c)(3) Status

With your state corporation formed and your EIN in hand, apply to the IRS for tax-exempt status using Form 1023-EZ (a $275 user fee, for smaller, simpler organizations) or the full Form 1023 (a $600 user fee, required for churches, schools, hospitals, LLCs, and any organization too large or complex for the EZ form), per the IRS. See our guide on how to apply for 501(c)(3) tax-exempt status for the eligibility rules and timeline in detail.

Step 7: Register to Fundraise and Handle Ongoing Compliance

Once approved, most nonprofits still need to register separately with any state where they plan to solicit donations, a requirement roughly 40 states impose, with Delaware, Texas and Wyoming among the few exceptions. From there, ongoing compliance includes an annual IRS information return, your state's annual or periodic report, and keeping your registered agent current.

Budget for Both State and Federal Fees, Not Just One

Founders sometimes budget only for the state filing fee and are surprised by the separate, often larger, IRS user fee, or vice versa. Plan for both: a state incorporation fee in the tens of dollars in many states, plus a $275 or $600 federal user fee, before any legal help.

The Organizational Meeting Isn't a Formality to Skip

Some founders treat the first board meeting as a rubber stamp and don't document it properly. Banks, grantmakers and the IRS can all ask to see your organizational minutes and adopted bylaws later; keep them from the start rather than reconstructing them after the fact.

Operating Outside Your State of Formation May Require a Separate Registration

If your nonprofit incorporates in one state but regularly operates, hires staff, or owns property in another, that second state may require you to register as a foreign nonprofit corporation there, on top of your original state's filing. Check before you assume your home-state incorporation covers activity elsewhere.

This Is Not Legal Advice

Which state to incorporate in, how to word your purpose and dissolution clauses, and what your specific state requires beyond the basics covered here depend on your organization's situation. Talk to a nonprofit attorney, particularly if your plans involve operating across state lines from the start.