The Heart of Dixie is an inviting place to start an Alabama non-profit corporation. A non-profit offers personal asset protection, state and federal tax exemptions, and tax deductions for certain types of gifts. Read on to learn all about starting a non-profit in Alabama, as well as the state's filing and maintenance requirements.

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Starting Your Nonprofit

When you start a non-profit in Alabama, there are several factors you should take into consideration. Factors can vary depending on whether you want to form a 501(c)(3) or other type of non-profit.

Creating a Mission Statement

Creating a nonprofit means you're giving back to your community, but it still requires that you comply with certain requirements to protect yourself and to ensure that you're meeting your organization's goals. Create a mission statement for your nonprofit, explaining your organization's purpose. Consider the problem or issue that your organization wants to address, then tailor your statement to include the goals and values that will guide how your nonprofit operates. Try to ensure that your business discussions and agreements have the organization's mission in mind.

Considerations for Starting a Nonprofit

Advantages:


  • Incorporation protects your personal assets from lawsuits and creditor claims. It also protects your trustees, officers and volunteers
  • Alabama nonprofits are usually exempt from federal tax on any income that's related to the organization's exempt purposes.
  • Your Alabama nonprofit organization may also receive Alabama's state tax exemption.
  • You may be able to collect tax deductible contributions.
  • There is no need to file a separate application for recognition of exemption with the state of Alabama.
  • Your nonprofit may qualify to receive private and public grant money.

Disadvantages:


  • You may not have individual control and autonomy over your corporation because your nonprofit is not owned by you or your stockholders.
  • Increased paperwork is involved, such as creating bylaws and recording and maintaining corporate minutes.
  • You'll need time and money to apply for the federal tax exemption, and you'll need an accountant or legal professional to help you operate your nonprofit.
  • Your nonprofit's finances are open to public inspection.
  • Charitable organizations in Alabama that solicit contributions within the state must register with the Alabama Attorney General's Office. Some exemptions exist.

Requirements and Mandatory Forms for Creating a Nonprofit

Alabama requires the following forms when you start and operate a nonprofit:

  • Certificate of Formation
  • Name Reservation Certificate
  • Bylaws
  • AAG-Charity Form
  • IRS Form SS-4 for an employer identification number, if your non profit has employees
  • IRS Form 1023 for tax exemption
  • IRS Determination Letter
  • Form 990 or a financial statement for reporting receipts or revenue from donations

How to Retain Your Nonprofit Status

After forming your not for profit organization, you must follow specific guidelines to retain your nonprofit status:

  • Keep detailed records of all your sources of income.
  • File annual reports.
  • Keep unrelated activities separate, and pay taxes on them separately.
  • Make sure your time and resources are related to your organization's exempt status.
  • Keep written disclosures made to any donor who contributes at least $75.
  • Maintain careful records of corporate meetings.
  • Do not distribute any corporate income to board members or anyone else. Salaries may be paid as long as they're reasonable.

What It Costs to Form an Alabama Nonprofit

  • Alabama's Office of the Attorney General, Consumer Affairs Division, charges a $100 fee, although some organizations are exempt.
  • You must pay a $50 probate judge fee with your Articles of Incorporation.
  • IRS Form 1023 requires a filing fee of $850, or $400 if your nonprofit's revenues are less than $10,000 a year.

Applying for Grants and Loans

Find out more information about applying for grants on behalf of your nonprofit by visiting Alabama.gov's Stimulus.

Alabama & National Nonprofit Resources

Alabama Department of Economic and Community Affairs (ADECA): This grant resource center assists nonprofits in researching, writing and obtaining grants.

Alabama Association of Nonprofits: When you become a member, you'll have access to a number of services, including workshops, IRS information, accounting services, and state farm grant opportunities. Membership is free.

Central Alabama Community Foundation: The Central Alabama Community Foundation provides links to resources and other services for nonprofits.

USA.gov for Nonprofits: This site offers information and services about grants, loans, management, tax information and funding directories for all states.

 

Get started Start Your Alabama Non-Profit Answer a few questions. We'll take care of the rest.


Get started Start Your Alabama Non-Profit Answer a few questions. We'll take care of the rest.