How to Form a Colorado 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 must form a Colorado nonprofit corporation and apply for tax-exempt status from the IRS and the state of Colorado.

The process of forming and maintaining a Colorado nonprofit can be complicated and is specific to each organization. But in general, you can follow the steps below to legally create your Colorado nonprofit corporation. If you'd like a helping hand, you can use our online nonprofit formation service to set up your nonprofit.

1. Choose a Name for Your Colorado Nonprofit Corporation

You've decided to create a nonprofit and now it needs a name. While this step is exciting, you'll still need to keep Colorado's nonprofit laws in mind when choosing a name for your nonprofit. Like other states, Colorado has restrictions on what you can name your corporation.

Nonprofit name must be distinguishable. The name of your nonprofit corporation can't be the same as the name of any other entity on file with the Colorado Secretary of State (SOS). You can conduct a name availability search on the SOS website to see whether your proposed name is available. (Colo. Rev. Stat. § 7-90-601 (2024).)

Nonprofit name isn't required to include an entity designator. Your nonprofit's name can but doesn't need to contain the terms "corporation," "incorporated," "company," or "limited" or the abbreviations, "corp.," "inc.," "co.," or "ltd." (Colo. Rev. Stat. § 7-90-601 (2024).)

Name reservation. You can reserve an available name for 120 days by filing a Statement of Reservation of Name with the SOS. You must file the name reservation online. You can renew the name reservation. As of 2024, the fee to reserve an entity name is $25. (Colo. Rev. Stat. § 7-90-602 (2024).)

Using a trade name. 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 nonprofit—sometimes called a "trade name," "DBA," (short for doing business as), "assumed name," or "fictitious business name." Unlike other states, Colorado doesn't require nonprofits to register their trade name. While not required, you can choose to register your nonprofit's trade name by submitting a Statement of Trade Name of a Reporting Entity to the SOS. As of 2024, the filing fee for a trade name statement is $20. (Colo. Rev. Stat. § 7-71-107 (2024).)

For more information on names, see the business name FAQ page on the SOS website.

2. Appoint the Initial Directors for Your Corporation

In Colorado, you must have a board of directors unless your articles of incorporation explicitly says otherwise. Every board must have at least one director. You should aim to have an odd number of directors to avoid any voting ties.

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.

(Colo. Rev. Stat. §§ 7-128-101 and following (2024).)

3. File Colorado Nonprofit Articles of Incorporation

You create your nonprofit corporation by filing Articles of Incorporation for a Nonprofit Corporation with the SOS. The articles must include basic information such as:

• the name of the nonprofit
• the name and street address of the nonprofit's registered agent
• affirmation of consent of the registered agent
• the principal office address of the nonprofit
• the true name and address of each incorporator (the person who signs the articles—it doesn't have to be a member of the nonprofit)
• whether the nonprofit will have voting members, and
• provisions regarding the distribution of the nonprofit's assets when it dissolves.

(Colo. Rev. Stat. §§ 7-122-101 and 102 (2024).)

You can add additional language to the articles such as the purpose for which the nonprofit was created.

Include IRS-Specific Nonprofit Language in Your Articles of Incorporation

To receive 501(c)(3) 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.

The online articles on the SOS website don't contain the tax-exempt language required by the IRS. You must add this specific language to the form yourself. You can add the dissolution clause in Section 7, Distribution of Assets, which includes a large blank space to be filled in. The other clauses can be added as an attachment in the "Additional information" section.

For guidance on 501(c)(3) language, check out the IRS's publication on the suggested language for corporations to use in their articles of incorporation. You can also find sample language to use approved by the IRS in the Instructions for IRS Form 1023-EZ, (see Part II).

How to File Your Articles of Incorporation With the SOS

You must file your nonprofit's articles of incorporation online with the SOS. You can find instructions and a checklist on the SOS website.

As of 2024, the filing fee for nonprofit articles of incorporation is $50.

4. Prepare Bylaws for Your Colorado Nonprofit Corporation

The next step in forming your nonprofit is drafting bylaws for your nonprofit corporation that comply with Colorado law. In Colorado, nonprofits aren't required to adopt bylaws. But it's highly recommended that your nonprofit create this essential organizational document. (Colo. Rev. Stat. § 7-122-106 (2024).)

Your bylaws contain the rules and procedures your corporation will follow for:

• holding meetings
• electing officers and directors
• adopting, amending, and repealing the bylaws, and
• taking care of other corporate formalities.

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

5. Hold a Meeting of Your Board of Directors

After you incorporate your nonprofit, you should hold a meeting of your board of directors. Your first board meeting is usually referred to as the "organizational meeting of the board." In this organizational meeting, the board should make all the important initial decisions to get your nonprofit up and running. 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.

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

6. 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 later).

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

7. 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. The state has many resources to help you with licensing and permits.

For state license information, check out the following resources:

• the Colorado Department of Regulatory Agencies website, and
• the Resource Book on the Colorado Small Business Development Center Network website.

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).

8. Get Your Federal and State Tax Exemptions

Now that you have created your nonprofit corporation, you can obtain your federal and Colorado 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 get your 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.

Colorado State Tax Exemptions

When you receive your 501(c)(3) determination letter from the IRS, your organization is automatically exempt from Colorado corporate tax.

However, you must file an application with the Colorado Department of Revenue (DOR) for a Certificate of Exemption for state state sales taxes. In general, 501(c)(3) organizations will be approved for a sales tax exemption in Colorado. You'll need to attach your IRS determination letter along with your application for your certificate. See the DOR's Colorado charitable organizations webpage for more details.

Contact local taxing authorities for exemptions from local sales and property taxes.

Other State Reporting and Registration Requirements

In Colorado, if your nonprofit plans to solicit contributions or to participate in charitable promotions, then it must register with the SOS. You must register your nonprofit online. See the SOS's instructions for registering as a charitable organization for more information. (Colo. Rev. Stat. § 6-16-104 (2024).)

If your nonprofit fundraises or receives charitable contributions in other states, then you might have to register your nonprofit for fundraising in those states as well.

Visit the SOS's charities and fundraisers page for links and instructions to register your nonprofit as well as other resources.

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).

9. File Your Nonprofit's Periodic Report With the SOS

Colorado nonprofit corporations must file a Periodic Report with the SOS each year. The report is due during the three-month period beginning with the first day of the corporation's anniversary month of formation. For example, if your nonprofit was formed on June 6, then your nonprofit's periodic report would be due the next year by August 31.

You must file this periodic report online at the SOS's website. As of 2024, the fee to file a periodic report is $25.

If you sign up for the Business Division's email notification service, an email notice that a Periodic Report is due will be sent ahead of time.

(Colo. Rev. Stat. § 7-90-501 (2024).)

Additional Guidance About Your Colorado Nonprofit

Starting up and running a nonprofit corporation is no easy task. It's critical that you properly set up your Colorado nonprofit both with the state and the federal government. Your tax-exempt status depends on your nonprofit following all of the federal and state laws. Moreover, you'll want to create a nonprofit that people feel comfortable donating their time and money to.

If you're looking for specific guidance on nonprofit questions and issues, see our sections on starting a nonprofit corporation and managing a nonprofit.

If you want to further educate yourself on nonprofit matters, 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, consider working with a Colorado attorney who has 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. You should also talk to a tax professional to make sure your contributions and expenses are appropriately logged and that your tax filings are accurate.