Where All Do I Need To Register My Nonprfit

How to Get-go a California Nonprofit

A Step-by-Step Guide & Additional Resources --->

planting-icon2 Congratulations. You've got an idea for making the globe a improve place, and you want to first a nonprofit as the means to do so. The good news is that starting a California nonprofit isn't that hard to exercise if y'all take a sound program, the right squad, and sufficient startup funds.

The bad news is that running a successful nonprofit is non easy. You lot'll need to think through how you volition bring value to the public, obtain funds, attract staff and/or volunteers, build a board of directors, and comply with the various laws that regulate nonprofits. Your answers to these questions will make up one's mind whether you should beginning a nonprofit or consider alternatives. More on these points later in this article.

Cheque out the recorded webinar from February 2022 with CalNonprofits CEO Jan Masaoka, where she walks through the major steps and gives communication well-nigh boards, finding your start funding, and much more! FREE for Members / $xv for not-all the same-members.

Questions to consider:

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

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

1. Make up one's mind the name of the corporation
2. Draft and file the articles of incorporation
3. Appoint the board of directors
4. Typhoon the bylaws and conflict of involvement policy
5. Take the initial lath deportment
6. Obtain an employer identification number (EIN)
7. File the initial registration grade with the California Chaser Full general's Registry of Charitable Trusts
8. File the Statement of Information with the California Secretarial assistant of State
ix. Use for federal revenue enhancement exemption with the Internal Revenue Service (IRS)
x. Apply for California taxation exemption with the California Franchise Tax Lath (FTB)
Bonus: Additional Resources

Nautical chart of the steps with the agencies, forms, and links.

1. Determine the proper name of the corporation.

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

Y'all tin check the current database of existing names on the business search page on the Secretary of Land website. You can also reserve a name for threescore days by mailing in a Name Reservation Request, which prevents some other person from registering that corporation name with the California Secretary of Land while it is reserved. You must besides brand sure the name does not infringe on some other person's trademark rights. This is non always piece of cake to determine, but a skilful start includes running a trademark search on the U.S. Patent and Trademark Office database and a simple Google search. For some founders, it may too be of import to confer with an intellectual property attorney to aid ensure they are not infringing on some other'due south rights and to protect their name from being used by other parties.

Besides, if you lot plan to operate the nonprofit in other states in addition to California, some founders may want to check that the corporation's name is similarly available in those other states where the nonprofit plans to have operations and therefore may need to register as a foreign corporation with the required state agencies in order to conduct business at that place.
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two. Draft and file the articles of incorporation.

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

(a) The arrangement's proper noun;

(b) Its purpose or purposes of the nonprofit;

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

(d) Limitations on the corporation's operations, consistent with its tax-exempt status;

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

(f) Appropriate dedication and dissolution clauses.

For California, the manufactures volition too identify the type of nonprofit corporation being formed. In that location are three types of nonprofit corporations in California: public do good, mutual benefit, and religious. A nonprofit public benefit corporation (the focus of this step-by-pace guide) is the appropriate choice for a nonprofit formed for charitable or public purposes. The articles of incorporation are typically signed by an "incorporator," which can be just ane person just may likewise be signed by the initial board of directors if they are named in the Articles.

There is a template yous can fill in and print on the Secretary of Land's website. This is a skilful starting signal but does non provide guidelines or advice on every important consideration. For instance, there is no guidance on specific purpose statements (you'll want to be careful virtually restricting the corporation's activities in the hereafter by a very limiting specific purpose statement) and no option to select whatever 501(c)(iii) purposes other than charitable, educational, and religious. It too does not address other languages that may be required in the articles if the nonprofit besides intends to seek exemption from property taxes in California.

A discussion on specific purpose statements: A broad specific purpose statement provides room for the organisation'due south mission to evolve without requiring an subpoena to the articles of incorporation. It and may too make it easier to comply with charitable trust laws that require charitable funds to be used consistent with the specific purpose of the organization at the time such funds were originally caused. If, instead, y'all adopt a narrow purpose statement such as "to restore and maintain Pomponio State Embankment," you lot would non exist able to use funds acquired while the articles of incorporation contained this purpose statement to restore any other beaches, but the argument would provide a stronger mission anchor to assistance ensure that your system stays on a specific course later the founders have left. In this example, the organization could amend its articles with the Secretary of State to augment its purposes to include other beaches, though just the funds caused after that change is in effect could be used for those broader activities. A better choice might exist for the nonprofit to adopt 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 nearly the amanuensis for service of procedure : It is as well of import to understand that the agent is responsible for receiving lawsuits and perchance other important legal documents on behalf of the arrangement and making sure those documents attain the President or other authorized officer or director in a timely manner. If the agent fails to exercise so (e.k., fails to accept his or her mail checked regularly while away for an extended flow), the system could confront negative consequences such every bit losing a default judgment for non showing up to defend a lawsuit. An organisation can identify an individual who resides in California who is willing to serve equally an agent or may elect to pay for a registered corporate amanuensis, which may be preferred if there is no person willing to accept this responsibility or if privacy concerns are an issue (an individual agent's proper name and street address volition be a thing of public record).
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iii. Appoint the board of directors.

