This article was originally written 06/01/2011 and has been updated annually. It was most recently updated 03/14/2026. Each state has different rules for nonprofit start-up and management.
Ready to Start a New Nonprofit Organization?
Starting a new nonprofit organization is exciting – but also complex. From incorporation to applying for 501(c)(3) status, there are critical legal steps you need to follow to ensure your nonprofit is properly set up, tax-exempt, and compliant.
In this guide, you’ll learn how to start a nonprofit organization, avoid common mistakes, and understand when to use IRS Form 1023, Form 1024, or Form 1023-EZ. Whether you’re launching a community organization, faith-based group, or charitable project, we’ll help you build a strong legal foundation.
Need help starting your nonprofit? Our award-winning nonprofit attorneys handle the full start-up – from nonprofit startup filings, drafting bylaws, and navigating IRS approval – so you can focus on your mission.
Understanding the Basics: Nonprofit vs. 501(c)(3) Tax-Exempt Status
What is a nonprofit?
- The word “nonprofit” generally describes an organization that works to serve a public purpose, rather than to provide financial benefit to any particular individual, corporation, or entity.
- Nonprofit status gives legal status under state law.
- Nonprofits are organized around a cause, mission, or community need. They are organizations that work to serve a public purpose.
- A nonprofit corporation does not automatically have tax-exempt status.
What is IRS 501(c)(3) status?
When people talk about nonprofits, they are often referring to 501(c)(3) tax-exemption with the IRS.
- Tax-exempt status refers to state and federal income tax exemption.
- 501(c)(3) is one type of federal tax designation for charitable, religious, educational, or scientific organizations.
- There are dozens of 501(c) categories — the (3) is just one of many types.
- An organization applies to the IRS to get a tax-exempt designation. Usually, the organization will use IRS Form 1023, Form 1023EZ, or Form 1024 to apply for tax-exempt status.
Steps to start a new nonprofit organization with IRS 501(c)(3) status
1. Make a Plan
Before you file anything, clarify:
- Who the new nonprofit will service (community, geography, group, clients)
- What the nonprofit will do (programs, services, work, core activities)
- Where and when it will operate
- Why it will exist – what is the problem you need to address
- How your work differs from others
- Whether to start a new nonprofit or work with an existing charity
Assemble a group of people who care about the cause as much as you do. Bring together co-founders, advisors, and consider working with an attorney who specializes in nonprofit, tax-exempt work so they can help you with your organization’s start-up and compliance.
2. Select a Name for the New Non-Profit
Pick a name that is memorable, mission-appropriate, and legally available.
- Check availability of your desired name by conducting a name search with your secretary of state.
- Check domain name availability and possible trademark issues.
- The legal name submitted to the state should not conflict with other registered entities.
3. Recruit a Board of Directors
Nonprofit organizations are not owned by any one person – not the founders, not the board, not the staff.
- Nonprofits are often managed by a board of directors or members.
- If it is managed by a board, that governing board may be legally accountable for its actions. They often are accountable to the public, to supporters, and to beneficiaries to oversee the accomplishment of the organization’s purposes.
- Each state has different requirements on the number of directors; check with the secretary of state.
- You will decide who manages the organization clearly in your formation documents – the articles of incorporation and in your bylaws.
- With member-managed nonprofits, those members may have certain rights (like voting rights). Other organizations may be director-managed. Some have a combination of member and director management.
- Each state has different requirements on the number of directors; check with the secretary of state.
- Each state sets out legal duties for the directors and officers.
Learn more about nonprofit ownership. One of the most often confused aspects of nonprofits concerns “ownership” of a nonprofit.
4. Chose a Business Structure & File Corporate Formation Documents – Nonprofit Articles of Incorporation
When you’re launching a new nonprofit start up, you’ll want to consider the business entity.
A common business structure in the nonprofit world is the “nonprofit corporation.” Business structures are state law concepts. While a common business structure is a nonprofit corporation, other options in some states include a benefit corporation, nonprofit LLC, or a unincorporated nonprofit association.
You will draft and file documents to become a state nonprofit corporation (or other appropriate state entity) and will likely include:
- Name of the organization
- Purpose of organization (aligned with certain IRS tax-exempt purposes)
- Name of initial directors
- Registered agent’s name and address (a registered agent is the person responsible for accepting lawsuits, certain government notices, and legal notices for the organization)
- Statement on membership (members or no members) and governance
5. Prepare Nonprofit Bylaws
Bylaws are your organization’s operating manual. They set out the rules that govern the internal management of an organization.
