At some point, business owners eventually reach a point of success where they feel like they are in a good place to give back to their communities. Forming a 501c3 charitable organization is the best way for a business to give back to those in need. It allows entrepreneurs to keep business finances separate from charitable giving. In order to establish a nonprofit organization, you need to follow certain steps, just as you would when incorporating a business. Learn the tips for forming a 501c3 in this post, so that your business can start making a positive impact on the local community.
Find A Purpose
Find a purpose for your charitable organization first. Once you establish a purpose, you will be better able to develop a plan for incorporating a nonprofit. This will also be one of the questions you must respond to when filing paperwork to form a 501c3. Determine what type of organization you will run. That will make the 501c3 application process much easier to complete.
Decide On A Name
Once you have a purpose, your nonprofit needs a name. State and federal regulations require nonprofits to have a name in order to be incorporated. Your charity name should also differ from your business name in some way. You will not be able to incorporate a nonprofit with the same name as your business. Think carefully about how you will name your charity. That way, you can move onto the next step in forming a 501c3 once you have made the the executive decision, so you can finally start to better your local community.
File For Incorporation
At this point, business owners should incorporate the nonprofit organization. Once you have a mission and a name, you can begin to file incorporation paperwork to incorporate your charity. Be sure to be diligent when filling out the paperwork to file articles of incorporation. This will be the basis for your ability to file for 501c3 status. There should be no errors that could otherwise compromise your attempts to start a charity offshoot of your business. Once you have filed for incorporation, you can wait for the paperwork in the mail that will establish your charity as a non-profit entity.
Complete A Federal Application
Next, you need to file for tax exempt status with the IRS when forming a 501c3. IRS tax exempt status is what truly makes your newly incorporated organization a non-profit charity. Non-profit organization leaders will need to complete IRS Package 1023 or the 1023-EZ form in order to apply. In addition, you will need to include your articles of incorporation in either application for tax exempt status. Just make sure to use a different address from your original business address. Tax exempt status allows you to avoid taxes when making purchases. That will ultimately make it easier for your business to give back to the community that has fostered its growth and success. Complete the application process for federal tax exempt status to formally establish your nonprofit organization.
Complete The State Application
Finally, business owners must also file for tax exempt status with the state in which they hope to conduct charitable operations. This step will not be necessary for all charitable organizations. Not all states have the same requirements for forming a 501c3. But, most states will accept a charity’s nonprofit status once they have completed all the steps for forming a 501c3 with federal tax exempt status. Do a little bit of research on the laws specific to your state. If necessary, be sure to file for state tax exempt status with the help of an online notary to fully form a 501c3.
Giving back to the community is a noble act. But for business owners, it is important to separate business and charity. Forming a 501c3 nonprofit organization is the best way to do that. In order to start a charity, entrepreneurs must first find a purpose, decide on a name, file articles of incorporation and complete federal and state paperwork to claim tax exempt status. Those steps for forming a 501c3 will ensure that your business finances are never impacted by your desire to benefit your local community.