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 Georgia corporation, then you then apply for tax-exempt status from the IRS and the State of Georgia. Here are the details.
First, you need to form a nonprofit corporation under Georgia state law.
In Georgia, a nonprofit corporation must have at least one director on its board.
The name of your nonprofit corporation must be distinguishable from the names of other corporations already on file with the Georgia Secretary of State Corporations Division. Names may be checked for availability by searching the Corporations Division business name database. You may reserve a name for 30 days online at the Corporations Division website or by mail by filing a Name Reservation Request. There is a $10 fee.
In Georgia, your nonprofit corporation name must contain the word "corporation," "company," "incorporation," "limited," or an abbreviation.
Every Georgia 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 Georgia, not a post office box. Small nonprofit corporations typically name a director or officer to serve as the initial agent. However, if your corporation is physically located in Georgia, it may act as its own registered agent. The agent must consent to the appointment.
To legally establish your corporation, you must create and file nonprofit articles of incorporation with the Georgia Secretary of State Corporations Division. Georgia requires that the following information be included in a nonprofit corporation's articles:
To receive 501(c)(3) tax-exempt status from the IRS, your corporation must have certain specific language in its articles, including:
The Georgia Secretary of State does not have a fillable Articles of Incorporation form to use. A detailed guide prepared by the Corporations Division, titled Filing Procedures, explains how to draft your articles yourself, including a sample form. However, the sample form does not contain the three clauses required by the IRS. Make sure you include the required tax-exempt language in the articles you create. You can find sample language to use approved by the IRS in the Instructions for IRS Form 1023-EZ, (see Part II).
For more information on IRS requirements for tax exemption, including sample language, consult How to Form a Nonprofit Corporation, by Anthony Mancuso (Nolo).
If you are filing by postal mail, you must draft your own articles on 8.5" x 11" paper. You must include a Transmittal Information Form if you file your articles by mail. You may file online by uploading your articles to the Secretary of State's website.
There is a $100 fee for online filings, a $110 for filings by postal mail.
You'll need to prepare bylaws that comply with Georgia 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 Georgia.
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 Georgia Secretary 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.
For more information, as well as minutes forms, consent forms, and other resolutions, see Nonprofit Meetings, Minutes & Records, by Anthony Mancuso (Nolo)
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. For local licenses, check with the city in which the nonprofit's primary office is located (or county if it is in an unincorporated area). For state licenses, check the Georgia Secretary of State's First Stop Business Guide.
Within 90 days of incorporation, each Georgia corporation must file an initial annual registration form that lists three principal officers with the Secretary of State. Corporations that form between October 2 and December 31 must file the initial annual registration between January 1 and April 1 of the next calendar year. The registration form can be filed online. An annual registration must be filed by April 1 every year after the initial year. There is a $30 filing fee for nonprofit corporations. A corporation that does not submit its annual registration is subject to administrative dissolution. There is a $250 fee to reinstate an administratively dissolved corporation.
Now that you have created your nonprofit corporation, you can obtain your federal and Colorado 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 Georgia corporate tax. You must file an application with the Georgia Department of Revenue to obtain an exemption from state sales taxes. Contact local taxing authorities for exemptions from local sales and property taxes. For more information, refer to the nonprofit corporation FAQs prepared by the Department of Revenue.
Depending on your activities and the size of your organization, you may need to register with the Securities Division of the Office of Secretary of State before soliciting or accepting contributions in the state. For more information about fundraising registration requirements, see Nonprofit Fundraising Registration Digital Guide, by Ronald J. Barrett and Stephen Fishman (Nolo).
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