Most nonprofits are 501(c)(3) corporations, which means they are 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, first you need to form a Florida corporation, then you then apply for tax-exempt status from the IRS and the state of Florida. Here are the details.
First, you need to form a nonprofit corporation under Florida state law.
In Florida, your nonprofit corporation must have three or more directors who are not related to each other.
The name of your nonprofit corporation cannot be the same as the name of another nonprofit corporation on file with the Florida Department of State. To see if your proposed name is available, you can search Florida's name database.
In Florida, your nonprofit corporation name must contain one of the following words: "corporation," "incorporated," or their abbreviations. It may not contain the word "company" or its abbreviation, "co."
Every Florida nonprofit corporation must have an agent for service of process in the state. This is an individual or corporation that agrees to accept legal papers on the corporation's behalf if it is sued.
The agent must have a physical street address in Florida, not a post office box. Small nonprofit corporations typically name a director or officer to serve as the initial agent. A different agent can always be named later. The agent must consent to the appointment.
You must create and file nonprofit articles of incorporation with the Florida Department of State, Division of Corporations. The Division of Corporation requires that articles of incorporation include:
The incorporator must sign the articles and the registered agent must sign its consent to act as agent for service of process.
To receive 501(c)(3) tax-exempt status from the IRS, your corporation must have certain specific language in its articles, including:
The Department of State has an articles of incorporation form on its website which you can fill out online and file electronically. However, this online form does not include the clauses required by the IRS. Nor does it include space to add these three clauses, so it should not be used. You need to create your articles yourself and add the IRS-required clauses. You can find sample language for these clauses approved by the IRS in the Instructions for IRS Form 1023-EZ, (see Part II).
You can create your articles yourself from scratch and file them by postal mail. You can use the sample fillable pdf articles form on the Department of State website as a guide. This form does not include the three IRS-required clauses. Add the IRS-approved purpose clause language in Article III and add new Articles VIII and IX including the prohibited activity and dissolution clauses required by the IRS. Then print out the form and file it by postal mail.
The filing fee is $70.
For more information on IRS requirements for tax exemption, including sample language, consult How to Form a Nonprofit Corporation, by Anthony Mancuso (Nolo).
You'll need to prepare bylaws that comply with Florida law and 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 Florida.
For more information, see Nolo's article Nonprofit Bylaws, or, for help creating your bylaws, see Nolo's book How to Form a Nonprofit Corporation, by Anthony Mancuso (Nolo). Your bylaws do not need to be filed with the Florida Department of State -- they are your internal operating manual.
Your first board meeting is usually referred to as the organizational meeting of the board. The board should take such actions as:
After the meeting is completed, minutes of the meeting should be created. Set up a corporate records binder to hold the corporation's articles, bylaws, consent forms, minutes and other important documents.
Your nonprofit corporation must obtain a federal employer identification number (EIN). You may obtain an EIN by completing an online application on the IRS website. There is no filing fee.
Depending on the type of activities your nonprofit intends to carry on and where it is located, it may need to obtain a local and/or state business license or permit. On the state's MyFlorida.com website you can find more information about business licenses.
Florida nonprofit corporations must file an annual report with the Department of State between January 1 and May 1 of every year. The corporation's first annual report will be due between January 1st and May 1st of the calendar year following the year the corporation is formed and must be filed online. The fee to file an annual report is $61.25. Reminder notices to file the annual report will be sent to the email address you provide in your articles.
Now that you have created your nonprofit corporation, you can obtain your federal and Florida state tax exemptions. Here are the additional steps you must take to obtain your tax-exempt status.
To obtain federal tax-exempt status from the IRS, you will need to complete and file 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 lots of information about your organization, including its history, finances, organizational structure, governance policies, operations, activities, and more. For line-by-line instructions on how to complete the Form 1023, see How to Form a Nonprofit Corporation, by Anthony Mancuso (Nolo).
Smaller nonprofits may be eligible to file Form 1023-EZ, Streamlined Application for Recognition of Exemption under Section 501(c)(3) of the Internal Revenue Code. This is a much simpler, shorter form that is 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.
Upon receipt of your 501(c) determination letter from the IRS, your organization is automatically exempt from Florida corporate tax. You must file an application with the Florida Department of Revenue to obtain an exemption from state sales taxes. If your nonprofit has four or more employees, it will have to pay state reemployment taxes. Check the Florida Department of Revenue Nonprofit Organizations web page for more information.
Depending on your activities and the size of your organization, you may need to register with the Florida Department of Agriculture and Consumer Services (FDACS) before doing any fundraising in the state. Check with that office for additional rules. For more information about fundraising registration requirements, see Nonprofit Fundraising Registration Digital Guide, by Ronald J. Barrett and Stephen Fishman (Nolo).