Written by Ivor Blewitt, blogger.
If you are new to the idea of starting a non-profit, it can be quite intimidating to churn through the plethora of information available online and find all you need. Luckily, Donorbox, an all-inclusive fundraising software, can help you learn how to start a non-profit, where to start, and how to raise funds. But first, what exactly defines a non-profit?
Here is a brief guide on starting a non-profit in the United States of America.
What is a non-profit?
A non-profit can be stated as an organisation, exempt from tax laws under 501(c)(3) and is set for various social issues, and is usually dependent on charity. As the name suggests, non-profit organisations do not work for any personal motives or profits but to bring attention, aid, and resources to social causes as required.
Most widely known non-profits include Red Cross, World Wildlife Fund, and more.
And now that we have this cleared, how can one start a non-profit, and is it costly to create one? Well, the cost and resources required usually depend on the size and are not relatively very high.
First, you will need to choose a unique business name, highlights the purpose of your non-profit, and is not already taken. You will then be required to file and pay for your articles for incorporation and apply for state-federal tax exemptions. Upon creating your by-laws and applying for EIN (Employer Identification Number), assign directors for the non-profit, and apply for any business licenses or permits as required.
You can either opt for a full non-profit organisation or otherwise use a few profits to pay the employees.
Now that all is clear, where should you set up your non-profit? Here is a list of the best states in the US to start a non-profit.
Being home to more than 5 500 non-profits and 3 000 public charities, Delaware is nothing short of being the States’ non-profit capital. Delaware’s state collectively helps raise more than 6 billion dollars in annual revenue utilising its astounding 12 percent of the workforce that works for charities!
Why is setting a non-profit in Delaware so easy? First, the ease and flexibility of establishing an organisation in Delaware can be owed to the comparatively relaxed laws of the states. For instance, Delaware requires a non-profit organisation only to have one director, while several other states might demand a number as high as three!
Further, the total cost of incorporating the organisation can be as lows as $89. The state will charge an additional $9 for extra pages, and an optional $50 – $1 000 expedite fee. The state expedite is $50 – $1 000 one-hour expedite.
All considered, it is not too costly an affair.
Florida has a record of incorporating more than 12 000 non-profits every year for ten years! Maybe it is because starting a non-profit in Florida is fairly easy and flexible. It does not require residency proof of the directors or a membership to start a non-profit, which is good news for organisations around the States that want to settle in Florida.
To set a non-profit organisation in Florida, you will need to name your organisations, state your directors’ names (at least 18 years old) in the bylaws, and a single 15-year-old director can be allowed if permitted by the organisation’s bylaws. Also, a registered agent is required who will make handling legal documents easy for you!
You will have to pay $35 for registering under Florida articles of incorporation and for an agent, along with applying for EIN, $275 for Form 1023-EZ, and $600 for Form 1023-EZ. Apple for tax exemption, charitable fundraising, a non-profit bank account, and you are ready to shape the world for the better and benefit from the $11.1 billion given to charity every year in Florida, according to National Center for Charitable Statistics.
California boasts a huge 7.5 percent of employees employed in the non-profit organisation niche and accounts for a whopping $608.34 billion worth of assets.
Misguidedly considered as one of the difficult states to start a non-profit in, establishing non-profit organisations in California is anything but challenging. All you need to do set a non-profit in this state with a turnover of $298.4 billion in annual revenues is to name your organization and corporate structure.
After appointing your board of directors, with three directors for maximum chances to get tax exemption, you will need to establish a registered agent for legal issues. Then file California Articles of Incorporation and a file for tax exemption. You will still need to pay $800 for income tax each year. Then file an initial report, apply for EIN, establish bylaws, and register with CATG. Upon applying for tax exemption and setting a non-profit bank account, you are done with the process!
Regardless of Nevada having the lowest percentage of employees deployed in non-profit organisations, Nevada has done pretty well considering its tens of thousands of charities and non-profit organisations that are doing well for social reform and changes. Nevada’s non-profit employment increased significantly in the year 2018.
With an incorporation fee of $50 and an optional, $125 – $1 000 expedite fee, starting a non-profit in Nevada is a fairly simple task. With moderate means to pay for $125 24-hour expedite, $500 two-hour expedite, and $1 000 one-hour expedite, Nevada non-profits work well despite its low employment rate in non-profit organisations.
After paying an initial list filing fee (Initial List of Officers and Directors, Nevada State Business License Application, Charitable Solicitation Registration) of $50, $200 for the business license fee for non-exempt organisations, and an optional $125 – $1 000 expedite payment you are all set to go. The price for 501(c) is $400 and an additional $850 IRS fee.
With more than 12 percent of the state’s population working under about 40 000 non-profits, Wisconsin is presently one of the best states to establish a non-profit. The state generates as much as $49 billion annually with non-profit revenues and holds assets worth $91 billion owing to the non-profits sector.
With an incorporation price of $35, Wisconsin is a pretty good state to start a non-profit. As you are done with naming your organisation and have employed a minimum of three directors, you can appoint a registered agent and file for Articles of Incorporation. It is also important to apply for business licenses and permits for establishing your non-profit.
The state demands a fee of $400 for 501(c) or $850 IRS fee. You will need to pay an additional $20 for Wisconsin business tax registration and $15 for Wisconsin charitable registration.
Starting a non-profit can be simple and hassle-free if you have all your necessary documents ready beforehand and enough funds to pay for all the fees. With Florida, California, and Delaware topping the yearly revenue and employment rates, you can depend on these best states to forward your social cause.
To find out more about starting your own non-profit, head here.