Highlighting a Local Non-Profit / Starting a Non-Profit

How to Start a Non-Profit 501(c)(3) Organization in North Carolina

Starting a non-profit in NC is fairly straight forward, and in many ways it mirrors the legal and practical framework for a for profit business. However, because they do not generate profit and are tax exempt, there is much more scrutiny on the organization on behalf of the office NC Secretary of State. It begs the question, is it right for you? Is your non-profit needed?Many non-profits begin and end without fulfilling their mission. Additionally, securing annual funding and maintaining the legal requirements can be daunting. There may be opportunities available to achieve the same purpose by coordinating with existing programs, volunteering, or becoming a board member. If your passion requires that you follow through, then proceed to the next step.

1. Initial Planning

Establish a Board of Directors

The State of North Carolina only requires one person on the board of the directors, but best practices reccomend that you have no fewer than five. Each board member should be selected by their expertise, experience, or familiarity with the mission. They must also be aware of their duties and responsibilities. The board must then agree on the mission, and the process laid out in short to long term goals. Checks and balances are laid in place, as board members are required to be fiduciaries to the organization, and not have conflicts of interest.

2. Establish the Non-Profit

Filing articles of non-profit articles of incorporation with the office of the NC Secretary of State officially creates your non-profit. It costs 60$ (plus the 2$ transaction fee) and the organization is complete. Forms and free information can be found at 1-888-246-7636 or 919-807-2225 or www.secretary.state.nc.us/corporations.

Like starting an LLC, you must designate a registered agent for this process (yourself or a trusted person) or hire one of the may companies who will handle all the paperwork. Prices can be 200-500 dollars depending on the agent. One advertised benefit of hiring a registered agent company is that you will receive less junk mail.

Before applying for tax exempt status you'll need to establish organizational by-laws with the board of directors. These by-laws can then be reviewed by a lawyer and adopted by the board.

Next, apply for 501 (c)(3) status with the IRS by filling out form 1023 or 1023EZ. Instructions are available at http://www.irs.gov/Forms-&-Pubs. Again, it is advised that a lawyer familiar with Non-profit organizations to review the paperwork.

The next steps deal with your tax-exempt status. You can file with the NC Department of Revenue for the exemption of income and corporate taxes. Employees with a non-profit are treated just like in a business, with requirements for a state withholding number and workers compensation.

Further down the road, you must file every year with the IRS your annual receipts.

And that is all!