How Long Does It Take To Register A Nonprofit Organization

How to Start a California Nonprofit

A Pace-by-Stride Guide & Additional Resources --->

Congratulations. You've got an idea for making the globe a improve place, and you want to start a nonprofit as the means to practice so. The expert news is that starting a California nonprofit isn't that hard to practise if you have a sound plan, the correct squad, and sufficient startup funds.

The bad news is that running a successful nonprofit is not easy. You'll need to think through how you volition bring value to the public, obtain funds, concenter staff and/or volunteers, build a board of directors, and comply with the various laws that regulate nonprofits. Your answers to these questions volition determine whether you should start a nonprofit or consider alternatives. More on these points subsequently in this article.

Cheque out the recorded webinar from Feb 2022 with CalNonprofits CEO Jan Masaoka, where she walks through the major steps and gives advice about boards, finding your first funding, and much more! Costless for Members / $15 for not-yet-members.

Questions to consider:

- Practice you need to work with an attorney to showtime a nonprofit?
- Should you start a nonprofit? What are the alternatives?

ten basic steps for starting a California nonprofit public benefit corporation:

1. Determine the name of the corporation
2. Draft and file the manufactures of incorporation
3. Appoint the lath of directors
four. Draft the bylaws and conflict of interest policy
five. Take the initial lath actions
6. Obtain an employer identification number (EIN)
7. File the initial registration form with the California Attorney Full general's Registry of Charitable Trusts
8. File the Statement of Information with the California Secretary of Country
nine. Apply for federal tax exemption with the Internal Acquirement Service (IRS)
x. Apply for California tax exemption with the California Franchise Tax Board (FTB)
Bonus: Boosted Resource

Chart of the steps with the agencies, forms, and links.

1. Make up one's mind the name of the corporation.

A nonprofit is typically formed as a corporation and its proper noun tin be a valuable asset. A corporation's legal proper noun must exist registered with the state where the corporation is formed. In California, a corporation proper noun may be accepted by the California Secretary of State if the proper name is non the aforementioned as or too similar to an existing name on the bureau'south records and if it's not misleading to the public.

You lot can bank check the current database of existing names on the concern search page on the Secretarial assistant of State website. You can also reserve a name for 60 days past mailing in a Proper name Reservation Request, which prevents another person from registering that corporation name with the California Secretary of State while information technology is reserved. You lot must likewise brand certain the name does not infringe on another person's trademark rights. This is not always easy to determine, merely a good start includes running a trademark search on the U.S. Patent and Trademark Office database and a uncomplicated Google search. For some founders, it may as well be important to confer with an intellectual property attorney to help ensure they are not infringing on another'south rights and to protect their name from being used by other parties.

Also, if you lot program to operate the nonprofit in other states in add-on to California, some founders may want to check that the corporation'due south name is similarly bachelor in those other states where the nonprofit plans to take operations and therefore may need to register every bit a foreign corporation with the required land agencies in guild to conduct concern at that place.
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ii. Draft and file the articles of incorporation.

A corporation is legally created with the filing of the articles of incorporation. Articles of incorporation typically identify:

(a) The organisation'south proper noun;

(b) Its purpose or purposes of the nonprofit;

(c) The agent for service of process -- that is, a person who tin receive lawsuits and other official correspondence and other matters, which can be an private whose name and address are identified or a corporate agent registered with the California Secretary of Land for such purpose;

(d) Limitations on the corporation'due south operations, consistent with its tax-exempt condition;

(east) The corporation's street address and mailing address, if dissimilar; and

(f) Advisable dedication and dissolution clauses.

For California, the manufactures will also identify the blazon of nonprofit corporation beingness formed. There are three types of nonprofit corporations in California: public benefit, mutual benefit, and religious. A nonprofit public benefit corporation (the focus of this stride-by-pace guide) is the appropriate pick for a nonprofit formed for charitable or public purposes. The articles of incorporation are typically signed by an "incorporator," which tin can be only one person but may also be signed by the initial board of directors if they are named in the Articles.

There is a template you lot can fill in and print on the Secretary of Land'south website. This is a good starting point but does not provide guidelines or advice on every important consideration. For example, there is no guidance on specific purpose statements (you'll want to be careful about restricting the corporation's activities in the future by a very limiting specific purpose argument) and no selection to select any 501(c)(3) purposes other than charitable, educational, and religious. Information technology besides does not address other languages that may be required in the manufactures if the nonprofit also intends to seek exemption from property taxes in California.

