(Note: This is an excerpt from The Nonprofit Handbook, by Gary M. Grobman.)
The following provides an overview of 23 major steps involved in starting up a nonprofit corporation. The order in which these appear below is not necessarily the most efficient in every case (and many steps can be accomplished simultaneously), but it should be sufficient for most startups. Obviously, the procedures will vary by state, and changes in laws and regulations will occur that may modify the contents of this list. Because this book does not provide legal advice relating to any specific fact situation, I recommend that you consider consulting a qualified attorney before starting up any corporation.
1. Choose the general purpose and mission of the organization, and write a description of it in a single sentence.
2. Conduct research to see―
• whether there is a sufficient need for a new organization with that purpose
• whether other organizations are already providing the service you propose to provide
• who and how many will likely seek to be served by your organization
• what federal, state, and local laws and regulations will apply to your organization
• whether you will have enough startup income to finance initial expenses, and whether you can generate enough income (through sales of goods and services, grants, or donations) necessary to sustain your organization
• whether there is sufficient interest in your community to build a board of directors for this organization.
3. Prepare a business and marketing plan if your startup is likely to require a substantial investment in startup funding.
4. Choose a unique business name, and check on its availability.
5. Choose an Internet domain name based on that name.
6. Choose a legal address for your organization.
7. Obtain an EIN number (your taxpayer identification number) from the Internal Revenue Service by filling out a Form SS-4. (This can be obtained online at: http://www.irs.gov/pub/irs-pdf/fss4.pdf by using the forms and publications finder using the term “SS-4” or by calling 1-800-829-FORM.)
8. Choose incorporators.
9. Prepare and file your incorporation papers with the appropriate state office.
10. Place any legally required advertisements about the incorporation of your organization.
11. Obtain any required local business licenses.
12. Obtain business insurance, and consider obtaining directors’ and officers’ insurance.
13. Register with your state’s charitable regulation agency, if you will be required to do so.
14. Find out about legal requirements relating to employees if you plan on having them, such as federal income tax and Social Security tax withholding, state and local payroll tax procedures, unemployment insurance, and workers’ compensation insurance; prepare job descriptions for staff, and develop personnel policies for employees.
15. Prepare draft organization bylaws.
16. Hold an organizational meeting of the board of directors and approve bylaws, approve organization bank accounts, elect organization officers, and schedule subsequent meetings.
17. Open a bank account for the organization.
18. Set up the organization’s accounting/bookkeeping, financial reporting system, and other record-keeping systems.
19. Obtain office space if required, business cards, stationery, office equipment, and supplies.
20. Obtain an Internet host, publicize your e-mail address, and build your Web site.
21. Obtain any required state sales tax licenses if you will be required to collect sales tax on items you sell.
22. Apply for mailing permits.
23. If eligible, apply for a federal tax exemption using Form 1023 for 501(c)(3) status and Form 1024 for exemption under other sections of the Internal Revenue Code.