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.
Create Your New Hampshire Nonprofit Corporation
First, you must form a nonprofit corporation under state law.
1. Choose who will the incorporators and directors of your nonprofit
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.
2. Choose a name for your New Hampshire nonprofit corporation
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.
3. Prepare and file your nonprofit articles of agreement
You will need to create and file nonprofit articles of agreement with the New Hampshire Secretary of State’s office. 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:
- the purpose for which your nonprofit was formed
- provisions relating to membership and participation in your nonprofit
- disposition of asset provisions upon dissolution
- the address where business will be conducted, and
- the amount of capital stock, if any.
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:
- a statement of purpose that meets IRS requirements
- statements that your nonprofit will not engage in prohibited political or legislative activitiy, and
- a dissolution of assets provision dedicating your assets to another 501(c)(3) organization upon dissolution.
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.
4. Prepare bylaws for your New Hampshire nonprofit corporation
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).
5. Hold a meeting of your board of directors
Your first board meeting is usually referred to as the organizational meeting of the board. The board should take such actions as:
- electing directors (if not already appointed in articles)
- approving the bylaws
- appointing officers
- setting an accounting period and tax year, and
- approving initial transactions of the corporation, such as the opening of a corporate bank account.
Be sure to keep minutes that accurately record your board’s actions.
6. Set up a corporate records binder
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).
Obtain Your Federal and State Tax Exemptions
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.
1. File your Form 1023 federal tax exemption application.
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.
2. Obtain your New Hampshire state tax exemptions
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.
3. Other state reporting and registration requirements
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.