How to start a nonprofit in New York - 501c3 Organization

Summary

This video offers a comprehensive guide to forming a 501(c)(3) nonprofit corporation in New York. It outlines two main options: DIY or hiring a service, detailing steps like securing a unique name, appointing a registered agent, choosing a corporate structure, selecting directors and officers, filing a Certificate of Incorporation, and establishing operating procedures. It also covers the necessity of obtaining an EIN, registering for tax accounts, and applying for federal tax-exempt status. The video concludes with the benefits of professional services and encourages viewers to visit startupsavant.com for more detailed guidance.

Takeaways

• 😀 A nonprofit corporation is a purpose-driven organization that aims to generate income to further a social cause or provide a public benefit, rather than for personal profit.
• 🔍 There are two primary methods to form a nonprofit corporation: doing it yourself or hiring a professional service.
• 🏷️ To form a nonprofit, you must choose and secure a name that aligns with your mission and follows New York's naming guidelines.
• 👤 Appointing a registered agent is crucial as they handle legal documents and reminders for necessary filings on behalf of your nonprofit.
• 🏢 You need to decide on the corporate structure of your nonprofit, which may include religious or non-religious corporations, each with specific rules.
• 👥 Selecting directors and officers is essential as they form the board and are responsible for the nonprofit's operations and management.
• 📄 Filing the Certificate of Incorporation with New York is a key step in正式成立 a nonprofit corporation.
• 📝 Operating procedures such as bylaws and a conflict of interest policy are necessary to govern the nonprofit's operations and ensure ethical decision-making.
• 💼 An organizational meeting is the first official gathering to adopt bylaws, appoint officers, and establish the nonprofit's initial operations.
• 💼 After formation, apply for an EIN, register for tax accounts, and pursue 501(c)(3) federal tax-exempt status to maximize the nonprofit's financial benefits.
• 💼 Hiring a professional service can streamline the nonprofit formation process, offering assistance with filings and acting as a registered agent.

Q & A

What is a 501(c)(3) nonprofit corporation?

A 501(c)(3) nonprofit corporation is a type of organization that is driven by a mission to further a social cause or provide a public benefit rather than generating profit for its owners.

How many ways are there to form a nonprofit corporation in New York?

There are two ways to form a nonprofit corporation in New York: doing it yourself or hiring a professional service to do it for you.

What is the first step in forming a nonprofit corporation on your own?

The first step is to choose and secure your nonprofit's name, ensuring it aligns with your mission and follows New York's naming guidelines.

Why is it important to check if the chosen name is available as a URL?

Checking if the name is available as a URL is important to secure the domain even if you don't plan on making a website immediately, preventing others from taking it.

What is the role of a registered agent for a nonprofit corporation?

A registered agent is responsible for receiving and forwarding legal papers on behalf of the nonprofit, including official correspondence and document filings.

What types of corporate structures do New York-based nonprofits need to determine before moving forward?

New York-based nonprofits need to determine if they will be a religious corporation or a non-religious corporation, each with its own set of rules and regulations.

What are the responsibilities of the directors in a nonprofit corporation?

The directors of a nonprofit are responsible for overseeing the operations of the organization and forming the board of directors. They create policies and oversee management-level hiring.

What information must be included in the Certificate of Incorporation in New York?

The Certificate of Incorporation must include information such as the corporate name, purpose, county location, directors, registered agent, registered office, tax exemption provisions, and incorporator.

Why are bylaws important for a nonprofit corporation?

Bylaws are crucial as they act as a constitution for the nonprofit, outlining how the organization will be governed, the roles of directors and officers, meeting procedures, and other operational guidelines.

What is the purpose of an Employment Identification Number (EIN) for a nonprofit?

An EIN is like a social security number for a nonprofit, used for filing for 501(c)(3) status, opening a bank account, applying for tax-exempt status, and submitting tax returns.

What is the benefit of hiring a professional service to form a nonprofit corporation?

Hiring a professional service can help ensure that reports are filed on time, keep business mail organized, and provide assistance with legal papers and official mail during regular business hours.

Outlines

00:00

🏢 Forming a Nonprofit Corporation in New York

This paragraph outlines the process of forming a 501(c)(3) nonprofit corporation in New York. It emphasizes the purpose-driven nature of nonprofits, which aim to generate income for social causes or public benefits rather than personal profit. The paragraph introduces two options for formation: doing it yourself or hiring a service. For DIY formation, it details the steps including securing a unique and compliant nonprofit name, appointing a registered agent, choosing the organization type, selecting directors and officers, filing the Certificate of Incorporation, and establishing operating procedures such as bylaws and conflict of interest policy. It also mentions the need for an EIN and registering for tax accounts, culminating in applying for 501(c)(3) federal tax-exempt status.

