Step 1 — Pick a name and check availability
Search your state's business entity database to make sure your name isn't already taken. Almost every state has a free online search. Two extra checks worth doing:
- Domain name — check the .org availability before you commit
- USPTO trademark search — tmsearch.uspto.gov — avoid stepping on a national trademark
Most states require “Inc.”, “Incorporated”, “Corporation”, or similar in the legal name.
Step 2 — Recruit your initial board
The IRS expects an arms-length board. Practical minimums:
- Minimum 3 directors in most states (some require only 1, but 3 looks better to the IRS).
- No more than 50% related (by blood, marriage, or business). A board of you, your spouse, and your sibling will get flagged.
- One person typically wears multiple officer hats: President, Secretary, Treasurer.
Step 3 — File articles of incorporation with your state
This creates the legal entity. Filing happens at your Secretary of State office. Cost ranges from $25 (Kentucky, Mississippi) to $125 (Texas) for nonprofit incorporation.
Articles must include specific IRS-required language:
- A purpose clause limiting the org to 501(c)(3) purposes
- A dissolution clause stating that on dissolution, assets transfer to another 501(c)(3) or government entity
- A clause prohibiting political campaign activity and limiting lobbying
Without this language, the IRS will reject your 1023 application even if everything else is perfect.
Step 4 — Get an EIN from the IRS
Free. Apply online, takes 10 minutes, EIN issued immediately. You'll need this for everything — bank account, IRS application, state registrations.
The applicant must be a U.S. person with an SSN or ITIN, and you can only do one EIN application per responsible party per day.
Step 5 — Adopt bylaws and hold an organizational meeting
Bylaws govern how your board operates — meeting frequency, quorum, voting rules, officer terms, conflict-of-interest policy. Free templates are available from the National Council of Nonprofits.
At your first board meeting, formally:
- Adopt the bylaws
- Elect officers
- Authorize opening a bank account
- Adopt a conflict-of-interest policy (the IRS will ask if you have one)
Document everything in meeting minutes.
Step 6 — File IRS Form 1023 or 1023-EZ
Form 1023-EZ ($275 IRS fee)
For small orgs only:
- Projected gross receipts under $50,000/year for the next 3 years
- Total assets under $250,000
- Not a church, school, hospital, supporting organization, or several other special types
Filed online at pay.gov. Approval often arrives in 2–4 weeks. Use the IRS eligibility worksheet to confirm you qualify.
Form 1023 long form ($600 IRS fee)
Required for everyone else. Significantly more involved — 28+ pages, narrative descriptions of activities, 3-year financial projections, board info, conflict policy. Approval usually takes 3–6 months and the IRS may send follow-up questions.
Step 7 — State charitable registration
Most states require nonprofits that solicit donations to register with the state Attorney General or Charities Bureau, separately from incorporation. Harbor Compliance maintains a free state-by-state guide. Fees range from $0 to $400.
Skip this and you can be fined — or barred from fundraising in that state.
Step 8 — Open a bank account and set up books
Once your IRS determination letter arrives, take it (plus EIN, articles, board resolution) to a bank. Many banks waive fees for verified 501(c)(3)s — ask. Set up accounting from day one using fund-accounting principles. Aplos and QuickBooks Online (with TechSoup discount) are the common picks.
Total cost summary
| Item | Cost |
|---|---|
| State articles of incorporation | $25 – $125 |
| EIN | $0 |
| IRS Form 1023-EZ | $275 |
| IRS Form 1023 long form (alternative) | $600 |
| State charitable registration | $0 – $400 |
| Registered agent (optional) | $0 – $200/yr |
| Typical total (1023-EZ path) | $325 – $1,000 |
Common mistakes that delay or kill applications
- Missing IRS purpose / dissolution clauses in articles — the most common rejection.
- Vague activity descriptions on Form 1023 — "we help the community" is not enough. Be specific.
- Board too small or too related — arms-length governance matters.
- Forgetting state charitable registration before fundraising.
- Choosing 1023-EZ when you don't qualify — the IRS reserves the right to revoke status if they audit and you should have used the long form.
Free legal help
- Pro Bono Partnership — free legal help for nonprofits in NY, NJ, CT
- Candid (Foundation Center) — nonprofit legal toolkits and templates
- State nonprofit associations — most states have a nonprofit-of-nonprofits with free guidance
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