Congratulations! You have decided to start a California nonprofit for religious, charitable, scientific, literary, or educational purposes. You will need to take specific steps to make sure you satisfy the requirements for a California nonprofit formation. Once you set up a California nonprofit corporation with the Secretary of State, you can apply for tax exempt status (501C3) with the IRS. Read on to learn more.
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Steps to Form California Nonprofit
There are several requirements for a California nonprofit to organize and run a California nonprofit under state law:
- Select the first corporate directors;
- Select a name for your California nonprofit (cannot be the same or similar to an existing corporate name);
- Select a corporate structure for the nonprofit;
- Prepare and file the articles of incorporation;
- Prepare the nonprofit corporate bylaws;
- Appoint a registered agent;
- Obtain an Employer Identification Number;
- Obtain California State Tax Identification Number;
- Hold a meeting with the board of directors; and
- Create a corporate records binder.
Keep in mind, there are four corporate structures you may choose from when creating your nonprofit corporation: religious corporation, public benefit corporation, mutual benefit corporation, and mutual benefit common law interest development.
Requirements for a California Nonprofit to Get Tax Exempt Status
Once your nonprofit corporation is created, you can apply for your state and federal tax exemption status. Follow these steps to get started:
- Complete and file Form 1023 federal tax exemption application. This form is complex to complete but a definite requirement for a California nonprofit. You may want to work with a legal document preparer to help you. The form will need you to provide a lot of information about your organization (ex – organizational structure, finances, governance policies, and operations).
- Obtain California state tax exemptions. Once your federal tax exemption is obtained, you can ask for California state tax exemption status. Complete FTB 3500A, Submission of Exemption Request. Consider working with a legal document preparer to complete this form as well.
Remember, it can take up to a year to get nonprofit tax-exempt status with the federal government and state. In addition, you must register for charitable solicitation as well if you plan to conduct fundraisers for your organization. Upon creating your tax-exempt nonprofit, you will be able to apply for grants, accept donations, and your nonprofit will be exempt from federal income tax.
Contact A People’s Choice today for more information about filing with the Secretary of State and other requirements for a California nonprofit. We can help you prepare the forms you need to get federal and state tax exempt status. We provide flat fee document preparation services to set up all California nonprofits. Call us today at 800-747-2780.
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