A word on specific purpose statements: A broad specific purpose argument provides room for the arrangement's mission to evolve without requiring an subpoena to the articles of incorporation. Information technology and may also make information technology easier to comply with charitable trust laws that require charitable funds to be used consistent with the specific purpose of the arrangement at the fourth dimension such funds were originally acquired. If, instead, y'all adopt a narrow purpose statement such as "to restore and maintain Pomponio State Beach," you would not be able to apply funds caused while the manufactures of incorporation independent this purpose statement to restore whatsoever other beaches, but the statement would provide a stronger mission anchor to help ensure that your organization stays on a specific course after the founders have left. In this example, the organization could amend its articles with the Secretarial assistant of State to broaden its purposes to include other beaches, though but the funds acquired after that change is in effect could be used for those broader activities. A better choice might be for the nonprofit to prefer a purpose statement "to restore and maintain California beaches and adjoining habitats."

For additional information on this issue, read Starting a Nonprofit: Articles of Incorporation and Specific Purpose Statements.

More than about the agent for service of process : It is also important to sympathise that the agent is responsible for receiving lawsuits and perhaps other of import legal documents on behalf of the organization and making sure those documents reach the President or other authorized officer or managing director in a timely way. If the agent fails to do so (east.g., fails to accept his or her mail service checked regularly while away for an extended period), the organization could face negative consequences such equally losing a default judgment for non showing up to defend a lawsuit. An arrangement can identify an private who resides in California who is willing to serve as an amanuensis or may elect to pay for a registered corporate agent, which may be preferred if in that location is no person willing to accept this responsibility or if privacy concerns are an issue (an private agent's name and street address volition be a matter of public tape).
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three. Appoint the board of directors.

If the initial directors are not named in the articles of incorporation, the incorporator tin can and should appoint the board through a written action.

Under California police, a nonprofit lath may exist composed of as few as ane director, but the IRS may accept effect with granting recognition of 501(c)(3) status to a nonprofit with only one director. It is commonly recommended that nonprofits take betwixt three and 25 directors.

These directors – board members – should understand their legal duties and responsibilities to act with reasonable intendance and in the best interests of the organization while providing management and oversight over the organization's activities, finances, officers, and legal compliance. Bridgespan offers valuable resources on nonprofit corporate governance, including BoardSource's Ten Basic Responsibilities of Nonprofit Boards ($29). We recommend also looking at the Board Source website and for more information and resources about boards, many of which are free.
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iv. Draft the bylaws and disharmonize of interest policy.

A corporation's bylaws provide the fundamental provisions for the governance of the corporation's activities and affairs. Bylaws should provide guidance to the board and reassurance of sound governance practices to government government, funders, and other interested stakeholders.

Bylaws typically contain specific provisions detailing:

(a) The powers of the board and duties of the directors;

(b) How directors are elected or otherwise selected (e.g., past a majority vote of directors at the annual lath meeting);

(c) How the board may take an action (e.g., past a majority vote of directors at a board meeting or by unanimous written consent);

(d) How board meetings are called, noticed, and held (east.g., 4 times per yr with 14 days advance detect by email);

(eastward) How board meetings are conducted (e.1000., the chair of the board presides or pursuant to Robert's Rules, which we mostly discourage for well-nigh nonprofits);

(f) The officers of the corporation (California law requires three officers: a president or chair of the board, secretary, and treasurer or principal financial officer);

(grand) The duties and responsibilities of each officeholder;

(h) Whether the corporation has voting members or is a not-membership corporation, either of which should be conspicuously stated in the bylaws;

(i) The authorization of board and non-lath committees (e.g., committees tasked to deed with the potency of the board versus advisory committees that can only make recommendations);

(j) The level of indemnification provided by the corporation to protect its directors, officers, employees, and other agents; and

(k) The reports due to directors and members, if whatever (e.chiliad., financial reports).

Bylaws may too include the corporation's specific purpose or mission argument (which might replicate or make more specific the purpose statement in the articles of incorporation) and the corporation's core values if they would exist viewed equally helpful in guiding the board on its leadership and decision-making – though the corporation should also exist mindful to avoid inconsistencies betwixt the articles and bylaws if mentioning the purposes or mission statement in both places (for which the articles will control).

If the nonprofit has voting members, the bylaws will also need to contain additional provisions regarding member rights and processes. Nonprofits considering a voting membership structure may want to first discuss such construction with a lawyer, particularly if they exercise not expect their members to actively participate in meetings and regularly do their rights to vote for members of the board of directors.

Public Counsel provides an Annotated Grade of Bylaws for a California Nonprofit Public Do good Corporation.

