When you want to start a business, there are many steps to take to make it legal and to obtain the contracts you need to hire employees or to make purchases over time with other business entities. One of the first things you need to do is to determine what kind of business formation you're going to have. For example, you can opt to be a sole proprietor or to have a partnership. You could opt for a limited liability company or corporation, or you could open a nonprofit organization.
What do you need to do to open a nonprofit organization legally?
For nonprofits specifically, you need to have a specific structure. You first need to choose a business name. Then, make sure that name is available by searching for it through state and federal databases. Register the name, and then decide where to incorporate your nonprofit organization. You will need to choose directors for the organization and sign the Articles of Incorporation.
Following this, file your nonprofit's Articles of Incorporation with the state and pay any filing fees that result. You'll next need to create by-laws and apply for tax-exempt status. Failing to do this can result in you having to pay taxes.
Before you can run a business, you need to obtain a business license from the state. You can also get local and federal licensing. A separate bank account should also be opened, so no individual receives funds for the nonprofit organization.
This can be a tricky process, and there are many steps, which is why it's important to consider legal assistance. Once your business is set up, you need to make sure you run it as a nonprofit in accordance with local and federal law.
Source: FindLaw, "Business Formation QuickStart," accessed Dec. 07, 2016