Online California Nonprofit FAQ

How do I form a nonprofit in California?

In California, you create a nonprofit by filing "articles of incorporation" with the Secretary of State's office and paying a filing fee. You'll also need corporate bylaws signed by the board of directors, though these documents don't need to be filed with the Secretary of State. Your bylaws explicitly state the rights and responsibilities of the directors and govern how your nonprofit will be run.

After your articles of incorporation have been filed and you sign corporate bylaws, your nonprofit is official, but you will still need to obtain the licenses and permits that all new businesses must have to operate. These may include a business license (sometimes also referred to as a "tax registration certificate"), a federal employer identification number, a sellers' permit, or a zoning permit. Forming a nonprofit may not exempt you from any of these requirements that apply to all businesses.

For more information, see the Licenses & Permits for Your Business area of Nolo's website.

To begin creating your California nonprofit, visit the Online California Nonprofit interview on the Nolo website.

What types of nonprofits can I form in California?

The state of California recognizes three basic types of nonprofit organizations:

Public Benefit Corporation: Nonprofits organized for the benefit of the general public or a large segment of the public, as opposed to a group of private individuals, are public benefit corporations. Most charitable organizations fall under this category, including schools, research facilities, museums, and animal shelters.

Religious Organization: Religious organizations include places of worship (churches, synagogues, mosques, or temples) and other organizations structured primarily for religious purposes, including religious schools and publishers. Like all nonprofits, religious nonprofits must use their net earnings to further the mission of the organization and not to benefit any individual.

Mutual Benefit Corporation: Nonprofits organized for the benefit of a select group, as opposed to the general public, are mutual benefit corporations. This includes organizations like homeowners associations and employee unions.

For more information on the different types of nonprofit organizations in California, check out the Attorney General’s Guide for Charities.

Our services are limited to public benefit and religious nonprofits. To form a mutual benefit corporation, or if you are unsure which type of nonprofit you will form, consider talking to a lawyer. You may want to use Nolo's lawyer directory to find a lawyer in your area.

Are all nonprofits exempt from taxes?

After forming your nonprofit with the state, you have the option to apply for tax-exempt status with the IRS. You can have a nonprofit without tax exemption, meaning the organization will be responsible for corporate, sales, property, and other taxes. Tax exemption is available to different types of nonprofits, including:

501(c)(3): Most nonprofits fall under this category, including organizations formed for the following purposes: religious, educational, scientific, literary, testing for public safety, amateur sports, and prevention of cruelty to children or animals.

501(c)(4): This includes social welfare groups such as civic leagues, social welfare organizations, homeowners associations, and local associations of employees. 501(c)(4)s can engage in lobbying and some political activity.

501(c)(6): Organizations such as business leagues, chambers of commerce, and professional associations fall under this category.

501(c)(7): Social and recreational clubs, such as country clubs and sororities, fall under this category. A 501(c)(7) is not organized for a charitable purpose, but to provide activities and other services to a particular group.

Our services are limited to public benefit and religious nonprofits that will not be applying for tax exemption and those that will qualify for 501(c)(3) tax status. To form other types of nonprofits, or if you are unsure which type of nonprofit you will form, consider talking to a lawyer. You may want to use Nolo's lawyer directory to find a lawyer in your area.

How much will it cost to form my California nonprofit?

The price of Nolo's Online California Nonprofit formation service varies depending on your needs.

Nolo's Basic Service. The price starts as low as $49.00 for Nolo's Basic Service, which includes preparation and filing of the articles of incorporation, minutes of first meeting of board of directors, and standard filing and shipping, which can take anywhere from three to four weeks.

Nolo’s Standard Service. Includes Nolo's Basic Service plus EIN application, for $149.00.

Nolo's Express Premiere Service. Includes Nolo's Standard Service plus Priority Rush Filing, a personalized corporate records book that is foil-stamped with your company name, 20 personalized membership certificates, and a personalized corporate seal, for $299.00. With Priority Rush Filing, your nonprofit will be formed within five to ten business days (15 days if the Secretary of State is experiencing delays), and you'll receive your final corporate documents three to four business days later. Your nonprofit corporate records kit will be sent to you directly from the manufacturer.

