A non-profit organization is a company whose sole purpose is to provide a benefit for a group of individuals or the community. Any revenue from the company is put back into the organization instead of being paid out to shareholders. Starting a non-profit group requires a number of necessary steps.
1. Decide If a Non Profit Is Right: Depending on what you’re trying to accomplish with your organization, a non profit may be the right fit. If you’re looking to give back to the community in some way, forming a non profit could be the first step. If you’re simply trying to make money, non-profit organizations are not the way to do it. As an owner of a not-for-profit group, your goal should always be tied back to service.
2. Compose a Mission Statement: To help secure your status as a non-profit, many experts recommend that you first compose a mission statement. This verbalizes your goals and the benefits you see for others.
3. Draft a Business Plan: Just like a traditional business, a non-profit must also have a viable business plan. Even though the goal is not to turn a profit for shareholders, procedures and transactions must still be financially sound so that the organization can stay afloat. Beyond the financial concerns, the business plan must also address things such as operations, marketing and management.
4. Select a Name for Your Company: Next, it’s important to select a name for your new company. You must research and make sure the name you choose is available to you. Your company name should reflect the purpose and scope of your corporation.
5. File Articles of Incorporation: Along with name selection, your organization also needs to be incorporated. For a non-profit, it is essential to file articles of incorporation. This document details the basics of your company.
6. Request Tax Exemption Status: Once your business has been incorporated, the next step is to secure tax-exempt status. For non-profits, it is standard to have a tax exemption, and if you don’t properly attend to this matter, it could affect your company’s purpose. Most businesses file a federal IRS Form 1023 in order to obtain this status. It is also important to file for tax-exempt classification within your state.
7. Choose the Directors of Your Corporation: Your next order of business should be about your directors. It’s important to choose a qualified board of directors who can help lead your corporation with passion and integrity through the challenges of running a non-profit.
8. Draw up Corporate Bylaws: A lawyer can help you with the next vital stage in not-for-profit formation, drawing up corporate bylaws. Your organization’s bylaws detail all of the company’s operating procedures and management structures.
9. Conduct Your First Board Meeting: With your newly formed board, your next priority is to meet together for the first time. This first meeting can establish ground rules for your corporation and set the tone for the way business is conducted. Your bylaws should be officially adopted at this meeting along with any initial startup procedures.
10. Apply for Any Additional Licenses or Authorizations: Finally, you are nearly ready to begin operations. Before jumping into business, however, it’s a good idea to explore the different licensing requirements that may be required within your industry or geographical area. Depending on the type of business, you may need to look into prerequisites for non-profits within your state. If you are starting a charitable organization, there are additional steps to follow beyond the startup stage as well.
Creating a non-profit is not a simple process, but it can be relatively straightforward. You can make the procedure easier by carefully investigating each phase. As you make your way through each step, you can get closer to the goal of giving back to your community.
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