First off, you should have identified a need or cause in your community that no existing group is currently advocating before seeking ideas on how to start a nonprofit in NC (North Carolina). If such a group exists, it may be advisable to collaborate in order to maximize current resources and have a greater impact on your community and achieve your objectives.
According to the National Center for Charitable Statistics (2012), there were more than 40,000 nonprofit organizations in North Carolina.
The majority of NGOs are classified as 501(c)(3) organizations, which means they were established for educational, literary, scientific, charitable, or religious purposes and thus qualify for state and federal tax exemptions.
To become a 501(c)(3) tax-exempt organization, on the other hand, you must first start an NC nonprofit company, then apply for tax-exempt status with the state of North Carolina and the Internal Revenue Service. But how do you start a no nonprofit in NC in the first place?
Let’s find out how…
How to Start a Nonprofit in North Carolina (NC)
This ensuing paragraph covers a step-by-step process on how to start a nonprofit in NC.
#1. Name Your Organization
A good nonprofit name is one that is distinctive, unique, and descriptive. In North Carolina, your name must be distinct from those of other NGOs and enterprises. We recommend contacting the North Carolina Department of the Secretary of State to see if the name you want is available.
The Secretary of State can also tell you if any words in your name are banned. Meanwhile, some examples include bank, trust, mutual, co-op, and wholesale. Legal authorities must grant special permission for these terms to be used.
On the flip side, here are some questions to think about when you brainstorm names for your 501(c)(3) in North Carolina:
- Is this name appropriate for my organization’s mission and work?
- Is there a relevant website URL for this domain that can be purchased for a reasonable price?
- Are the social media handles I want available?
- Is there an unfavorable acronym in this name? For example, because the acronym for your dance company is BAD, you might want to avoid naming it “Biltmore Ave Dance.”
If you’re looking for ideas, look through the list of nonprofits in the state maintained by the NC Center for Nonprofits. This is also a great approach to determine if your proposed name conflicts with the name of an existing organization in North Carolina.
#2. Name Incorporators and Directors
The incorporator(s) and director(s) are the people in charge of your nonprofit’s management and monitoring.
An incorporator is a person who signs the Articles of Incorporation for your nonprofit. Your board of directors will create your organization’s bylaws as well as vote on important topics and decisions. Basically, building a well-rounded, diverse board of directors that reflects the community your organization serves is one of the best practices for nonprofits.
Incorporator Specifications
- A nonprofit organization in North Carolina must have at least one incorporator. This individual may also be a director and/or the sole director.
- The incorporator must sign the organization’s Articles of Incorporation and other important documents.
- On important documents for your nonprofit, the incorporator’s name and address must be included.
Director Specifications
- A nonprofit organization in North Carolina must have at least one director. It’s possible that this is the same individual as the incorporator.
- Founding directors must be specified in your Articles of Incorporation or chosen after they have been filed.
- Directors must act in the best interests of the organization, based on their best judgment.
- Your nonprofit directors may be held personally accountable for damages caused by their failure to fulfill their responsibilities.
- They should be people who share your organization’s enthusiasm, knowledge, and resources. Note that “resources” does not necessarily imply financial assistance. While many board members are encouraged to give substantially, it’s also a good idea to think about other resources like time, connections, and relevant knowledge.
Meanwhile, the Secretary of State’s list of requirements on how to start a nonprofit in North Carolina includes more information on incorporators and directors.
#3. Designate a Registered Agent for your business.
In order to start a nonprofit in NC, you’ll need to choose a registered agent. A registered agent is mostly an entity that receives (and forwards as appropriate) formal legal notices delivered to your nonprofit organization.
Basically, you can either function as the registered agent for your organization or appoint or employ someone to do so. The mailing address of the registered agent must be on file with your organization’s papers, which becomes a public record.
There are, however, a few conditions that your registered agent must meet in North Carolina. One of the following is required as a registered agent:
- For starters, a person who lives in North Carolina and has the same business address as the registered office.
- A domestic commercial corporation, nonprofit corporation, or limited liability company (LLC) with the same business address as the registered office.
- A foreign commercial corporation, nonprofit corporation, or limited liability company (LLC) that is permitted to do business in this state and has the same business address as the registered office.
Explore the Secretary of State’s requirements for how to start a nonprofit in NC to get the entire list of registered agent requirements.
#4. File Articles of Incorporation in NC
The first legal document you’ll file to start a nonprofit is your Articles of Incorporation. It will send your name to the Secretary of State’s office in NC. But you’ll have to pay a fee of $60.
The following items must be included in your Articles of Incorporation:
- The official name of your non-profit: Any acronyms or punctuation in your paperwork must be utilized consistently throughout. A corporate ending, such as “, Inc.” or “, Corp.”, may be added to your name.
- The mission statement of your company: This is a statement that outlines your organization’s mission and/or intended work.
- Your incorporator’s and registered agent’s names and addresses (step 3)
- If your group intends to have members, this should be included.
- A section describing what will happen to the assets of your North Carolina nonprofit if it is dissolved
- The address of your organization’s main office, as well as the county in which it is located
You can optionally include information such as the names and addresses of your initial directors, as well as management provisions for your organization.
#5. Obtain an Employer Identification Number (EIN)
An EIN is a nine-digit number assigned by the IRS to NGOs and other entities. Your organization can use an EIN to fulfill important administrative duties. To open a bank account, apply for 501(c)(3) status, and file your annual Form 990 with the IRS, you’ll need an EIN.
