How to start an Utah 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 a Utah 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 Utah:
 

PROS

CONS

Utah not-for-profits are exempt from Utah income tax. Nonprofit corporations may provide their shareholders, directors, and officers with protection from liability. Some Utah nonprofits have advantages in fundraising, especially 501(c)(3) nonprofits. A nonprofit corporation can outlive its original organizers, unlike partnerships and associations. Not-for-profit organizations may be exempt from property taxes on all or part of their real property.

Although nonprofits are good for managing a large number of members, they're not a good choice if you want to retain personal control of your organization. Nonprofits require more time and money to create and maintain than sole proprietorships or partnerships.

How to form a nonprofit in Utah

1. Developing a business plan for your Utah 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 Utah. 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 Utah

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.
 

Other forms and requirements for Utah nonprofits: Your nonprofit must publish either the intent to file, or the actual filing, of its Articles of Incorporation in two newspapers. Proof of publication should be kept with the nonprofit's minutes. If your corporation is a 501(c)(3) nonprofit, submit Form 1023, Application for Recognition of Exemption, to the Internal Revenue Services. Nonprofits exempt from federal tax are automatically exempt from Utah Franchise and Income Tax. 501(c)(3) nonprofits may apply for exemption from Utah sales tax by submitting Form TC-160, along with a copy of the IRS exemption letter, to the Utah State Tax Commission, Religious and Charitable Section. Nonprofit organizations that will solicit donations must also register with the Utah Department of Commerce, Division of Consumer Protection. Submit the Charitable Organization Permit Application Form, along with copies of the IRS exemption letter, your Articles of Incorporation, bylaws, copies of contracts with any fundraisers, and IRS Form 990 or annual financial report. Board members should avoid conflicts of interest. They must disqualify themselves from decisions if a conflict is present. Nonprofits should respect the intentions of their donors in areas such as anonymity, and the use of gifts. Written agreements can help avoid disputes about how gifts will be used. Nonprofits operate for public purposes with public support, so information regarding your nonprofit's mission activities and finances should be made available to the public.

5. Applying for grants and loans in Utah 

Grants and loans from federal, state, and private sources are a major source of funding for Utah 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 Utah

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

• Nonprofit corporations must file annual reports with the Utah Department of Commerce, Division of Corporations.
• File a Charitable Organization Permit Application Form Renewal 12 months after the original filing.
• A nonprofit corporation should maintain complete books and records of accounts, as well as minutes of corporate meetings, at its registered office.

Here are some additional best practices for retaining your nonprofit status:

• Keep detailed records of all sources of income.
• Keep unrelated activities separate from your nonprofit, and pay separate taxes on them. Unrelated activities could jeopardize your nonprofit status if they make up a substantial portion of your business.
• Ensure that the time and resources spent on your nonprofit are related to the organization's exempt status.
• Maintain detailed records of corporate meetings.
• Make sure that if and when your nonprofit dissolves, its assets are distributed to another tax-exempt group.
• Do not make loans to any of your directors or officers.
• Do not issue shares of stock or pay out dividends or other shares of income to members, directors, or officers.

Utah nonprofit resources

1. Utah Nonprofits Association: UNA provides training, networking, information, discounts, and advocacy for Utah nonprofits.
2. National Council of Nonprofits: This national organization provides resources for starting and maintaining a nonprofit organization.
3. Utah Division of Corporations and Commercial Code: This website offers regulations and guidelines for starting and maintaining nonprofits in Utah.

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 Utah, like tax breaks and protection from personal lawsuits, but it also comes with extra paperwork and public financial records. After forming a Utah 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