1. Apply for a Federal Employer Tax ID # (EIN). This can be done online at www.irs.gov. Applicants can call the IRS at 800-829-4933 and complete the application with the help of an IRS agent and receive the EIN immediately; or the application can be completed online at https://sa1.www4.irs.gov/modiein/individual/index.jsp
2. Apply for a State Employer Tax ID number by contacting its state Employment Development Department.
3. Create and file with its state, Articles of Incorporation and Bylaws (see Exhibit A).
4. Complete IRS Form 1023, Application for Recognition of Exemption (see Exhibit B attached). This application needs to be dated and signed by an officer of the corporation, generally the president or treasurer. Attach a conformed copy of the Articles of Incorporation, approved and dated by the state, and a copy of the Bylaws to Form 1023. New company needs to estimate revenues and expenses in the form of a summary budget for the current year and next 2 years. The information is entered on Part IV of the form, under Financial Data.
5. Complete IRS Form 8718, User Fee for Exempt Organization Determination Letter Request. Attach a check payable to “United States Treasury”; current filing fee is $750 (see Exhibit C).
6. Complete IRS Form 872-C, Consent Fixing Period of Limitation. This is dated and signed by an officer of the corporation, generally the president or treasurer.
7. Prepare and have signed by the board, and submit with the IRS package: Conflict of Interest Resolution and Disqualified Person Resolution
8. Documents in items #4, 5, 6 & 7 are submitted as a package to the IRS. Theforms must be filed within 15 months of incorporation.
9. We filed our start-up documents in early December 2004 and received our approved IRS non-profit determination letter on 4/15/05.
10. Purchase business liability, workers comp, internet liability, directors & officers liability insurance, file fictitious name statement in newspaper. Create personnel policies and find a good payroll service. Shop for and select employee benefits (health insurance, etc.). The Vanguard Group has a nice 403(b) retirement plan that can start off with no match and progress to an employer match; all of the administration can be handled on-line. There are other mutual fund companies that offer investment plans for non-profits; we picked Vanguard because the investment fees are very low and they have a very large selection fund choices.
11. The IRS requires public charities to pass a public support test. The IRS looks at the first 5 years of contributions (reported on tax returns) and requires that at least 33-1/3% need to be from the broad general public, government agencies or publicly supported organizations. After the initial 5 years, the IRS tests the support contribution with each tax return. Consult with your tax accountant for more details.
12. The attorney who helped us incorporate was:
13. Our CPA (who also has a law degree) and who can help with the initial paperwork and on-going tax accounting is:
Mark Lindsay, CPA, JD
Lindsay & Brownell, LLP
14. For strategic planning (and other business development services), a very good company that we have used is:
Rebecca Alvarez & Jenn Tankersley