There are numerous benefits to formalising your group into a non-profit organisation. Non-profit can receive tax-deductible donations and apply for government grants. In addition, forming a non-profit shelters group leaders from legal liability. However, starting a non-profit club requires filing legal documents on both the federal and state level. The process can be time-consuming and expensive if you hire an attorney. Learn what you need to do to start a non-profit club, so you can decide whether the benefits outweigh the cost.
- Skill level:
Organise your club members. Find out if the majority of members are interested in becoming a formal non-profit group. Elect members into director and board member positions. If necessary, collect dues for incorporation fees. Decide on a group purpose and mission statement.
Draft and file articles of incorporation. Incorporate as a non-profit organisation in your state. Contact your local Secretary of State or Attorney General for specific requirements. If necessary, employ a licensed attorney to assist with drafting your club's articles of incorporation. There is often a small filing fee when submitting corporation documents. For example, the state of California charges £19 for non-profit organisation filing fees.
Write corporate bylaws for your non-profit club. You may want an employer to assist with writing the corporate bylaws, since it is a legal document. Corporate bylaws are easily amended by the group's board members. The document should specify operational information, such as the group's mission, membership requirements and board member duties. Meet with the club's board members to review and approve the final draft.
File for an employee identification number (EIN) and tax-exempt status with the IRS. The necessary forms are available at IRS.gov. An EIN is needed, even if the group does not hire employees. The EIN serves as your group's tax identification number, similar to a person's social security number. For example, you will need an EIN to open the organisation's bank account. Federal tax exempt status will exempt your group from federal income taxes.
Comply with state non-profit requirements. In addition to federal requirements, your state may have its own non-profit requirements. Apply for a sales tax exemption from your state's tax board. Also, apply for a state tax identification number. If required, register as a charity with your state's attorney general.
Tips and warnings
- Companies such as Legalzoom.com offer document preparation and filing services for non-profit organisations. The cost is often lower than hiring an attorney.
- Purchase liability insurance for your non-profit group, especially if you plan to organise community events and participate in fundraising activities. Insurance will help protect your non-profit group's operating budget from legal liability.
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