How to Form an Arizona Nonprofit Corporation

Most nonprofits are 501(c)(3) organizations, which means they're formed for religious, charitable, scientific, literary, or educational purposes and are eligible for federal and state tax exemptions. To create a 501(c)(3) tax-exempt organization, you need to form an Arizona nonprofit corporation and apply for tax-exempt status from the IRS and the state of Arizona.

Follow the steps below to legally create your Arizona nonprofit.

1. Choose a Name for Your Arizona Nonprofit Corporation

The first step to creating an Arizona corporation is an exciting one. You get to pick a name for your nonprofit. When choosing a name, you'll need to follow the state's laws for corporation names.

Nonprofit name must be distinguishable. Under Arizona law, the name of your nonprofit corporation must be distinguishable (different) from the names of other businesses registered, reserved, or on file with the Arizona Corporations Commission (ACC). You can do a name availability check on the ACC's eCorp Search. (Ariz. Rev. Stat. § 10-3401 (2024).)

Name reservation. You can reserve an available name for 120 days by filing an Application to Reserve Corporation Name with the ACC. You can reserve your nonprofit name online or by mail. As of 2024, the filing fee is $10 if filed by mail or $45 if filed online ($10 filing fee plus $35 expedite fee). (Ariz. Rev. Stat. § 10-3402 (2024).)

Using a DBA. When conducting business, you don't have to use your nonprofit's legal name registered on its articles of incorporation. Instead, you can use a different name for your business—sometimes called a "DBA," (short for doing business as), "trade name," "assumed name," or "fictitious business name." Unlike other states, Arizona doesn't require you to register your trade name. However, you can register your name online with the Arizona Secretary of State (SOS) for a $10 fee (as of 2024). When you register your trade name, you let others know that the name is being used in Arizona. (Ariz. Rev. Stat. § 44-1460 (2024).)

For more information on name requirements and restrictions for nonprofits, see Instructions C011i to Articles of Incorporation – Nonprofit.

2. Appoint the Initial Directors for Your Corporation

In Arizona, you must have at least one director on your board. However, you can choose to have more directors. You should aim to have an odd number of directors to prevent any ties in a vote. Your corporation's articles of incorporation or bylaws can outline specifics for directors, such as:

• the number of directors (it can be a set number or a range)
• the rights, duties, and powers of directors
• the term of directors
• the qualifications for directors
• the election, designation, and appointment of directors, and
• the meetings of the board of directors.

(Ariz. Rev. Stat. §§ 10-3801 and following (2024).)

3. Appoint an Arizona Statutory Agent

Every Arizona nonprofit corporation must have an agent for service of process in the state. Arizona calls this agent a "statutory agent" but most other states use the term "registered agent." A statutory agent agrees to accept legal papers on the corporation's behalf if it's sued. They must have a physical street address in Arizona, not a post office box.

The statutory agent must be either:

• an individual who resides in Arizona
• a domestic business or nonprofit corporation, or
• a foreign business or nonprofit corporation authorized to transact business in Arizona, or
• a domestic or foreign LLC authorized to do business in Arizona.

(Ariz. Rev. Stat. § 10-3501 (2024).)

Small nonprofit corporations typically name a director or officer to serve as the initial agent.

Your nonprofit's statutory agent must accept the appointment in writing, which is done by completing and submitting the Statutory Agent Acceptance form with your Articles of Incorporation. If you submit your articles online through the ACC's eCorp system, the agent can accept the appointment through the ACC's eCorp dashboard.

The ACC has a FAQ page about statutory agents on its website with more information.

4. Prepare and File Your Nonprofit Articles of Incorporation

To legally establish your nonprofit corporation, you must file Articles of Incorporation - Nonprofit with the ACC. Your articles of incorporation must include the following information:

• the nonprofit's name
• the "character of affairs" the nonprofit intends to conduct in Arizona
• the names and addresses of the nonprofit's initial directors
• the name, address, and signature of the nonprofit's statutory agent
• the nonprofit's business address (physical or street address) if different from the statutory agent address
• the name and address of each incorporator
• whether the nonprofit will have members or not, and
• the signatures of all incorporators.

(Ariz. Rev. Stat. § 10-3202 (2024).)

Include IRS-Specific Nonprofit Language in Your Articles of Incorporation

To receive tax-exempt status from the IRS, you'll need to have additional specific language in your articles, including:

• a statement of purpose that meets IRS requirements
• statements that your nonprofit will not engage in activities unrelated to its exempt purposes or in prohibited political or legislative activity, and
• a dissolution clause dedicating the corporation's assets to another 501(c)(3) organization or to the government upon dissolution.

For guidance, the IRS has published suggested language for corporations to use in their articles of incorporation.

The ACC has an Articles of Incorporation form for nonprofit corporations on the ACC website. This form has the minimal information necessary to create a nonprofit corporation in Arizona. It doesn't include language required by the IRS to obtain 501(c)(3) federal tax-exempt status or have space to add it. As a result, you should create your own articles including the IRS-required clauses. You can use the articles of incorporation form as a guide and add the required clauses to it. Add each as a separate article.

You can also find sample language for these clauses approved by the IRS in the Instructions for IRS Form 1023-EZ, (see Part II).

How to File Your Articles of Incorporation With the ACC

You can file a copy of your articles online through the ACC's eCorp website. You'll need to input the data in your articles and then upload the pdf copy of your articles. Alternatively, you can file by postal mail.

You must submit a Statutory Agent Acceptance form M002 and a Certificate of Disclosure when you file your articles with the ACC. If you electronically file through eCorp, you'll complete and file the certificate of disclosure online. If you file by mail, you must also include a Cover Sheet.

As of 2024, the filing fee for Articles of Incorporation for a nonprofit is $40.