Note that filing fees charged by the state are not included in our package prices. The Secretary of State charges $54 in state fees (includes a name check and a certified copy of the articles of incorporation). This filing fee will be added to your total when you check out.

In addition, within 90 days of your formation, you will need to submit a statement of information (Form SI-100), along with a $20 filing fee. (You can file it online here.)

To compare Nolo's California nonprofit packages, see our package and pricing details. Please note that coupon codes are not applicable to corporate packages.

How long will it take to form my California nonprofit?

With the Priority Rush Filing that comes with Nolo's Express Premiere Service, your nonprofit will be formed within five to ten business days (up to 12 days if the Secretary of State is experiencing delays), and you'll receive your final corporate documents one business day later. Your corporate records kit will be sent to you directly from the manufacturer.

With the Standard and Basic Service, your nonprofit will be formed, and you will receive your final nonprofit documents, within three to four weeks.

Will I have to pay taxes on my California nonprofit?

Tax exemption. Forming a nonprofit does not automatically exempt you from taxes. You must file additional paperwork with the Internal Revenue Service (IRS) and California Franchise Tax Board (FTB) to obtain tax-exempt status. Until you are approved, your nonprofit must pay federal and state taxes.

Federal tax exemption. 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 a lot of information about your organization, including its finances, organizational structure, governance policies, operations, activities, and more.

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. 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.

State tax exemption. Once you have your federal tax exemption, you can obtain your California state tax exemption. Nonprofits may qualify for exemptions from income, property, sales, and other state taxes. The website for California’s tax agency, the Franchise Tax Board, will have the form you need to file to obtain your state tax exemption, FTB 3500A, Submission of Exemption Request.

Do I need a lawyer to form a nonprofit in California?

You can form your own nonprofit online by using Nolo's Online California Nonprofit. We will walk you through the information needed to form a nonprofit and provide you with resources to learn about nonprofit law. If you have a complex question, you may want to consult a nonprofit lawyer or tax expert. Our website features an online lawyer directory as a free resource to our customers. Comprehensive profiles of business attorneys in your state can be found at www.nolo.com. Click here for more information about how an attorney can help you form a nonprofit and your options for obtaining legal services.

If you are forming a nonprofit other than a public benefit, 501(c)(3), or religious nonprofit consult with an attorney. Forming other types of nonprofits, such as mutual benefit organizations, 501(c)(4) civic leagues, 501(c)(6) chambers of commerce or business leagues, or 501(c)(7) social or recreational clubs, are outside the scope of our service.

Does California require that nonprofits have bylaws?

California's Secretary of State does not require you to file written bylaws, but our service provides customized nonprofit bylaws that help ensure that courts will respect the directors’ personal liability protection, and help to avert misunderstandings among the directors and officers over the nonprofit’s finances, management, policies, and more. Every nonprofit needs bylaws to outline the organizational structure, establish the powers of the directors, officers, and members (if applicable), and lay out the procedures for holding meetings, electing directors, and appointing officers.

For more information, check out Nolo’s article on Nonprofit Bylaws.

How do I create bylaws for my nonprofit?

Your organization’s board of directors will draft and approve the bylaws. Nonprofits often draft bylaws before or shortly after filing formation documents with the state. However, you can create bylaws any time after formation.

Unlike other organizational documents, like the articles of incorporation, you do not file bylaws with the state. You must keep them with your nonprofit’s records and ensure they are accessible to board members.

Nolo offers an online form you can use to create customized bylaws for your nonprofit. Our bylaws include the essential terms to help your board of directors run your organization, including the board structure, meeting and voting procedures, officer descriptions, member rights and responsibilities (if applicable), a conflict of interest policy, and more.

Does forming a nonprofit mean I don't need California business licenses or permits?