Separately articulated policies ordinarily supplement the bylaws in addressing primal governance and management issues. For example, although not required by federal tax police force, it is considered by many to be a best practice for any nonprofit to have an adopted conflict of interest policy. Additionally, if a nonprofit does not accept a disharmonize of interest policy, it must draw its policy regarding conflicts of interest in the IRS Course 1023. Appropriately, it would be advantageous for about nonprofits to adopt a policy. The IRS provides a sample policy in Appendix A of the Instructions to Form 1023, which can be a helpful starting point though note that this sample policy does not necessarily account for state law requirements such equally the procedural requirements under California law for approving sure self-dealing transactions involving directors.
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5. Accept the initial board actions at a lath meeting or by unanimous written consent of the directors.

The lath should take the post-obit deportment:

(a) Prefer the bylaws and conflict of interest policy;

(b) Gear up the verbal authorized number of directors if the bylaws provide for a range for the size of the board;

(c) Adopt a fiscal year (such as a twelvemonth catastrophe Dec 31 or June xxx);

(d) Approve establishing a banking concern account;

(e) Approve applying for federal and land tax-exempt status;

(f) Approve reimbursement of startup expenses (if applicative); and

(g) Approve the compensation of the president (CEO) or the treasurer (CFO) and anyone performing the functions of such officers, like an executive director (if applicable).

The incorporator may accept already taken some of these actions at the fourth dimension that he or she appointed the initial board, in which case the board can review and confirm those prior deportment if desired.

At this step, the directors may also complete some initial forms for the organization's records (which may as well be required of the corporation's officers) such as their completed annual disclosure of any potential or actual conflicts of interests, which is commonly required by whatever well-drafted conflict of interest policy, and also providing a signed written consent to receiving electronic transmissions from the corporation every bit required by California police in order to deport official business electronically (e.g., receiving meeting notices by e-mail).
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six. Obtain an employer identification number (EIN).

An officer or authorized 3rd-party designee may apply for and obtain an EIN online.
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7. File the initial registration form (Form CT-1) with the California Attorney General's Registry of Charitable Trusts.

The initial registration must be renewed annually, is required for the majority of nonprofit public do good corporations, and must be filed within 30 days after receipt of assets. The CT-ane Class and Instructions are bachelor online. The corporation's articles of incorporation and bylaws should be included in the initial filing. For corporations that are in the process of applying for 501(c)(3) tax-exempt status, you tin submit copies of the Course 1023 application and federal conclusion letter (Step 9) subsequently receiving the determination letter to complete your filing with the Registry.
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8. File the Statement of Information (Form SI-100) with the Secretary of State.

The Statement must initially be filed within 90 days of the appointment of incorporation. This biennial filing requirement, which identifies the organization's address, principal officers, and agent for service of process, tin be filed online or by mail. (Yous tin can notice information and instructions on completing the Statement of Information hither.)
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nine. Employ for federal taxation exemption with the Internal Revenue Service (IRS) and receive a conclusion letter from the IRS.

Completing the Form 1023 application for exempt condition under Internal Acquirement Code (IRC) Section 501(c)(3) may be the virtually challenging part of the startup process. Information technology is a legally-driven and comprehensive research covering ten Parts and 8 Schedules.

As of Jan 31, 2020, the IRS revised Form 1023 to exist an online fill-in form that must be filed electronically at Pay.gov. While substantively the new electronic Form 1023 is by and large like to its paper version predecessor, there are some new changes with the electronic form and e-filing process and some wrinkles that may be addressed in the hereafter. Luckily, the IRS has added new tools and instructional videos to their website to help you understand the eastward-filing process. Yous will be required to create an business relationship at Pay.gov in which you will be able to preview and download the class, relieve your progress, and render to the class at a later time. Please note that although you will exist able to save your progress, the application volition not let yous to advance to the side by side page until you accept completed all of the questions on the current page, including entering required descriptions or explanations or completing required schedules.

A disquisitional section for careful completion is Function IV, Narrative Description of Your Activities, which asks: for each past, present, or planned activeness, include information that answers the following questions.

• What is the action?
• Who conducts the activeness?
• Where is the activity conducted?
• What per centum of your total fourth dimension is allocated to the activity? (Combined time percentages should add together upwards to 100%.)
• How is the activity funded and what percent of your overall expenses is allocable to this activity?
• How does the activity farther your exempt purposes?