05:01

📝 Operating Procedures and 501(c)(3) Application

The second paragraph delves into the specifics of operating a nonprofit corporation, starting with drafting bylaws that act as a constitution for the organization, detailing governance, roles, meetings, voting, record-keeping, dispute resolution, and bylaw amendments. It also stresses the importance of a conflict of interest policy to ensure decisions benefit the organization. The paragraph describes the organizational meeting's agenda, including appointing temporary officers, adopting bylaws, and recording minutes. It continues with the necessity of obtaining an EIN for various legal and financial processes and registering for state and city tax accounts. The paragraph concludes with information on applying for 501(c)(3) federal tax exemption, detailing the forms and fees involved, and the benefits of tax-exempt status. It also briefly touches on the option of hiring a professional service for nonprofit formation, highlighting the advantages such as timely reporting and organization.

Keywords

💡501(c)(3)

501(c)(3) refers to a subsection of the United States Internal Revenue Code that designates a type of non-profit organization exempt from federal income tax. In the context of the video, forming a 501(c)(3) nonprofit corporation is the ultimate goal, as it allows the organization to operate tax-free, with the income being used for the furtherance of a social cause rather than for personal profit.

💡Nonprofit Corporation

A nonprofit corporation is an organization that is not operated for the purpose of generating profit for its owners. Instead, it aims to further a social cause or provide a public benefit. In the video, the process of forming such a corporation in New York is outlined, emphasizing the steps necessary to achieve this status.

💡Registered Agent

A registered agent is an individual or a company designated to receive official correspondence and legal notices on behalf of a business entity. The video explains that appointing a registered agent is a crucial step in forming a nonprofit corporation, as they are responsible for handling legal documents and ensuring compliance with regulations.

💡Certificate of Incorporation

The Certificate of Incorporation is a legal document filed with the state to formally establish a corporation. In the video, it is mentioned as a necessary step in forming a nonprofit corporation, which includes details such as the corporate name, purpose, directors, and registered agent.

💡Bylaws

Bylaws are the rules and regulations that govern the internal operations of an organization. The video emphasizes the importance of creating bylaws for a nonprofit corporation, which serve as a 'constitution' for the organization, outlining how it will be governed and operated.

💡Board of Directors

The board of directors is a group of individuals who oversee the management of an organization and are responsible for making major decisions. The video explains that the directors form the board of a nonprofit corporation and have collective power to create policies and oversee management-level hiring.

💡EIN (Employer Identification Number)

An EIN is a unique identification number assigned by the IRS to business entities for tax purposes. The video mentions that obtaining an EIN is necessary for a nonprofit corporation to file for 501(c)(3) status, open a bank account, and handle other tax-related matters.

💡Conflict of Interest Policy

A conflict of interest policy is a set of rules designed to ensure that decisions made within an organization are in the best interest of the organization rather than individual members. The video highlights the need for a nonprofit to have such a policy to maintain transparency and ethical governance.

💡Tax-Exempt Status

Tax-exempt status refers to the condition of being exempt from federal income tax. The video explains that applying for 501(c)(3) status, which confers tax-exempt status, is a key step for nonprofits to ensure that their income is not taxed, allowing more funds to be directed towards their mission.

💡Organizational Meeting

An organizational meeting is the first official meeting of a newly formed nonprofit corporation. The video describes this meeting as a place where bylaws are adopted, officers are appointed, and other foundational governance decisions are made, setting the stage for the operation of the nonprofit.

Highlights

A nonprofit corporation is purpose-driven and not focused on making profits for its own benefit.

Nonprofits aim to generate income to further a social cause or provide public benefits.

There are two ways to form a nonprofit corporation: doing it yourself or hiring a service.

To form a nonprofit on your own, you must choose and secure a name that aligns with your mission and follows New York's naming guidelines.

The name must be distinct from any other corporation in New York and should not be offensive or misleading.

A registered agent is required to receive and forward legal documents on behalf of the nonprofit.

Nonprofits in New York must determine their corporate structure, such as religious or non-religious corporation.

Directors and officers are essential for the governance and management of a nonprofit corporation.

