Establishing a nonprofit organization is an excellent way to make a change in your community and use your gifts to make the world better. Starting a nonprofit organization is by no means an easy ordeal and piloting the monetary aspect can be difficult. This is because, starting a nonprofit usually requires hard work, consistency, endurance, commitment, patience, and critical thinking. We are providing you with detailed information on what it costs to start a nonprofit, and to help you figure out your starting expenses to ensure success down the line.
How much does it cost to start a nonprofit organization?
When starting a nonprofit organization, financial planning is a priority. To get your nonprofit up and running, there are some standard fees you will need, and this cost ranges from $283 to over $700. They include expenses such as:
- Incorporation fees: $0 to $250 (depending on the state).
- 501(c)(3) fees: $600 or $275 for filing the 1023 or 1023EZ forms, respectively.
- Hiring employees
- Name reservation and trademark registration: $25 to $450.
- Website and branding: approximately $15 per month for hosting and $10 to $50 for domain registration.
- Insurance: less than $500/year
- Office space
What is an incorporation fee?
The primary cost you incur when starting a nonprofit organization is an incorporation fee. It is needed by not-for-profits with a long-term mission, high level of accountability, and working on a larger monetary and structural scale. This may not be necessary for small or momentary nonprofit groups. You should consider the advantages and disadvantages involved before concluding to seek or not seek it. It costs between $25 and $125, and this depends on the state where the nonprofit will be established.
How much does filing a 501(c)(3) status cost?
As soon as your incorporation has been approved by your state, you are expected to apply for 501(c)(3) status with the IRS within 27 months of your approval. There are several fees associated with obtaining your 501(c)3 status, and this depends on the state your nonprofit is established. They are,
- Form 1023, which grants immunity against federal income taxes and costs $600, and
- Form 1023-EZ which can be filed by Nonprofit organizations with less than $50,000 revenue. This costs only $275.
- The cost can increase if you hire a service provider to assist you with completing the paperwork. Costs can range from $125 to $250 per hour.
How much does it cost to hire an employee?
In a nonprofit organization, hiring an employee is optional, so you need to decide if you will hire employees, use volunteers, or both in order to determine the cost and how to include those costs in your budget.
NOTE: It is important to request for an Employer Identification Number (EIN) when filing for tax-exempt status. This saves money on some costs in the long run, even if you don’t have employees yet. Other fees may include a business license fee, insurance, outreach or program expense, cost of supplies, postage, and a fee for charitable solicitation. Check other resources, e.g. your state’s website so that you know all the fees you will need.
You can also contact the team at QT Business Solutions to discuss how we can help you setup your non-profit organization and get it approved in 90 days or less.