Nonprofit Checklist
Interested in starting a Friends nonprofit to support your local Shelter? Here is a checklist:
How to Start a Nonprofit*
VIRGINIA CHARITY GROUP GUIDANCE
*This document was created by a shelter/rescue volunteer on 01/25/2019. It is not intended to be a substitute for professional guidance.
| Item | Comments/Details |
| Decide on a board of directors | Generally, it’s better to have at least 3 board members who are not related through family or business. This is not a steadfast rule particularly for small and/or new non-profits. |
| Obtain IRS Number (EIN) | Apply online for the EIN. Look at the form SS-4 first to make sure you have all the information. There is no fee for this. SS-4 Form and SS-4 Instructions |
| Bylaws | Bylaws are an organization’s internal operating rules. This includes how officers are elected. Many nonprofits post their bylaws online or are happy to send a copy to new groups to use as guidance. https://www.irs.gov/Charities-&-Non-Profits/Other-Non-Profits/Exempt-Organization-Bylaws |
| Develop a conflict of interest policy | The instructions to IRS form 1023 contain a sample conflict of interest policy, which many organizations adopt without change–see pages 26 and 27. |
| Incorporate | Nonprofits are formed in Virginia as non-stock corporations. Mail your articles of incorporation with $75 fee payable to, “The State Corporation Commission” to: Clerk of the State Corporation Commission P. O. Box 1197 Richmond, VA 23218-1197 OR File Online Toll-free number for inquiries: 866-722-2551 Note: Must use PDF submission–can’t use eFile Express Must include certain language required by the IRS. View Sample Articles |
| Open Bank Account | Will need an IRS EIN number. Check with your bank or credit union about other needed documents or information. |
| Submit IRS Application | Actual or estimated average annual income less than $5,000–don’t have to formally apply but still must meet all other requirements and submit an annual tax return. See link which states: “Except for churches, their integrated auxiliaries, and public charities whose annual gross receipts are normally less than $5,000, organizations will not be treated as described in section 501(c)(3) unless they notify the IRS by applying for recognition of section 501(c)(3) status.” Actual or estimated average annual income $5,000 to $50,000. Submit form 1023ez online and pay fee of $275. Sample Form1023ez and Instructions Actual or estimated average annual over $50,000. Include fee of $600 with and complete the full Form1023 with required attachments. Form1023 Instructions See IRS information for charities |
| Submit application as to be approved to solicit charitable donations in Virginia | $100 fee with Form 102 OR $10 Fee if exempt with Form 100 Include copy of IRS application or approval and mail to: Virginia Dept. of Agriculture and Consumer Services Office of Consumer Affairs PO Box 526 Richmond, VA 23218-0526 Phone: 804-786-1343 The required form depends on your past income or future estimated income. Make sure to include all required attachments. |
| Submit application for a business license (if required – check local rules) | Either through the city or county you are located in. Check local rules for requirements to obtain a business license and the exclusion of charity income for exemption from fees if you are required to file annually. |
| File a personal property tax return (if required – check local rules) | Either through the city or county you are located in. Check local rules for requirements to file a property tax return. |
| Apply for Exemption from Virginia Sales Taxes | Fairly straight-forward process. Details |
Annual Filings After Approval:
- State Corporation Commission – list officers and pay annual fee.
- Commonwealth of Virginia – annual filing and fee under the charitable solicitations law (form 102 or 100).
- IRS – Tax Return – 990, 990ez, or 990N post card depending on income. No fee, easy online form for small groups–CRITICAL TO FILE. If the IRS receives nothing, they may assume you are no longer in operation and revoke your tax-exempt status.
- Business license renewal (if applicable).
- Personal property tax (if applicable).
Are you Exempt from the Virginia Charitable Solicitations Law?
Find out who is exempt. Note that if your income exceeds the threshold later, you will have to complete the full filing.
Common reason for exemption: “Charitable organizations that do not intend to solicit and receive, during a calendar year, and have not actually raised or received, during any of the three next preceding calendar years, contributions from the public in excess of $5,000, if all of their functions, including fund-raising activities, are carried on by persons who are unpaid for their services and if no part of their assets or income inures to the benefit of or is paid to any officer or member. Nevertheless, if the contributions raised from the public, whether all of such are or are not received by any charitable organization during any calendar year, shall be in excess of $5,000, it shall, within 30 days after the date it has received total contributions in excess of $5,000, register with and report to the Commissioner as required by this chapter.”
When may donors consider their donations charitable deductions?
“Generally, organizations required to apply for recognition of exemption must notify the Service within 27 months from the date of their formation to be treated as described in section 501(c)(3) from the date formed.“ This means if you are incorporated on 1-1-19 and apply to the IRS for non-profit status within 27 months, your subsequent approval will apply to all donations you receive back to 1-1-19, your date of formation. Good to know if people want to donate before you get your official approval. Just be careful to explain you’ve applied for approval from the IRS and they can’t consider their donations deductible for tax purposes until you get your official approval.
What organizations are not required to apply for IRS exemption?
Except for churches, their integrated auxiliaries, and public charities whose annual gross receipts are normally less than $5,000, organizations will not be treated as described in section 501(c)(3) unless they notify the IRS by applying for recognition of section 501(c)(3) status. Note: must follow all other requirements including the necessary language in the Articles of Incorporation and an annual tax return (990, 990ez or 990-N).
Public Charity versus Private Foundation: It’s usually more advantageous to be considered a public charity. Read about private foundations and public charities.
Membership versus Non-membership Corporation: With a membership structure, your members elect the board of directors and make many important decisions. You must have an annual membership meeting to elect the directors. With a non-membership corporation, your board of directors elects new board members and makes all important decisions.
“Although a nonprofit corporation can choose to have members who have voting rights, many nonprofit corporations decide not to adopt a membership structure and, in the interests of efficiency, leave the decision making up to the directors. If a nonprofit does opt for a membership structure, the members participate in major corporate decisions. Specifically, the members have the exclusive right to elect directors, amend articles and bylaws, and vote on a merger or dissolution of the corporation.”