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 New Hampshire nonprofit corporation. Then you apply for tax-exempt status from the IRS and the state of New Hampshire. Here are the details.
First, you must form a nonprofit corporation under state law.
In New Hampshire, your nonprofit corporation (which does not include religious nonprofits) must have at least five incorporators (of lawful age). In addition, your board of directors must have at least five voting members who are not from the same immediate family or related by blood or marriage.
The name of your nonprofit corporation must be distinguishable from, and not the same as or likely to be confused with, the name of any other business entity on file with the New Hampshire Secretary of State. See the New Hampshire Name Availability Guidelines for more information on name restrictions. To see if your proposed name is available, you can search New Hampshire's name database on the Secretary of State’s website.
You will need to create and file nonprofit articles of agreement with the New Hampshire Secretary of State’s office and pay the $25 filing fee (as of July 2020). The Secretary of State has a sample nonprofit articles of agreement form on its website which you can use to create your New Hampshire nonprofit corporation. The articles form includes the minimal information needed to create a nonprofit corporation in New Hampshire. You must provide:
See Section 292:2 of New Hampshire’s Voluntary Corporations and Associations Act for more on the requirements for your nonprofit articles of agreement.
The articles form on the Secretary of State’s website does not include certain language required by the IRS to obtain your federal tax-exempt status. To ensure you get 501(c)(3) tax-exempt status from the IRS, you will need to have additional specific language in your articles including:
For more information on IRS requirements for tax exemption, see IRS Publication 557, Tax-Exempt Status for Your Organization, available on the IRS website.
Follow the instructions on the Secretary of State’s website for completing and filing your nonprofit articles of agreement. Be sure to include the additional language required by the IRS for 501(c)(3) tax-exempt status.
You'll need to prepare bylaws that comply with New Hampshire 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 New Hampshire. Your bylaws do not need to be filed with the New Hampshire Secretary of State -- they are your internal operating manual. In New Hampshire, the initial bylaws of a nonprofit corporation must be adopted by a 2/3 majority vote of the signers of the articles of agreement.
For more information, see Nolo's article Nonprofit Formation Documents: Articles of agreement, 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:
Be sure to keep minutes that accurately record your board’s actions. You should set up a corporate records binder for your nonprofit to hold important documents such as articles of agreement, 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).
An EIN is a unique tax identification number for your nonprofit, which you will provide on the nonprofit's state and federal tax returns, bank account, and other government filings. You must have an EIN before you can submit your tax exemption applications. You can submit a free application online via the IRS website.
You do not need a statewide business license to operate your nonprofit in New Hampshire. However, depending on your services and your location, you might need one or more certifications or permits. Check with the Office of Professional Licensure and Certification, as well as your local licensing offices, to determine the requirements for your organization.
To keep your organization in good standing, you must file a nonprofit report with the Secretary of State every five years by December 31. Keep your contact information up to date with the state, as they will send you a reminder email before the due date. If you fail to file, the state may administratively dissolve or revoke your organization. You may submit the report online.
Now that you have created your nonprofit corporation, you can obtain your federal and New Hampshire 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 have your federal tax exemption, check with the New Hampshire Department of Revenue to find out about your state tax exemptions. Depending on how much income you earn, you may have filing requirements with the Department of Revenue.
All New Hampshire nonprofits that obtain 501(c)(3) tax-exempt status from the IRS must register with the New Hamshire Attorney General, Charitable Trusts Unit. Check the New Hampshire Attorney General’s website for nonprofit registration rules and requirements before you engage in any fundraising activities.