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How to Start a Nonprofit

Corporation in Florida

Ronald C. Nyhan, Ph.D. Florida Atlantic University

Fall 2012

Before you Start a Nonprofit!

Why?

What’s the need?

How do I prove it?

Who else is providing similar services?

Can I add value to the community?

Will others pay?

Prepare a Business Plan

http://www.sba.gov/smallbusinessplanner/index.html

http://www.cfnpe.org/site.cfm/np-businessplan.cfm

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Filing with the State of

Florida

Six Steps

Incorporating in Florida

1. Establish Administrative Structure

2. Choose an Unique Corporate Name

3. Check for Trademarks and Service

Marks

3. Draw Up Articles of Incorporation

4. File Application with Fee Payment

5. Draft Bylaws

6. Hold Initial Board Meeting

1. Establish Administrative

Structure

Choose three persons to be on the Board

Select an Incorporator

Select a Registered Agent (Florida

resident)

Determine Principal Place of Business

Choose a Billing Address

2. Choose an Unique Corporate

Name

Florida Department of State, Division of

Corporations

(800) 755-5111, or

http://www.sunbiz.org/search.html

Check both Corporation Name and

Fictitious Names

3. Check on Trademarks and

Service Marks

US Patent Office

http://www.uspto.gov/trademarks/basics/

trade_defin.jsp

4. Draw Up Articles of

Incorporation (or File On-Line)

In Compliance with Chapter 617, F.S.

ARTICLE I: Name

ARTICLE II: Principal Office

ARTICLE III: Purpose

ARTICLE IV: Manner Of Election

ARTICLE V: Initial Directors/Officers

ARTICLE VI: Initial Registered Agent And Street Address

ARTICLE VII: Incorporator

Plus - Needed for IRS Compliance

• ARTICLE VIII: Dissolution

5. File with Dept. of State

For all Florida Forms:

http://www.sunbiz.org/downloads.html

File by Mail Transmittal letter with Articles

30 – 60 days, expedite if necessary

Do NOT File On-line

https://efile.sunbiz.org/onlmenu.html

Filing Fees Base cost $ 35.00

Registered Agent Designation $ 35.00

Certified Copy (optional) $ 8.75

Total $ 78.75

Certificate of Incorporation

Issued by the Florida Department of State, Division of

Corporations.

Organizations must operate under exact legal name

including use of “corporation”, “incorporated”, “Inc.” or

“Corp.”

Any other name is considered “fictitious” and must be filed

as a “fictitious name” with DOS.

6. Draft Bylaws

Bylaws can be amended by the Board at any meeting

More detailed operating rules and procedures

They include issues like:

Membership qualifications

Meeting times

Quorum requirements

Procedural rules

Officers duties

Amendments

Conflicts of interest

7. Hold Initial Board Meeting

Approve Bylaws

Establish Minutes

Assign Fiscal Cycle

Elect Officers

Next Step -- IRS

Incorporating as a non-profit does not automatically result in 501(c)3 status or state sales and income tax exemption. These must be applied for separately.

To successfully obtain 501(c)3 status, an organization must be able to show a defined charitable purpose, and a structure that ensures that the organization benefits the public, not the employees or owners of the organization.

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Filing with IRS

Four Steps

Filing With IRS

1. Qualify for 501 (c) (3)s

2. Obtain Federal EIN

3. File Application

4. Pay Fees

1. Qualification Tests

Organizational Test must be formed exclusively for religious, charitable,

Scientific, Literary, Educational, purposes

must have a public benefit

no financial benefit to the principals

Political Test no support for individual candidates

no participation in political campaigns

no “substantial” lobbying expenditures

Public Support Test One-third revenues from public sources

2. Obtain Federal EIN

File Online at:

http://www.irs.gov/businesses/small/article/0,,i

d=102767,00.html

There is no charge for obtaining an EIN.

3. File with IRS

Obtaining recognition as a 501(c)3 organization is much more involved. The application is lengthy, and approval is not automatic. The IRS carefully reviews all applications to ensure that the organization is a bona fide charity. The process can easily take several months before a determination is made.

Complete Application – 1023.

http://www.irs.gov/pub/irs-pdf/f1023.pdf

Detailed instructions on BB

501(c)(3) main requirements

Formed exclusively for benefit of the public good:

Charitable

Educational

Religious

Literary

Scientific

Testing for public safety

Prevention of cruelty to children or animals

Fostering national or international amateur sports

competition

501(c)(3) requirements cont.

No private inurement

Cannot distribute gains

Assets irrevocably dedicated

Cannot substantially engage in the influence of legislation

No partisan politics

IRS Form 1023 Exceptions

Not required for:

Churches and related associations/schools

Branch of national exempt organization

Form 1023 Main Themes

Activities and Operational Information

Personnel and business relationships

Technical Matters

Financial Information

1023 filing status -

http://www.irs.gov/charities/article/0,,id=156

733,00.html

4. Pay Fees

$400 fee for organizations with less than

$10,000 anticipated annual income

$850 fee for organizations with higher

anticipated income

Cyber- Assist software for electronic

filing for $200 may be available someday

Florida Legal Compliance Issues

Licenses and Registration

State of Florida

Solicitation registration

Sales Tax exemption

Palm Beach County

Tangible property registration

Solicitation Registration

Under Florida Statute 496, you must obtain a license to solicit charitable funds, this includes:

Applying for grants

Soliciting donations

File with Department of Agriculture and Consumer Affairs. http://www.800helpfla.com/socbus.html

Fees start at $10 for donations less than $25,000 to $400 maximum

Attach copy of IRS 990

Sales Tax Exemptions

Optional but saves paying sales tax

File DR-5 with Department of Revenue

http://www.myflorida.com/dor/forms/downloa

d/!sales.html

Local Taxes

Property

Occupational licenses

Tangible Personal Property Tax

File DR 405 (one time) with County Tax Appraiser, together

with DR 504 Ad Valorem Tax Exemption.

Includes information on property, equipment, leased goods,

Board salaries.

Attach Articles of Incorporation, IRS Exemption letter, Board

salary information.

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Annual Filing

Requirements

Federal

State

Annual Renewals - Federal

All nonprofits must file Form IRS 990 If your revenues are below $50,000, you may file e-Postcard (Form

990-N)

If your revenues are under $200,000, assets under $500,000 you may file 990EZ

If your revenues are greater than $200,000 file 990 and Schedule A

File On-line at: http://efile.form990.org/ The 990 is due 4 and 1/2 months after the close of the fiscal

year, and must be made available for public inspection.

Nonprofits must file Form 990-T if their gross revenue in unrelated business income exceeds $1,000

990 is a Marketing Tool

Many potential funders or donors use an organization’s 990 for initial research. Some of the information that can be gleaned from a 990 includes:

Income from donations, government contracts, fees for services, and membership dues.

Expenses for programs, management, and fundraising.

Assets and liabilities.

Members of the board of directors and their compensation.

Any employees or contractors receiving over $50,000 per year.

Investments.

Grants paid or pledged.

A clean, well-organized 990 makes a great first impression!

Annual Renewals – State of Florida

Universal Business Report

File on-line https://efile.sunbiz.org/onlmenu.html

Reports are due between January 1 and May 1st.

Fee $61.25

Charitable Solicitation Renewal

File on anniversary date

Fee – same as initial filing

Palm Beach County Tangible Property Report

Next…..Administrative Issues

Filing Payroll Taxes

Compiling a Budget

Providing Insurance

Soliciting funds

Providing Employee Benefits

Using Independent Contractors

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Easy, huh?