How to Start a Nonprofit Organization the Simple Way

You can start a nonprofit organization just as quickly and easily as a for-profit business when you know what to do. Some people assume that it is difficult to start a nonprofit organization because they are exempt from paying taxes. However, that couldn’t be further from the truth. Below are the three simple steps you need to follow to start a nonprofit organization.

Research Your Industry

It’s important to research your industry if you will start a nonprofit organization. This is because, in the nonprofit sector, a business model (i.e. a project or program) that has already been proven to work is more likely to receive grant funding than a business model that hasn’t been proven. (This is specifically for 501(c)(3) nonprofit organizations). More than one-third of your nonprofit revenue will come from grantmakers. That means your project or program should be aligned with the grantmakers mission and goals and you must prove that it can be done successfully. If you find that your business model hasn’t been proven after conducting extensive research, I strongly suggest you rethink your business model.

Build Your Board of Directors

Your board of directors need to be a group of people you trust, who also have a passion for what you’re doing. These are the people who will be responsible for overseeing the organization (and possibly giving you your first donation). Therefore it’s best that they have experience in running a business (preferably a nonprofit). If you want to be taken seriously by grantmakers, you will need at least five board members (including yourself). Get their full names and addresses because you will need this information when registering the nonprofit organization with the state and federal government.

Register Your Nonprofit Organization at the State Level

After developing a proven business model, it’s time to start your nonprofit organization. You start a nonprofit organization by registering it as a “domestic nonprofit corporation” with your state. This can be as simple as going on your state government website, downloading the application to register a new business, filling it out and sending it back to the state (along with the state filing fee). Depending on the state, it should take less than 30 days for them to approve your application for registration.

Register Your Nonprofit Organization at the Federal Level

To start your nonprofit organization at the federal level and receive your tax exempt status, you must submit a 1023 application as required by the IRS. The 1023 application is for nonprofit organizations that are applying for tax exemption under section 501(c)(3) of the internal revenue code. According to the IRS, it can take anywhere from 3 months to 2 years to get approved for your tax exempt status. However, here at QT Business Solutions, we have been able to get our clients their tax exempt approval in an average of 3 weeks. If you’re ready to start a nonprofit organization (specifically a 501(c)(3), contact us today to get started. We can possibly help you get your tax exempt status fast!

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