Starting Your Nonprofit
Starting a non-profit doesn't have to be difficult, but you'll have to meet some requirements, particularly if you want to form a 501(c)(3) organization.
Creating a Mission Statement
A mission statement can help guide your non-profit toward meeting its goals. Start with a broad view, then pare it down to specifics. The process might involve some repetition, but this will help you avoid leaving out important details.
501(c)(3) and Other Types of Nonprofits
South Carolina recognizes several types of non-profits, including charitable, educational, religious, healthcare, scientific and veterans organizations. None are automatically tax-exempt. To achieve tax-exempt status, non-profits must file Form 1023, an Application for Recognition of Exemption, with the IRS.
Considerations for Starting a Nonprofit
Advantages:
- Only assets and property owned by your nonprofit are at risk in lawsuits or creditor claims.
- Non-profits may qualify for tax-exemption.
Disadvantages:
- Planning a nonprofit involves a significant amount of time and effort.
- If control and autonomy in running your organization are important to you, nonprofit status might not be right for you.
- It takes time and money to meet South Carolina's incorporation filing requirements.
Requirements and Mandatory Forms for Creating a Nonprofit
- If you're not ready to file for incorporation, but you want to reserve your name, you can file an Application to Reserve Name with the Secretary of State. The application holds your selected name for 120 days.
- You must file Articles of Incorporation with the Secretary of State.
- If your nonprofit was originally incorporated in a state other than South Carolina, you must file an application for a Certificate of Authority to Transact Business with the Secretary of State.
- If you're applying for 501(c)(3) tax-exempt status with the IRS, you can also file a South Carolina form for 501(c)(3) attachment and include it with your Articles of Incorporation.
How to Retain Your Nonprofit Status
After you secure nonprofit status for your organization, you must focus on keeping it. If you plan to solicit contributions from the public, there are annual registration and financial reporting requirements you must meet under the terms of South Carolina's Solicitation of Charitable Funds Act. These include annual financial reports for charitable organizations, an Application for Registration Exemption, payroll deduction forms and a registration statement for charitable organizations. .
Tax-Exemption and Other Benefits
- To obtain status as a 501(c)(3) corporation, nonprofits must file Form 1023, an Application for Recognition of Exemption, with the IRS.
- To retain tax-exempt status, file Form 990-N, Form 990-EZ or Form 990 with IRS, based on your non-profit's yearly gross income.
What it Costs to Form a South Carolina Nonprofit
It costs $25 for non-profits to file Articles of Incorporation in the Palmetto State. Exceptions exist if you're incorporating a political association. In this case, the fee is $50 because an extra CL-1 form must also be filed. There are additional fees to reserve a business name prior to incorporation, and to file an application for a Certificate of Authority to Transact Business if your nonprofit was formed out of state.
The IRS charges an application fee of $850. If you expect that your nonprofit's annual revenues will fall below $10,000, this fee is only $400.
South Carolina & National Nonprofit Resources
South Carolina Association of Nonprofit Organizations: SCANPO's website offers online resources, a job center, training opportunities, a consultant directory, recommendations for best practices, and national partner links.
South Carolina State Library: The Library's Grant and Funding Sources section provides a schedule of grant training classes and an online directory database of foundations that give grants to nonprofits.
This article contains general legal information and does not contain legal advice. Rocket Lawyer is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.
