Starting Your Nonprofit
There are several things to consider when you start a non-profit, especially if you plan to form a 501(c)(3) organization.
Creating a Mission Statement
When you create your mission statement, begin with a broad view of what you want your nonprofit to accomplish, then pare it down to specifics. The process may feel a bit repetitive at first, but this will help you make sure you don't leave out any important details.
501(c)(3) and Other Types of Nonprofits
Tennessee recognizes several types of non-profits, including educational, charitable, scientific, religious, healthcare and veterans organizations. None are automatically tax-exempt. To achieve this status, non-profits must file Form 1023, an Application for Recognition of Exemption, with the IRS.
Considerations for Starting a Nonprofit
Advantages:
Only your corporation's assets or property are vulnerable to your nonprofit's lawsuits or creditor claims. The personal property of trustees, officers and managers is not at risk.
Disadvantages:
- Planning a nonprofit requires significant time and effort.
- If control, autonomy, and independence in running your organization are important to you, nonprofit status may not be right for you.
- Meeting Tennessee's incorporation filing requirements takes time and money.
Requirements and Mandatory Forms for Creating a Nonprofit
- File a charter, which is the same as Articles of Incorporation, with Tennessee's Department of State Division of Business Services. Use Form #SS-4418.
- After you've filed your charter with the Division, you must also file it with the Register of Deeds in the county where your nonprofit has its principal office.
- You may reserve exclusive use of a corporate name by filing an Application for Reserved Name with the Division. This requires Form #SS-4428.
- You can also file an Application for Registration of Assumed Name with the Division. Use Form #SS-4402.
- If your nonprofit originally incorporated in a state other than Tennessee, file an Application for Certificate of Authority with the Division.
- File annual report with the Division on or before the first day of the fourth month following the close of your fiscal year.
Now to Retain Your Nonprofit Status
After you achieve nonprofit status, you must turn your attention to retaining it. In Tennessee, this involves filing your charter and Application for Certificate of Authority, and keeping current with your annual reports.
Tax-Exemption and Other Benefits
- To obtain status as a 501(c)(3) corporation with exemption from federal income taxes, file Form 1023, Application for Recognition of Exemption, with the IRS.
- To retain your tax-exempt status, file Form 990-N, Form 990-EZ or Form 990 with the IRS, depending on your non-profit's annual gross income.
What it Costs to Form a Tennessee Nonprofit
The Volunteer State charges a $100 filing fee for non-profit Articles of Incorporation. There are additional fees to reserve a business name, register an assumed name, and file an application for a Certificate of Authority as a nonprofit formed outside of Tennessee.
The IRS charges an $850 application fee to nonprofits with annual revenues exceeding $10,000. If you expect that your nonprofit's revenues will be less than that, the fee is only $400.
Tennessee & National Nonprofit Resources
United Way's Center for Nonprofits: The United Way of Greater Chattanooga's Center for Nonprofits helps local nonprofits operate efficiently and effectively through training, consulting services and other resources.
Center for Nonprofit Management: The Nashville Center offers workshops, board training and executive education for leaders of nonprofits.
DiscoverET.org: This East Tennessee gateway to online resources offers nonprofit management information regarding funding, grants, publications and volunteer listings.
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.