The initial board of directors should prepare and adopt bylaws for the corporation simultaneously with the preparation of the articles of incorporation or soon thereafter. A copy of the bylaws, signed by a corporate officer, are submitted when applying for the federal tax-exemption.
Learn more: what is the difference between articles of incorporation and bylaws?
6. Hold an OrganizationalMeeting
The foundational meeting accomplishes:
- approval of the bylaws
- selection of directors and officers
- approval of initial resolutions (like bank account)
- approving IRS-required and/or state-required policies (like conflict of interest policy)
Remember that it is important to keep minutes of this meeting.
7. Apply for a Federal Employer Identification Number (EIN)
Regardless of whether your organization has employees, it needs an EIN. You will use this EIN number for
- opening bank accounts
- applying for tax-exempt status
- filing tax returns, and more.
To obtain an EIN, your organization should complete IRS Form SS-4, available on the IRS website.
8. Apply for 501(c) Tax-Exempt Status with the IRS
This is a critical step.
Tax-exempt status means that an organization does not pay certain taxes. There are dozens of IRS 501(c) categories, each with unique rules and obligations.
To apply for federal tax-exempt status, a nonprofit applies to the IRS using Form 1023, 1023EZ, or 1024, depending on the type of work and budget projections.
Non-profit with 501(c)(3) status – IRS Form 1023 or IRS Form 1023EZ
To be tax-exempt under section 501(c)(3) of the Internal Revenue Code, an organization must be organized and operated exclusively for exempt purposes set forth in section 501(c)(3), and none of its earnings may inure to any private shareholder or individual. In addition, it may not be an action organization, i.e., it may not attempt to influence legislation as a substantial part of its activities and it may not participate in any campaign activity for or against political candidates.
The application to apply for section 501(c)(3) status is the Form 1023 or the Form 1023-EZ, depending on the organization’s expected revenue.
Option A: IRS Form 1023 EZ
The Form 1023-EZ is for small organizations that expect to have less than $50,000 in annual revenue. In 2025, the IRS filing fee for Form 1023EZ is $275.
Option B: IRS Form 1023
The IRS Form 1023 is the application that most organizations use to apply for 501(c)(3) tax-exemption. It requires the applicant submit:
- Articles of Incorporation – a certified copy of the articles of incorporation from your state
- Bylaws
- Financial information – pro forma financial statements, including revenue and expense statement for current and three preceding fiscal years and/or proposed budgets for upcoming years
- Narrative description of past, present, and future planned activities
- Names and addresses of directors and officers
- Annual accounting period (fiscal year)
- Statement as to whether the organization is claiming status as a private foundation, public charity, supporting organization, church, or other category
In 2025, the IRS filing fee for Form 1023 is $600.
Option C: IRS Form 1024
The IRS Form 1024 is the application that organizations applying under categories other than 501(c) status (for example, business associations may seek 501(c)(6) status, social welfare groups may seek 501(c)(4) status).
9. Apply for State Exemptions and Permits – State Tax Exemption
Once your IRS status is pending or approved, apply for state-level exemptions (sales tax, hotel occupancy tax, and franchise tax, etc.). You must apply for these state exemptions; it is not automatic.
Your organization may also need
- business licenses
- local permits
- state charitable registrations
State laws vary – check with your state tax office.
10. Apply for Federal Charitable Solicitation & Fundraising
Many states require registration prior to soliciting funds or hiring solicitors.
Common Questions about Starting a New Nonprofit
- Who really owns a nonprofit? Nonprofits are not “owned” by individuals. Board or members may govern.
- Nonprofit Corporation vs. 501(c)(3) Tax-Exempt Organization. You can be incorporated at the state level but not have tax-exempt status.
Why work with Cullinane Law to start your nonprofit?
Launching a nonprofit can be an exciting (but sometimes overwhelming!) experience.
Cullinane Law Group provides a quick, straightforward solution to set up a nonprofit with 501(c)(3) status. From drafting your governing corporate documents and obtaining federal tax exemption, to counseling on compliance and reporting requirements, we offer complete flat-rate packages to get you off the ground. Please give us a call when you’re ready to start a new nonprofit organization.
We handle all of the work to set up for
- 501(c)(3) public charities, foundations, supporting organizations
- 501(c)(4) social welfare organizations, civic leagues
- 501(c)(6) associations, business leagues, chambers of commerce
- 501(c)(7) social and recreational clubs
- other tax-exempt entities.
