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 West Virginia nonprofit corporation. Then you apply for tax-exempt status from the IRS and the state of West Virginia. Here are the details.
To form a nonprofit in West Virginia, first you need to form a nonprofit corporation under West Virginia state law (Chapter 31E of the West Virginia Code "WVC").
In West Virginia, you must have three or more directors on your board.
The name of your nonprofit corporation must contain the word "corporation," "incorporated," "company," or "limited," or the abbreviation "corp.," "inc.," "co.," or "ltd." It also must be distinguishable from the name of any other corporation or business entity on file with the Secretary of State. To see if your proposed name is available, you can search the Business Organization Search database on the Secretary of State's website. You can reserve a name which will prevent another nonprofit or business from registering the name while you prepare and file your articles.
See WVC §31E-4-401 for more information on name restrictions for nonprofits.
You create your nonprofit entity by filing articles of incorporation for a nonprofit with the West Virginia Secretary of State and paying the $25 filing fee (as of July 2020). Your articles of incorporation must include basic information such as:
The West Virginia Secretary of State has a nonprofit articles of incorporation form on its website which you can use to create your nonprofit corporation. Complete and file your articles following the instructions provided. You can complete and file your articles online or complete a fillable articles form and mail it in.
To receive tax-exempt status from the IRS, you'll need to have specific language in your articles, including:
The Secretary of State's office has an articles form for nonprofits that includes the IRS-required language in an attachment (CD-1NP Articles of Incorporation With Nonprofit IRS Attachment). Be sure to include the IRS language in the articles you create. For more information on IRS requirements for tax exemption, including sample language, see IRS Publication 557, Tax-Exempt Status for Your Organization, available on the IRS website.
Before you file your articles of incorporation, you'll need to have bylaws that comply with West Virginia law. Your bylaws 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 West Virginia. Your bylaws do not need to be filed with the 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, be sure to create minutes that accurately record the actions taken by the board.
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).
Apply for an EIN via the IRS website. An EIN is a unique tax number for your nonprofit, which you will use on your state and federal tax filings, exemption applications, bank accounts, and other government filings. The application is free, and you will receive your EIN immediately if you submit your application online.
You do not need a statewide business license to operate a nonprofit in West Virginia. However, depending on your location and services, you might need one or more licenses or permits. Check with your town and county licensing divisions to determine the requirements for your organization.
To keep your nonprofit in good standing with the state, file your annual report by July 1 of each year and pay the $25 filing fee (as of July 2020). In the report, you will confirm or update basic information about your organization, such as the organization's address, the names of its directors, and the registered agent. You may submit your report online or mail in a paper copy.
Now that you have created your nonprofit corporation, you can obtain your federal and West Virginia 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 your nonprofit receives 501(c)(3) tax-exempt status from the IRS, you are exempt from West Virginia's income tax. For information and filing requirements for exemptions from other state taxes, including sales and use tax and property taxes, check with the West Virginia State Tax Department.
Depending on your activities and the size of your organization, you may need to register with the state before doing any fundraising activities. The Secretary of State's office has information about fundraising and registration requirements for nonprofits, including a charitable solicitation registration package.