Form 1023 also requires information regarding (a) organizational structure; (b) compensation and other financial arrangements with officers and directors, and certain highly paid employees and independent contractors; (c) members and other individuals and organizations that receive benefits from the arrangement; (d) organizational history (east.m., an arrangement that was spun off or previously fiscally sponsored past another organisation may demand to complete an additional schedule as a successor arrangement); (e) specific activities; and (f) actual and/or projected statement of revenues and expenses (which should exist consequent with any identified activities).

Part Viii is designed to determine the system's classification every bit either a private foundation or a public charity. Public charity status is generally the more than favorable tax condition but requires an organization to run into certain requirements. For near organizations, this means passing a public support test over an ongoing v-year measuring menstruum. For organizations that will receive a large bulk of their support from few sources over their first 5 years, monitoring and managing of the public support ratio may exist critically important. Public Clemency Status Simplified (a little) is a helpful online resource from Insight Center for Community Economic Development.

If you call up that your nonprofit will non bring in gross receipts of more than than $50,000 per year during the adjacent three years, and has non had gross receipts of more than than $l,000 in any of the past three years, y'all may be eligible to file Grade 1023-EZ. The full criteria are explained hither. Like Class 1023, the 1023-EZ must be filed electronically. You can find instructions on this site.

The filing fee for Grade 1023 is currently $600. The filing fee for Class 1023-EZ is $275. Fees are paid online here.
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x. Employ for California taxation exemption with the California Franchise Taxation Board (FTB) and receive an affirmation of exemption letter of the alphabet from the FTB.

Organizations with a 501(c)(iii) federal decision letter can request California recognition of tax exemption under California Revenue & Taxation Code section 23701d from the FTB past filing Form 3500A along with a re-create of the IRS determination alphabetic character. Yous can find instructions here. The FTB will mostly recognize the organization's exemption from state income taxes as of the federal effective engagement. An organization that does not have a 501(c)(3) federal determination letter of the alphabet is otherwise required to file the more complicated Grade 3500 for state income revenue enhancement exemption. At that place is no fee for either Class 3500A or Form 3500.
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Bonus: Additional Resource

• IRS "StayExempt.org" peculiarly for 501(c)3s
• Nolo Press: How to Class a Nonprofit Corporation in California
• California Chaser General'southward "Guide for Charities"
• Nonprofit Kit for Dummies
• Why Join the California Association of Nonprofits

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Practice you need to work with an attorney to offset a nonprofit?

Although the majority of nonprofits are ready without the aid of lawyers, it's easy to make mistakes that go costly to correct later on (such every bit unwisely creating voting membership structures, adding unlawful provisions to template bylaws, violating the commerciality doctrine, etc.). We recommend having experienced professionals involved -- such as attorneys, lath members with nonprofit incorporation experience, and experienced consultants. Don't disbelieve the value of a knowledgeable attorney. You can observe a list of firms and consultants who are CalNonprofits members in the Professional Directory online. (Search for "Starting a Nonprofit and Staying Compliant.")
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What are some alternatives to starting a nonprofit?

Now that you lot know how to start a California nonprofit, you should thoughtfully consider whether this is the correct choice for your ideas and for the public benefit. There may be other ways to deport out your dreams, including working under the umbrella of an existing nonprofit. One oft-overlooked alternative is fiscal sponsorship, a relationship that may let a group to house a charitable project inside an existing nonprofit with the ability to spin it off at a later date. For more information on financial sponsorship, see Fiscal Sponsorship Basics from the Bar Association of San Francisco. Very pocket-sized operations may consider forming themselves as an unincorporated clan. You may also detect that starting a for-profit company will serve your purposes ameliorate than a nonprofit structure.

One time you have started your nonprofit, be sure to wait at CalNonprofits' Nonprofit Compliance Checklist, a regularly updated listing of all the federal and state forms required from nonprofits, including links to all the forms.
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Virtually THE AUTHORS: Emily Chan and Cistron Takagi

Attorneys Emily Chan and Gene Takagi wrote this guide for the California Association of Nonprofits every bit office of their commitment to pro bono work and customs service.

Emily Chan is of counsel with Adler & Colvin and a quondam recipient of the Outstanding Nonprofit Lawyer – Young Attorney laurels recognized past the Nonprofit Organizations Committee of the American Bar Association. Cistron Takagi is a principal attorney of NEO Law Group, a function-time lecturer at Columbia University, and a contributing editor of the Nonprofit Police force Blog.

You tin reach Emily at www.adlercolvin.com or 415-421-7555
You can reach Cistron at world wide web.neolawgroup.com or 415-977-0558
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Source: https://calnonprofits.org/resources/starting-a-california-nonprofit

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