If the initial directors are non named in the articles of incorporation, the incorporator tin and should engage the board through a written action.

Under California police, a nonprofit lath may be composed of equally few as one managing director, only the IRS may take effect with granting recognition of 501(c)(three) condition to a nonprofit with only i managing director. It is commonly recommended that nonprofits have between three and 25 directors.

These directors – lath members – should sympathize their legal duties and responsibilities to act with reasonable intendance and in the best interests of the organization while providing direction and oversight over the arrangement's activities, finances, officers, and legal compliance. Bridgespan offers valuable resource on nonprofit corporate governance, including BoardSource's Ten Basic Responsibilities of Nonprofit Boards ($29). Nosotros recommend too looking at the Board Source website and for more information and resources nearly boards, many of which are complimentary.
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4. Draft the bylaws and conflict of interest policy.

A corporation'south 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 authorities government, funders, and other interested stakeholders.

Bylaws typically comprise specific provisions detailing:

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

(b) How directors are elected or otherwise selected (e.one thousand., by a majority vote of directors at the annual board meeting);

(c) How the lath may have an activity (e.g., past a bulk vote of directors at a lath meeting or by unanimous written consent);

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

(e) How board meetings are conducted (e.g., the chair of the lath presides or pursuant to Robert'south Rules, which we generally discourage for most nonprofits);

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

(g) The duties and responsibilities of each officer;

(h) Whether the corporation has voting members or is a non-membership corporation, either of which should exist clearly stated in the bylaws;

(i) The authorization of board and non-board committees (eastward.g., committees tasked to human activity with the authority 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

(g) The reports due to directors and members, if any (e.g., financial reports).

Bylaws may also include the corporation's specific purpose or mission argument (which might replicate or make more than specific the purpose argument in the articles of incorporation) and the corporation'southward core values if they would be viewed equally helpful in guiding the board on its leadership and decision-making – though the corporation should also be mindful to avoid inconsistencies between 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 demand to incorporate boosted provisions regarding member rights and processes. Nonprofits because a voting membership structure may want to first discuss such structure with a lawyer, particularly if they do not wait their members to actively participate in meetings and regularly exercise their rights to vote for members of the lath of directors.

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

Separately articulated policies normally supplement the bylaws in addressing key governance and management issues. For example, although non required past federal tax law, information technology 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 have a disharmonize of interest policy, it must describe its policy regarding conflicts of interest in the IRS Course 1023. Accordingly, information technology would be advantageous for most nonprofits to adopt a policy. The IRS provides a sample policy in Appendix A of the Instructions to Form 1023, which tin can exist a helpful starting point though notation that this sample policy does not necessarily business relationship for state law requirements such as the procedural requirements under California law for approving certain self-dealing transactions involving directors.
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5. Take the initial board actions at a board meeting or by unanimous written consent of the directors.

The board should take the following actions:

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

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

(d) Approve establishing a banking concern account;

(due east) Approve applying for federal and land revenue enhancement-exempt condition;

(f) Corroborate reimbursement of startup expenses (if applicable); and

(yard) 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 take already taken some of these actions at the time that he or she appointed the initial board, in which case the board can review and confirm those prior actions if desired.

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

An officeholder or authorized 3rd-political 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 Full 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 subsequently receipt of assets. The CT-ane Form and Instructions are available 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 can submit copies of the Form 1023 application and federal determination letter (Pace 9) afterward receiving the determination letter to complete your filing with the Registry.
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eight. File the Argument of Information (Grade SI-100) with the Secretary of State.

The Statement must initially be filed inside 90 days of the date of incorporation. This biennial filing requirement, which identifies the organization's accost, primary officers, and amanuensis for service of process, can exist filed online or by mail. (You can discover information and instructions on completing the Statement of Information hither.)
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9. Apply for federal taxation exemption with the Internal Revenue Service (IRS) and receive a determination letter from the IRS.

Completing the Form 1023 application for exempt condition under Internal Revenue Lawmaking (IRC) Department 501(c)(3) may be the nigh challenging part of the startup process. Information technology is a legally-driven and comprehensive inquiry covering x Parts and 8 Schedules.