The Certificate of Incorporation is a necessary document to officially form a nonprofit corporation in New York.

Bylaws are crucial for governing the nonprofit, outlining roles, meetings, voting procedures, and record-keeping.

A conflict of interest policy ensures decisions are made in the best interest of the nonprofit, not individuals.

An organizational meeting is the first official gathering to adopt bylaws and policies, and appoint officers.

An EIN is necessary for a nonprofit, functioning like a social security number for tax purposes and banking.

Nonprofits must register for applicable tax accounts with the state and city of New York if conducting business there.

501(c)(3) status allows nonprofits to apply for federal tax exemption, keeping more funds for their cause.

Form 1023 or Form 1023-EZ is used to apply for tax-exempt status, with fees and eligibility varying based on annual gross receipts.

Hiring a professional service to form a nonprofit can include additional fees but offers benefits like timely report filing and organization.

Nonprofit corporations are ideal for organizations aiming to support a cause rather than make personal profits.

Transcripts

How to form a 501(c)(3) nonprofit corporation.

A nonprofit corporation is purpose-driven.

A company whose goal is not to make profit for themselves.

Typically, they are an organization

that wants to make money

in order to help further a social cause

or provide a public benefit.

Let's get you started on the right path

to forming a nonprofit corporation in New York.

If you're not sure what a nonprofit is,

check out our other video,

what is a nonprofit?

Linked below.

How do you form a nonprofit corporation?

There are two ways.

You can do it yourself

or you can hire a service

to do it for you.

Let's take a look at both options

and help you decide how to go

about forming your own nonprofit corporation.

Option one, do it yourself.

If you want to save money,

you can form a nonprofit corporation on your own.

Let's take a look at the steps

to forming a nonprofit corporation on your own.

One, choose and secure your nonprofit's name.

The name you select

for your nonprofit will establish its brand.

It's the first thing most people will learn

about your organization.

It's important to pick a name

that both aligns with your mission

and follows the rules

of naming guidelines in New York.

You'll need to check New York's specific naming requirements

but in general, follow these rules when choosing a name.

The name you pick

for your organization should not include any words

or terms that could be considered grossly offensive

or misleading.

The name must be distinct

from that of any other corporation in New York.

For more information on what makes the name distinct,

check out our other video,

how to name your business in New York,

linked below.

Once you have a name selected,

do a name search to make sure it's available in New York.

After doing a New York name search,

you'll want to do a domain search to see

if your name is available as a URL.

Even if you don't plan on making a website today,

you may want to secure the URL

so someone else doesn't take it.

Two, appoint a registered agent.

The registered agent can be an individual

in the company including yourself

or you can hire a professional service authorized

to do business in New York.

They will send and receive legal papers on your behalf.

These documents include official correspondence

like legal summons and document filings

which your registered agent will receive

and forward to you.

Your registered agent will also help remind you

to file the necessary reports.

Failure to properly maintain your nonprofit can result

in fines and dissolution

so this assistance is valuable.

Three, choose your organization type.

Before moving forward,

New York-based nonprofits need to determine what type

of corporate structure they will have.

Choose from the following,

religious corporation.

There are separate rules and regulations that apply

to religious corporations operating

in the state of New York.

To learn more about the requirements

to start a religious corporation in New York,

access the Consolidated Laws of New York.

Non-religious corporation.

If your nonprofit's purpose is related to any

of the definitions found in section 404,

you must obtain approval

from the appropriate governing body.

This approval must accompany

your Certificate of Incorporation application.

You can find section 404 linked below.

If your nonprofit does not fall

into one of these categories,

you are not required to submit approval letters

along with your Certificate of Incorporation.

Four, select directors and officers.

Your nonprofit corporation will be made up

of some number of directors and officers.

The directors of a nonprofit are responsible

for overseeing the operations of the organization.

Together, they form the board of directors.

The power and influence of the directors

over the organization comes from them as a board.

The directors themselves do not have any authority

as individuals.

The board typically creates the policies

that govern the nonprofit.

They also oversee management level hiring

such as the company officers.

The officers of the nonprofit such as the president

or secretary are individuals with responsibilities

and the authority to execute based

on their job description.

Together, the officers on the board will come together

to make up the organizational structure

of your nonprofit.

An officer may also be on the board of directors

and serve both roles

if allowed to do so by the organizational bylaws

which we will discuss later.

If your organization plans to apply

for 501(c)(3) status for federal tax exemptions,

it must elect at least three directors not related

to each other, a president,

at least one vice-president, a secretary

and a treasurer.

