East End Chamber of Commerce Starting a Non-Profit East End Chamber of Commerce

In this guide you will find tips for: Conducting research Incorporation & State forms Filling for Federal Tax-Exempt Status

1. Do your research! In todays economy, starting and sustaining a non-profit can be a challenge and the struggle to find funding is extremely limited as there are an estimate of one million charitable non-profits in the United States. Before you start you will need to identify and quantify the need for your specific organization and find out if there are other groups out there who are already engaged and/or doing the same work, making sure that the new non-profit is the right solution for the community you are trying to reach.

Questions to ask yourself: Is there a need in the community for a new nonprofit with the mission we envision? Do we have a solid plan for financing the organization during start-up and the future? What are the costs to start the organization? Where will I get not only start-up funding but also operational funding to continue thereafter? Helpful resources

2. Build a solid foundation WHO: Structuring your non-profit will take more than a few people…having lots of people willing to help as board members, volunteers etc. will you a better chance of success. WHAT: Continue to develop your detailed business plan considering your mission, economic climate, organizational structure, 3-year budget, marketing plan and resource development/fundraising . WHERE: can you get quality assistance? Seek help from an attorney or accountant who has direct experience working with nonprofits. Your state association of nonprofits of nonprofits may offer educational workshops on starting a nonprofit or be able to connect you with local experts who can assist. 2. Build a solid foundation WHEN: should you file paperwork? Step 1: Incorporating at the state level; completing state forms required to create a non-profit corporation. Step 2: Securing your tax exempt status from the federal government (501 (c)(3)) Step 3: Filing tax exempt at the state and local level (which you can only do AFTER the IRS issues a "Determination Letter" of your organization's tax-exempt status) Ongoing paperwork: Annual fillings with state entities (to maintain non-profit corporations status and to register for fundraising purposes. Annual federal reporting to IRS (Form 990) HOW: do you create and sustain a non-profit organization? Depending on your business plan… if the organization can achieve its mission in less than three years, it would likely be better as a program housed at an existing organization.

Incorporation and State Loans State laws and regulations for non-profits vary from state to state. For help you can connect with your local state association of nonprofits. Consulting with local legal counsel or CPAs experienced with charitable, tax-exempt organizations is essential to ensure you follow the proper process for starting your organization. General Steps Reserve/register intended name of the nonprofit corporation to make sure that no one else has created a nonprofit of the same name. File Articles of Incorporation (called a "certificate of incorporation" in some states.) Some states require supplemental information, such as: Certificate of Disclosure Proof of Corporate Name Filing fees - Be sure to follow the instructions on the forms and pay all applicable filing fees. Incorporating a non-proft

4. Filling for Federal Tax-Except Status The organization must be organized as a trust, a corporation or an association for the IRS to recognize an organization’s exemption and be a 501 (c)(3) organization recognized by the IRS as tax-exempt. Federal forms to keep in mind: Form SS-4 : Federal Employer Identification Number (EIN) (needed for IRS, banking, hiring staff etc.) Form 1023-EZ :For small organizations with gross reeipts of $50,000 or less and assets of $250,000 or less (exceptions include churches, schools, and organizations with mailing addresses outside the US) usually a fee of $275 Form 1023 : regular application for Tax- Exemption Form 2848 : Power of attorney

501 (c)(3): Portion of the US Internal Revenue Code that allows for federal tax exemption of nonprofit organizations, specifically those that are considered public charities, private foundations or private operating foundations. The most distinct provisions unique to Section 501 (c)(3) organizations as compared with other tax exempt entities is the tax deductibility of donations. There’s a deduction for federal income tax purposes, for donors who make charitable contributions to most types of 501 (c)(3) organizations To receive 501 (c)(3) status the organization must apply to the IRS for recognition by filling Form 1023. More Information

Difference: Unlike 501(c)(3) charities, which can operate ancillary activities such as festivals or bake sales for profit, a 501(c)(6) organization may not oversee any profit-generating enterprises. The organization is also prohibited from offering the same type of services or products sold by its membership. 501 (c)(3) vs. 501 (c)(6)

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