How to start an Indiana nonprofit

Start by doing research. Is your nonprofit serving a mission in the community? And do you have the means to maintain it? Then make your case: write your mission statement, think about a name, and select your directors carefully. After that, all there’s left to do is file. 

Advantages and disadvantages of having an Indiana nonprofit organization

A nonprofit is an entity or association created to promote and maintain the well-being and greater good of a community, in which profits (or surplus) are directed towards the business and mission rather than divided among the owners and shareholders. Here are the pros and cons of having one in Indiana:
 

PROS

CONS

A nonprofit that forms becomes its own legal entity. It's separate from its founders, directors and others. This means the business, not any individual, is liable for its debts or any other legal issues that may arise. If your nonprofit meets the qualifications for tax-exempt status, it will be exempt from many federal and state taxes. Certain nonprofit purposes qualify for property tax exemptions.

You have much less control over a nonprofit than you would over other business forms. Nobody “owns” a nonprofit. The board controls the company and employs the CEO. It takes a lot of time and money to set up a nonprofit correctly, including securing tax-exempt status. After you're set up, it takes even more effort to maintain your nonprofit status. You'll have to be very careful about the type of activities your nonprofit engages in.

How to form a nonprofit in Indiana

1. Developing a business plan for your Indiana nonprofit

• Define the purpose and goals of the organization.
• Research the issues and determine what resources you have and need.
• Establish your priorities.
• Market your idea to possible volunteers and board members.
• Create a budget and timeline.

2. Writing a mission statement 

A mission statement clarifies your goals and explains how you plan to meet them. As a guideline, describe what, where, when, and how your nonprofit's purpose will be met, as well as who is going to help your nonprofit meet it. It may take a few tries to narrow your ambitions down into a workable plan.

Although you're creating a nonprofit because you want to give back to your community, you still have to meet certain requirements to protect yourself and to ensure that you achieve your organization's goals. When you create a mission statement, you can explain your organization's purpose. Consider what problem or issue your organization wants to address, then focus your statement on including the efforts and values that will guide your nonprofit to these goals.

3. Choosing a unique name 

Your nonprofit's name must be distinguishable from existing names registered with the state of Indiana. This means it shouldn't be the same as or too similar to another organization's name. The name should also not be misleading to the public – it must accurately reflect the nature and purpose of your organization.

4. Filing your Articles of Incorporation in the state of Indiana

This is the legal document that brings the business to life. It includes important information like the nature of the company and the location of the corporate headquarters. Once accepted, the corporation becomes its own legal entity.
 

What to include in the Articles of Incorporation for Indiana nonprofits: Your nonprofit's name. Whether your organization will be for public benefit, mutual benefit or religious benefit. The name and address of your registered agent. The names and addresses of your incorporators. Whether your nonprofit will have members. How your nonprofit's assets will be distributed if it stops operating. The last requirement is very important. Without this provision, you cannot gain tax exempt status.

5. Applying for grants and loans in Indiana 

Grants and loans from federal, state, and private sources are a major source of funding for Indiana nonprofits. A not-for-profit corporation is responsible for complying with grant requirements and keeping appropriate records. It's important for nonprofits to keep money received from grants separate and apart from the nonprofit's general fund. A good reputation in administering grant monies helps nonprofits obtain more funding from these sources. 

What to do after forming a nonprofit organization in Indiana

After forming your Indiana nonprofit organization, you must follow specific guidelines to retain your status:

• File an annual Business Entity Report, along with the appropriate fee. This report is due during your anniversary month every year.
• Keep accurate corporate records books. All files, including your Articles, bylaws, meeting minutes and tax exempt filings, should be easily accessible for review.
• Keep careful financial records, including donations, income from related activities and income from unrelated activities.
• Pay income taxes on any income from commercial activities not related to your charitable purpose. Also, make sure these activities do not make up a substantial portion of your business.
• Do not issue stock or pay dividends to directors or other individuals.

Indiana nonprofit resources

• Business Owner's Guide to State Government: This site has a guide to state and federal requirements for starting and running a business. It includes information for nonprofits.

Still have questions? Learn more about how to register your own nonprofit with Rocket Lawyer and get started today!
 

Key takeaways Starting a nonprofit takes planning, like creating a mission statement, picking a name, and choosing responsible directors to lead the group. There are good things about having a nonprofit in Indiana, like tax breaks and protection from personal lawsuits, but it also comes with extra paperwork and public financial records. After forming an Indiana nonprofit, it’s important to stay organized, follow state laws, and stay focused on helping the community to keep your nonprofit status.

Additional resources

Learning how to enforce a contract is just one step. Explore these additional topics to learn more and take the next steps.

• What is a nonprofit organization?
• How to start a nonprofit organization
• How are nonprofits taxed?
• How to get 501(c)(3) tax-exempt status
• How to register a nonprofit by state