What to Know About Starting and Running A Nonprofit
How does a nonprofit work?
A nonprofit works just like any other business except any profits are exempt from taxes to be reinvested into its primary charitable purpose. Nonprofits vary in size and purpose, but should all be run like a business for sake of documenting the charity’s assets are being used solely for its specific charitable purpose. The formation and running of a nonprofit have some major differences in for-profit business entities but should be run substantially the same.
To be able to accept charitable donations, you’ll need to first set up your nonprofit with your state and the Internal Revenue Service (“IRS”). Then you’ll have annual filings with your state and the IRS to maintain your nonprofit status. Depending on the size of your nonprofit, these filings may be as simple as providing current information for your organization and certifying it is still a small nonprofit or as complex as any other business tax return.
What is the structure of a nonprofit?
All nonprofit organizations are first formed on a state law basis. There are many different types of nonprofits but, in Georgia, all nonprofits are formed as corporations. This is done by filing Articles of Incorporation with the Georgia Secretary of State (“SOS”) – but before you file, make sure you have everything you need! The basic online forms for the SOS do NOT include all of the language required for nonprofit status with the IRS. SWWW attorneys usually file the Articles of Incorporation for our clients to make sure we add all of the language you need for your specific type of nonprofit. As part of registering with the SOS, you are also required to publish a Notice of Incorporation in the legal organ (i.e. a specific newspaper) in the county where you are forming the nonprofit.
While you are waiting on your approval from the SOS, you’ll need to choose your directors and officers, draft your nonprofit entity documents, and request a tax identification number from the IRS. Your entity documents should include Bylaws and Organizational Minutes.
After a nonprofit is approved by the SOS, your entity documents have been completed, and you have a tax number, you then need to file an application with the IRS to receive nonprofit status for taxes. This is the step that allow your donors to make tax deductible donations to your nonprofit! The IRS has different applications for different types of nonprofits. Most small nonprofits are public charities whose IRS applications are filed online.
Nonprofit resources in Georgia:
- Georgia Center for Nonprofits https://www.gcn.org/
- National Council of Nonprofits https://www.councilofnonprofits.org/
- Internal Revenue Service (IRS) https://www.irs.gov/charities-and-nonprofits
- StayExempt (an IRS website for nonprofits) https://www.stayexempt.irs.gov/
- Charities Division of the Georgia Secretary of State https://sos.ga.gov/index.php/charities
- Guidstar https://www.guidestar.org/
- Community Foundations in Georgia (search for yours: https://www.tgci.com/funder/community-foundation-central-georgia)
How Our Attorneys Can Help You Start A Nonprofit
The business law attorneys at SWWW are available to help you at any stage of your nonprofit’s life cycle. We routinely form nonprofits for our clients and advise them on what annual forms they need to file to stay in good standing with the SOS and IRS and continue providing donors a tax deduction. We take pride in helping organizations that improve our communities and better the lives of our neighbors!
Call or contact the law office of Smith, Welch, Webb and White for experienced attorneys that can serve your legal needs. We have six convenient locations in McDonough, Stockbridge, Peachtree City, Jackson, Barnesville, and Griffin. We serve clients all over the state as one of Georgia’s most respected law firms.
Any representations regarding the law in this Blog is made available for educational purposes only as well as to give you general information and a general understanding of the law, not to provide specific legal advice. By using this blog site you understand that there is no attorney client relationship between you and the Blog publisher. The Blog should not be used as a substitute for competent legal advice from a licensed professional attorney in your state.
Amy Fletcher’s primary areas of practice include taxation, corporation/business organizations, trusts, probate, and estate planning. Amy graduated magna cum laude from Wesleyan College in 2006 with a degree in Business Administration with an Accounting concentration. Her Wesleyan honors thesis, “Benford’s Law [of Physics] as an Auditing Tool”, led her first to a career as an auditor, where she earned her license as a Certified Public Accountant. She went on to receive her J.D. degree from the Mercer University Walter F. George School of Law in 2012 and her LL.M. in Taxation from the University of Alabama in 2013.