Furthermore, to apply, you must complete and submit IRS Form SS-4, as well as an application for an Employer Identification Number (EIN). You can fill out your SS-4 form for free online. After that, you’ll get an EIN and be able to use it right away.
You can also apply for an EIN via fax or mail, though the IRS warns that these methods will take longer to process.
#6. Hold Company Meeting and Establish Nonprofit Bylaws
Your nonprofit’s bylaws are a set of regulations that govern how it is organized and operates. While North Carolina and the IRS provide recommendations for how a nonprofit should be administered, you, your board of directors, and your bylaws are ultimately in charge. Your articles of incorporation should not clash with your bylaws.
Tips for Creating Bylaws for a Nonprofit Organization:
- Include provisions for appointing officials and electing new directors.
- Avoid information that may become obsolete in a few months or years.
- In general, to provide flexibility, it would be safer to say that board meetings will be held on a monthly basis, rather than on the first Monday of each month at 2 p.m.
- Use caution when using the word “must.” It implies that your company must take action. Use words like “may” or “will consider” instead. This will allow your company to be more adaptable.
- Avoid making rules so loose that they lack structure and routine. The border between useful flexibility and open-ended uncertainty is thin.
#7. File for Federal and State Tax Exemptions in North Carolina
You might be shocked to learn that not all charitable organizations are exempt from paying taxes. You’ll need to apply for both federal and state tax exemptions to launch your 501(c)(3) exempt nonprofit. Here’s how to do it.
Federal tax exemption under section 501(c)(3)
You’ll need to fill out and submit a Form 1023-series application to apply for 501(c)(3) tax-exempt status. This application must be completed online at www.pay.gov. This form has a $275 cost attached to it. But before applying with the state of North Carolina, the state recommends that you file for a federal tax exemption.
On the IRS website, you can learn everything you need to know about applying for 501(c)(3) tax-exempt status. A 14-page PDF guide is also included to assist you through the procedure.
Exemption from state taxes in North Carolina
The Secretary of State will automatically notify the North Carolina Department of Revenue when you file your Articles of Incorporation. The DOR will then send a notification letter along with a questionnaire to your registered agent. You’ll fill out this questionnaire and send it together with a copy of your Articles of Incorporation to the DOR.
#8. Submit an Application for the Necessary NC State Business Licenses
Nonprofits in North Carolina are not required to obtain a normal state business license. Some business activities, such as selling beer and wine at a fundraiser or “gambling” activities like a raffle or bingo game, do, however, require a license or licenses.
The North Carolina Secretary of State’s guidance on company licensing is a good place to start. A handy reference from the US Small Business Administration outlines some federal and state licenses and permissions.
#9. Create a Charitable Fundraising Account
A charitable solicitation license is required for nonprofits. There are limited exclusions for groups that bring in less than $25,000 per year and do not reimburse anyone, such as schools, churches, YMCAs, and charities.
The North Carolina Department of the Secretary of State can help you get a charitable soliciting license. Your North Carolina 501(c)(3) will be able to legally collect funds for your cause once you have obtained your license.
The North Carolina Secretary of State’s website has all the information you need concerning charitable solicitation licensing.
#10. Open a Bank Account for a Nonprofit Organization
When it comes to collecting donations, building savings, paying vendors, and more, having a bank account for your North Carolina nonprofit is crucial. It separates your personal assets from the assets of your firm, which is required for personal asset protection. Furthermore, it simplifies bookkeeping and tax reporting.
To open a bank account for your 501(c)(3) organization in North Carolina, you’ll normally need to give the following information:
- A copy of your corporation’s articles of incorporation
- A copy of your corporation’s bylaws
- EIN (Employer Identification Number)
Steps to Take After Starting a Nonprofit
The following are important steps to take after you have started your nonprofit in NC.
#1. Obtain a Credit Card for Your Business:
It assists you in distinguishing between personal and commercial spending.
It also builds your company’s credit history, which can come in handy if you need to raise funds in the future.
#2. Engage the Services of a Business Accountant:
This prevents your company from paying too much in taxes while also avoiding penalties, fines, and other costly tax mistakes. Other benefits include the fact that it;
- Allows you to focus more time on your expanding business by simplifying bookkeeping and payroll.
- Aids in the successful management of your business’s funding and the discovery of areas of unanticipated loss or profit.
#3. Obtain Insurance
Business insurance allows you to control risks while focusing on expanding your company.
The following are the most popular types of company insurance:
- General Liability Insurance (GLI) is a type of insurance that protects your company from lawsuits. General liability insurance is purchased by the majority of small enterprises.
- Professional Liability Insurance (PLI) is a type of business insurance that protects professionals (consultants, accountants, etc.) from allegations of malpractice and other business blunders.
- Workers’ Compensation Insurance is a kind of insurance that covers employees for illnesses, injuries, or deaths that occur on the job.
#4. Create a Website for Your Business
Putting up a website is a huge step in establishing credibility for your company. As a nonprofit, your website will be the primary means of informing supporters about your mission and stories. Anyone interested in your nonprofit’s future events, goals, and news should visit your website to learn more about how they can assist promote your cause.
And because they don’t have any website-building skills, some people may believe that building a business website is out of their reach. While this may have been a valid concern in 2015, web technology has advanced significantly in recent years, making the lives of small business owners much easier.
