Most nonprofits are 501(c)(3) organizations, 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 Louisiana corporation, then you apply for tax-exempt status from the IRS and the State of Louisiana. Here are the details.
In Louisiana, your nonprofit corporation must have three or more directors. In a membership corporation, if there are less than three members, then there must be the same number of directors as there are members.
The name of your nonprofit corporation cannot be the same as the name of another corporation or limited liability company, or trade name on file with the Louisiana Secretary of State. To see if your proposed name is available, you can search Louisiana's name database on the Secretary of State's website.
In Louisiana, your nonprofit corporation cannot contain the words "bank," "banking," "banker," "savings," "trust," "deposit," "insurance," "mutual," "assurance," "indemnity," "casualty," "fiduciary," "homestead," "building and loan," "surety," "security," "guarantee," "cooperative," "state," "parish," "redevelopment corporation," "electric cooperative," or "credit union." Also, except as allowed in Section 204.1 of Louisiana nonprofit law, the corporate name of a nonprofit corporation or organization shall not contain the name of any public park, playground, or other public facility together with the word "benefit," "benevolent," "endowment," "philanthropic," "foundation," or "fund." See Section 204 and 204.1 of Louisiana Nonprofit Corporation Law for other restrictions on names.
You will need to create and file nonprofit articles of incorporation with the Louisiana Secretary of State's office. As of May 2020, the filing fee for nonprofits is $75. The Louisiana Secretary of State's website has a nonprofit articles of incorporation form you can use to create your articles. You can also create and file your articles online. Your articles must include:
Follow the instructions on the Secretary of State's website for filing your articles online, or by regular mail, express mail, or fax. You must file an affidavit of registered agent with your articles. Within 30 days after filing your articles, file a certified copy of your articles and a copy of the Certificate of Incorporation with the office of the recorder of mortgages in the parish where your corporation’s registered office is located.
In addition to what's required in your articles under state law, you'll need to include certain provisions in your articles to meet IRS requirements for 501(c)(3) tax-exempt status. For IRS purposes, your articles must include:
These provisions are not included on the state articles form provided on the Secretary of State's website so you will need to add them to your articles. For more information on IRS requirements for articles of incorporation, see IRS Publication 557, Tax-Exempt Status for Your Organization (available on the IRS website). You can also refer to How to Form a Nonprofit Corporation, by Anthony Mancuso (Nolo) for guidance on drafting articles that satisfy both state and IRS rules for 501(c)(3) nonprofits.
You'll need to prepare bylaws that comply with Louisiana 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 Louisiana. Your bylaws do not need to be filed with the Louisiana Secretary of State -- they are your internal operating manual.
For more information, see Nolo's article Nonprofit Formation Documents: Articles of Incorporation, Bylaws, and Organizational Minutes. For help creating your bylaws, see Nolo's book How to Form a Nonprofit Corporation, by Anthony Mancuso (Nolo).
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. You should set up a corporate records binder for your nonprofit to hold important documents such as articles of incorporation, bylaws, and minutes of meetings. For more information, as well as minutes forms, consent forms, and other resolutions, see Nonprofit Meetings, Minutes & Records, by Anthony Mancuso (Nolo).
Before applying for exempt status, you will need an EIN from the IRS. Similar to a social security number, an EIN is a unique identification number the IRS will assign to your nonprofit. You will use the number on your state and federal tax filings. You may apply for an EIN online by submitting a free application via the IRS website.
Depending on your location and type of nonprofit, you may need one or more business licenses. You are not required to obtain a state-wide business license, but each town and city in Louisiana may impose its own licensing requirements. Check with your town's business division for details.
To maintain your nonprofit with the state, you must file an annual report with the Louisiana Secretary of State, which is due on the anniversary of your formation date. The report provides updates on essential information about your nonprofit, such as the current address and the names of the nonprofit's directors. As of May 2020, the filing fee for the nonprofit annual report is $10.
Now that you have created your nonprofit corporation, you can obtain your federal and Louisiana state tax exemptions. Here are the 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.
Once you receive your federal tax exemption, you are automatically exempt from Louisiana state income tax. Check Louisiana's Department of Revenue website for information and requirements for exemptions from sales tax and other state taxes.
Depending on your activities and the size of your organization, you may need to register with the Louisiana Attorney General before doing any fundraising activities. Check the Attorney General's website for rules and filing requirements.