Every bit of January 31, 2020, the IRS revised Form 1023 to be an online backup course that must exist filed electronically at Pay.gov. While substantively the new electronic Form 1023 is by and large similar to its paper version predecessor, there are some new changes with the electronic form and eastward-filing process and some wrinkles that may be addressed in the future. Luckily, the IRS has added new tools and instructional videos to their website to help yous understand the e-filing process. You volition be required to create an business relationship at Pay.gov in which y'all will be able to preview and download the form, save your progress, and return to the form at a later time. Delight note that although you lot volition be able to save your progress, the application will not allow you to advance to the next page until you have completed all of the questions on the electric current folio, including entering required descriptions or explanations or completing required schedules.

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

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

Form 1023 also requires information regarding (a) organizational construction; (b) compensation and other financial arrangements with officers and directors, and certain highly paid employees and contained contractors; (c) members and other individuals and organizations that receive benefits from the system; (d) organizational history (due east.g., an organisation that was spun off or previously fiscally sponsored by another organization may need to complete an additional schedule as a successor organization); (east) specific activities; and (f) bodily and/or projected statement of revenues and expenses (which should be consequent with any identified activities).

Part 8 is designed to determine the system's nomenclature as either a private foundation or a public charity. Public charity status is generally the more than favorable tax status but requires an organization to meet certain requirements. For well-nigh organizations, this ways passing a public support test over an ongoing five-twelvemonth measuring period. For organizations that volition receive a large bulk of their support from few sources over their first five years, monitoring and managing of the public support ratio may be critically important. Public Clemency Status Simplified (a piddling) is a helpful online resource from Insight Heart for Community Economic Development.

If y'all call up that your nonprofit volition not bring in gross receipts of more than $50,000 per year during the next three years, and has not had gross receipts of more than $50,000 in any of the by three years, you may be eligible to file Class 1023-EZ. The total criteria are explained here. Similar Form 1023, the 1023-EZ must be filed electronically. You can discover instructions on this site.

The filing fee for Form 1023 is currently $600. The filing fee for Course 1023-EZ is $275. Fees are paid online here.
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10. Use for California tax exemption with the California Franchise Tax Board (FTB) and receive an affirmation of exemption letter of the alphabet from the FTB.

Organizations with a 501(c)(3) federal determination letter can request California recognition of tax exemption under California Acquirement & Taxation Code section 23701d from the FTB by filing Grade 3500A along with a copy of the IRS determination alphabetic character. Yous can detect instructions hither. The FTB will generally recognize the organization's exemption from state income taxes as of the federal effective date. An arrangement that does not accept a 501(c)(3) federal determination alphabetic character is otherwise required to file the more complicated Form 3500 for state income taxation exemption. At that place is no fee for either Course 3500A or Form 3500.
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Bonus: Additional Resources

IRS "StayExempt.org" peculiarly for 501(c)3s
Nolo Printing: How to Form a Nonprofit Corporation in California
California Attorney General'south "Guide for Charities"
Nonprofit Kit for Dummies
Why Join the California Clan of Nonprofits

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Do you demand to work with an attorney to start a nonprofit?

Although the majority of nonprofits are ready without the aid of lawyers, information technology's easy to make mistakes that become costly to correct later on (such as 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 listing of firms and consultants who are CalNonprofits members in the Professional person Directory online. (Search for "Starting a Nonprofit and Staying Compliant.")
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What are some alternatives to starting a nonprofit?

Now that y'all know how to start a California nonprofit, yous should thoughtfully consider whether this is the correct choice for your ideas and for the public do good. In that location may exist other ways to conduct out your dreams, including working under the umbrella of an existing nonprofit. I often-overlooked alternative is fiscal sponsorship, a relationship that may allow a group to firm a charitable project within an existing nonprofit with the ability to spin information technology off at a later engagement. For more information on fiscal sponsorship, see Fiscal Sponsorship Basics from the Bar Association of San Francisco. Very pocket-size operations may consider forming themselves as an unincorporated association. You lot may also find that starting a for-profit visitor will serve your purposes ameliorate than a nonprofit structure.

Once you have started your nonprofit, be sure to look at CalNonprofits' Nonprofit Compliance Checklist, a regularly updated listing of all the federal and country forms required from nonprofits, including links to all the forms.
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Most THE AUTHORS: Emily Chan and Factor Takagi

Attorneys Emily Chan and Gene Takagi wrote this guide for the California Association of Nonprofits as part of their commitment to pro bono work and community service.

Emily Chan is of counsel with Adler & Colvin and a former recipient of the Outstanding Nonprofit Lawyer – Young Attorney award recognized by the Nonprofit Organizations Committee of the American Bar Clan. Gene Takagi is a principal attorney of NEO Law Group, a function-fourth dimension lecturer at Columbia University, and a contributing editor of the Nonprofit Law Blog.

You can reach Emily at www.adlercolvin.com or 415-421-7555
You lot can reach Gene at world wide web.neolawgroup.com or 415-977-0558
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