Overview of Nonprofit Incorporation
Nonprofit corporations are incorporated organizations consisting of three or more members joined for a common, nonprofit purpose. To incorporate a nonprofit, choose a legally available business name and file for an Employer Identification Number (EIN). Prepare and file your articles of incorporation with your state’s corporate filing office, and pay a filing fee. After incorporating, you can apply to the IRS for 501(c)(3) tax-exempt nonprofit status. Incorporating your nonprofit shields your personal assets and gives the organization legal status needed to apply for funding. An unincorporated nonprofit has no legal protections.
Legal and Tax Considerations
The IRS has specific forms and guidance for creating nonprofits. You must file articles of incorporation and an IRS form to get tax-exempt status. Each state also has requirements for incorporating.
Importance of Incorporating
The purpose of incorporating is to protect board members and volunteers from personal liability. For example, if your nonprofit is sued, your personal assets are typically protected.