5. Publish Notice of Your Nonprofit's Incorporation

Within 60 days after the ACC approves the filing of your articles, you must publish a copy of your articles of incorporation with a local newspaper. The ACC will send you instructions regarding this publication requirement with your approval letter. Expect to pay an additional fee to publish your notice. The ACC has a list of approved newspapers on its website.

You don't need to file an affidavit or any paperwork with the ACC proving that you fulfilled the publication requirement.

The publication requirement doesn't apply to corporations that are located in a county with a population of more than 800,000 people. In that case, the ACC will input the approval of your nonprofit's articles in its database, which automatically satisfies the publication requirement. As of 2024, only Maricopa and Pima counties have a population exceeding 800,000 people.

(Ariz. Rev. Stat. § 10-3203 (2024).)

6. Prepare Bylaws for Your Arizona Nonprofit Corporation

Before you file your articles of incorporation, you'll need to have bylaws for your nonprofit that comply with Arizona law. All nonprofits in Arizona are required to adopt bylaws. (Ariz. Rev. Stat. § 10-3206 (2024).)

Your bylaws contain the rules and procedures your corporation will follow for holding meetings, electing officers and directors, and taking care of other corporate formalities required in Arizona. Your bylaws don't need to be filed with the state—they're your internal operating manual.

For more information on this nonprofit formation document, see our article about articles of incorporation, bylaws, and organizational minutes.

7. Hold a Meeting of Your Board of Directors

After you incorporate your nonprofit, you must hold a board meeting. Your first board meeting is usually referred to as the "organizational meeting of the board." The board should take such actions as:

• approving the bylaws
• appointing officers
• setting an accounting period and tax year, and
• approving initial corporation transactions, such as opening a corporate bank account.

(Ariz. Rev. Stat. § 10-3205 (2024).)

After the meeting is completed, be sure to create meeting minutes that accurately record the actions taken by the board.

8. Apply for an EIN From the IRS

Your nonprofit corporation must obtain a federal employer identification number (EIN). You'll need an EIN to complete your application for federal tax exemption (discussed below).

You can obtain an EIN by completing an online EIN application on the IRS website. There's no filing fee.

9. Obtain the Necessary Business Licenses

Depending on your nonprofit's activities and location, it might need to obtain local and state business licenses or permits. For local licenses, check with the clerk for the city or town where the nonprofit's primary office is located (or county if it's in an unincorporated area). For state license information, check the business licensing section of the Arizona Commerce Authority website.

10. Obtain Your Federal and State Tax Exemptions

Now that you have created your nonprofit corporation, you can obtain your federal and Arizona state tax exemptions. Here are the steps you must take to obtain your tax-exempt status.

File Your Form 1023 Federal Tax Exemption Application

To obtain federal tax-exempt status from the IRS, you'll need to complete and file IRS IRS Form 1023, Application for Recognition of Exemption Under Section 501(c)(3) of the Internal Revenue Code. This long and detailed form asks for a lot of information about your organization, including its history, finances, organizational structure, governance policies, operations, activities, and more.

Smaller nonprofits might be eligible to file Form 1023-EZ, Streamlined Application for Recognition of Exemption under Section 501(c)(3) of the Internal Revenue Code. This application is a much simpler, shorter form that's filed online. Only smaller nonprofits—those with projected annual gross receipts of less than $50,000 and total assets of less than $250,000—are eligible to use the streamlined 1023-EZ application.

See the IRS website for more information on the Form 1023 and Form 1023-EZ filing requirements.

Arizona State Tax Exemptions

In general, once a nonprofit receives 501(c)(3) tax-exempt status from the IRS, it should be automatically exempt from Arizona income tax. However, your nonprofit could need to apply with the Arizona Department of Revenue (DOR) to obtain an exemption from state sales and use taxes—called the "transaction privilege tax" (TPT).

Arizona doesn't offer nonprofits a blanket exemption from the TPT. Instead, Arizona makes specific exclusions for the transaction privilege tax based on the type of activity. In general, Arizona nonprofits aren't taxed on sales they make but they are taxed when sales are made to them.

For details, see the DOR's Nonprofit and Qualifying Healthcare webpage.

Other State Reporting and Registration Requirements

In Arizona, nonprofits aren't required to register to solicit or fundraise in the state. However, Arizona nonprofits that solicit or receive donations in other states might have nonprofit filing and reporting obligations in those states.

For more information about fundraising registration requirements in all 50 states, see Nonprofit Fundraising Registration Digital Guide, by Ronald J. Barrett and Stephen Fishman (Nolo).

11. File Your Nonprofit's Annual Report With the ACC

Every Arizona nonprofit corporation must file an annual report each year with the ACC so the information on file about your organization is kept up to date. The report is due by the anniversary date of your corporation's formation. (Ariz. Rev. Stat. § 10-11622 (2024).)

You can file the report online through the ACC's eCorp system or by mail. As of 2024, the filing fee is $10.

Additional Guidance About Your Arizona Nonprofit

There's a lot that goes into running a nonprofit. Your tax-exempt status depends on your nonprofit following all of the federal and state laws. In addition, you'll want to create a nonprofit that people feel comfortable donating their time and money to. For specific guidance on nonprofit questions and issues, see our sections on starting a nonprofit corporation and managing a nonprofit.

If you're looking for more education, check out How to Form a Nonprofit Corporation, by Anthony Mancuso (Nolo). This book has line-by-line instructions on how to complete Form 1023, how to create your nonprofit's bylaws, and more. If you want more personalized legal help, talk with an Arizona attorney with experience advising nonprofits. An experienced lawyer can help you properly manage your tax exemptions, meet your filing deadlines, and advise you on federal, state, and local laws for nonprofits.