Five, file the Certificate of Incorporation.

To form a nonprofit corporation,

you'll need to file official papers with New York.

In New York,

this is called the Certificate of Incorporation.

Some possible information

in the Certificate of Incorporation

you may have to include is,

corporate name, purpose, county location,

directors, registered agent and registered office,

tax exemption provisions and incorporator.

For more information on the sections

of New York's Certificate of Incorporation,

check out our page linked below.

Six, operating procedures and housekeeping.

Once your nonprofit corporation has been formed,

you'll want to start getting the structure of it together

and determine how your nonprofit will be run.

Starting with the bylaws

and conflict of interest policy.

Your bylaws are the rules that determine

how your organization will be governed and run.

You can think about it as a constitution

for your nonprofit.

It makes the rules

and priorities clear for everyone involved.

In your bylaws,

be sure to include how the non-profit will be governed,

the roles of directors and officers,

how meetings are held,

voting procedures,

electing officers or directors,

how records will be kept and managed,

how disputes will be handled

and how bylaws will be added and amended in the future.

When you're ready to get started,

check out some bylaws templates linked

in the description below.

The conflict of interest policy are the rules set

to ensure that decisions being made

for the nonprofit are based

on what is best for the organization

and not being motivated

by what is best for individuals.

You'll want to make sure you have a draft

of both the bylaws and conflict of interest policy

before your organizational meeting.

We have templates of both bylaws

and conflict of interest policy linked

in the description below.

An organizational meeting is the first official meeting

of your nonprofit.

Some of the things that are discussed

in a typical organizational meeting are,

taking attendance to show you have a quorum,

appointing temporary officers and chairman,

adoption of bylaws

and adoption of conflict of interest policy.

It's important to record minutes of the meeting

and have it signed by all attending directors.

We have some corporate minutes templates linked below

to help you get the ball rolling.

After your nonprofit has been formed,

you'll need to apply for an EIN

or Employment Identification Number.

An EIN is like a social security number

for your nonprofit

and it's used for things like filing

for 501(c)(3) status, opening a bank account,

applying for tax-exempt status

and submitting tax returns.

For more information on EINs,

check out our other video linked below.

You will need to register for all applicable tax accounts

with the state of New York

and the city of New York

if you'll be conducting business there.

Read the state's tax guidance

for new businesses linked below

and file for the appropriate state

and or city account.

Seven, apply for 501(c)(3) status,

federal tax exemption.

What is federal tax-exempt status

and why do you want it?

When a corporation generates income,

that corporation has to pay a federal income tax.

As a nonprofit, your goal is to generate income

that is used to help further a cause

rather than fill the pockets

of the company employees.

Because of this, the federal government allows

that nonprofits' income not be taxed

so that more of the money can go

towards the cause that the nonprofit is supporting.

Before your nonprofit can apply for 501(c)(3) status,

it must file the Certificate of Incorporation

with the required provisions,

adopt the bylaws and conflict of interest policy

and have an EIN number.

In order to file for tax-exempt status,

most organizations will need to file Form 1023 online

or by mail and pay a fee of $600.

If your organization's annual gross receipts

are below $50,000,

then you may be able to file Form 1023-EZ

with the fee of $275.

You can check your eligibility

with the link in the description below.

Once you've received your 501(c)(3) determination letter

from the IRS,

you can file for corporate franchise tax exemption

using Form CT-247.

Option two.

The second way to form a nonprofit

is to hire a professional service

to create your nonprofit for you.

Hiring a professional service to file your forms

and act as your registered agent

for the nonprofit will cost you an additional 50 to $150.

This fee only covers formation

of a nonprofit corporation.

If you wish for the professional service

to file for 501(c)(3) status,

the cost may go up to as much as $1,700

plus filing fees.

However, there are several benefits

to working with a pro.

A hired registered agent helps

with getting your reports filed on time,

helps you stay organized

by keeping your business mail separate

and is available at all regular business hours

to accept official mail

and legal papers on your nonprofit's behalf.

If you want to form an organization

or company in New York

with the purpose being to help a cause

rather than make a personal profit,

a nonprofit corporation is the best way to do that.

Now you know all the steps

to form a nonprofit in New York.

For a more detailed guide,

visit our site at startupsavant.com.

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If you have questions or encounter any roadblocks,

leave a comment below.

Good luck in starting your nonprofit.