Forming a nonprofit does not take the place of obtaining a business license, tax registration certificate, and other required business permits. A nonprofit merely creates an ownership setup that limits the owners' personal liability. Even if the nonprofit’s sales are nontaxable, the organization needs a seller’s permit to sell goods or merchandise in the state. For more information on required licenses and permits, see the Licenses & Permits for Your Business area of Nolo's website.

Do I need to register my nonprofit before fundraising or soliciting donations?

Depending on your activities and the size of your organization, you may need to register with the state before doing any fundraising activities. The Office of the Attorney General, Registry of Charitable Trusts division, has information and forms about fundraising and registration requirements for nonprofits in California. Also, see Nolo’s article on fundraising registration rules for California.

How can a California nonprofit be ended after it has been formed?

Your nonprofit will exist—and may incur taxes and fees, whether or not you are actively operating a business—until you take legal steps to dissolve it. Depending on the structure of your nonprofit and your bylaws, you will need a majority or unanimous vote of the nonprofit’s members or directors to approve the dissolution.

After you have formally decided to dissolve, you must file a Certificate of Election to Wind Up and Dissolve and a Certificate of Dissolution with the California Secretary of State and the Attorney General. For specifics, read the Frequently Asked Questions on the Secretary of State's website.

In addition, certain franchise tax requirements must be met before you are off the hook for your business. For more information, see FTB Publication 1038, Guide to Dissolve, Surrender, or Cancel a California Business Entity on the Franchise Tax Board's website at http://ftb.ca.gov.

Unlike for-profit corporations, nonprofits have restrictions on how they can distribute any remaining assets. After paying off any debts, a 501(c)(3) organization must distribute its remaining assets to one or more other 501(c)(3) organizations. For more information about closing a nonprofit, read the article How to Dissolve a Nonprofit Corporation in California.

How long do I have to work on my nonprofit order?

You have as long as you like to work on your nonprofit formation before purchasing it. Every time you work on your nonprofit order on Nolo.com, your answers are automatically saved. You may access your work-in-progress nonprofit by signing in to your Nolo account at www.nolo.com/products/customer/account/login, clicking on My Account, and clicking on California Nonprofit.

What happens after I pay?

Note: You will receive a confirmation email that includes the following information.

Your articles of incorporation will be generated and sent to the Secretary of State. With the Priority Rush Filing that comes with the Express Premiere Service, your nonprofit will be formed within five to ten business days (depending upon the Secretary of State's processing times) and you'll receive your final nonprofit documents three to four business days later. With the Standard and Basic Service, your nonprofit will be formed and you will receive your nonprofit documents within three to four weeks.

If you ordered Nolo's Express Premiere Service, your nonprofit corporate records binder and company seal will be sent to you independently, directly from the manufacturer.

When you receive your final nonprofit documents, you will receive instructions on a few more steps you need to take, which include holding an initial meeting of your directors, sending a statement of information to the Secretary of State, and completing membership certificates (if you are forming a membership nonprofit).

After completing your purchase, you may no longer go back and change your answers because your order is being processed. You may, however, view your answers by signing in to your Nolo account at www.nolo.com/products/customer/account/login, clicking on My Account, and clicking on California Nonprofit.

Once we send your documents to the Secretary of State, we cannot refund your state filing fees and other third-party costs, such as courier and delivery services, should you decide to cancel your order. If you have a question after submitting your order, you may contact our filings specialists by going to https://www.nolo.com/customer-support/filing-support.

What if I want to change the information I gave you for my new nonprofit?

You can take as much time as you like to work on your nonprofit answer choices. Every time you add or edit an answer, your work is automatically saved.

After completing your purchase, you may no longer go back and change your answers because your order is being processed. You may, however, view your answers by signing in to your Nolo account at www.nolo.com/products/customer/account/login, clicking on My Account, and clicking on California nonprofit.

Where can I learn more about California nonprofits?

To learn more about nonprofits, visit the Nonprofits area of Nolo's website or read How to Form a Nonprofit Corporation in California, by Anthony Mancuso.