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How to Start a Nonprofit Colorado

Many people want to start businesses that aim to give back to the world. Starting a nonprofit may be a good idea if you have a passion for goodwill. The state of Colorado is an excellent place to get started. Continue reading for a step-by-step guide on how to create a Colorado nonprofit.

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Step One: Choose the Name for Your Organization

It would be best if you chose a unique name for your nonprofit. Colorado requires that every business that operates in the state have a unique name. You can ensure that your name is available by conducting a business search on the Colorado Secretary of State website.

If you have an idea for your business name but are not ready to file your articles of incorporation and legally begin the organization, you can still reserve your name. To reserve a business name, you must file a Statement of Reservation of Name with the Colorado Secretary of State. After filing the Statement of Reservation of Name, your potential name will be reserved for 120 days, and the filing fee for the application is $25. Remember that your name will not be officially yours until you file your articles of incorporation.

Step Two: State the Purpose of Your Nonprofit

Your nonprofit will not be eligible for federal tax exemptions (501 (c)(3) status) unless you state your nonprofit's purpose in the articles of incorporation. The IRS only grants 501 (c)(3) status to organizations that fall into one of the following categories:

  • Charitable
  • Religious
  • Educational
  • Scientific
  • Literary

Step Three: Appoint a Registered Agent

Every nonprofit organization must have a registered agent. A registered agent is a person or a service responsible for accepting legal documents on behalf of an organization. Your registered agent must be at least 18 years old.

Step Four: Draft the Nonprofit Bylaws

The nonprofit's bylaws are a set of rules that are in place to regulate the organization. Colorado requires that every nonprofit have bylaws. Your bylaws and your articles of incorporation should be consistent with each other. Your bylaws should address the roles of each director or officer.

You should also draft and adopt your nonprofit's conflict of interest policy. A conflict of interest policy is a plan about how your organization will act if one or more of the directors' interests conflict with the nonprofit's purpose.

Step Five: File Articles of Incorporation

In addition to your bylaws, Colorado requires that every nonprofit organization file articles of incorporation with the Colorado Secretary of State. A nonprofit is legally started once the articles of incorporation are filed. Your nonprofit will have to name at least one incorporator. An incorporator is a person who is responsible for signing and filing the articles of incorporation with the secretary of state. Incorporators do not have to be members of the nonprofit. The filing fee is $50.

Your articles of incorporation must include:

  • The name and address of the nonprofit organization
  • The name and address of the registered agent or the name and address of the registered agent service
  • A statement affirming that the registered agent has agreed to serve as the nonprofit's agent for service of process
  • The name and address of each incorporator
  • A comment about if the corporation will have voting members
  • Statement of the purpose of the nonprofit
  • The date when the articles of incorporation will become effective if they become effective after filing
  • A statement that shows the nonprofit agrees that it will not operate in a way that is contrary to its stated purpose

Step Six: Have Your First Meeting of Board of Directors

Your nonprofit organization must have an initial organizational meeting of the board of directors. Your board of directors will include specific officers like a president, vice president, treasurer, and secretary and at least three directors that are not related to each other. You will want to create a record for the nonprofit by taking minutes for the initial meeting.

The board of directors ensures that the nonprofit's actions always align with the purpose stated in the articles of incorporation. The board of directors has legal responsibilities, including the duties of care, loyalty, and obedience.

Duty of Care

The duty of care refers to the board of directors' responsibility to act in the best interests of the board of directors. Because of the board of directors' legal obligation to the nonprofit, the board of directors must work with the utmost care when making decisions for the nonprofit.

Duty of Loyalty

The duty of loyalty includes each director's responsibility to not act in their self-interest if acting in that way will harm the nonprofit in some way.

Duty of Obedience

The duty of obedience refers to the board of directors' responsibility to ensure that the organization follows state and federal law and remains focused on the its purpose.

During your first board meeting, you will need to take care of much administrative business. At your first meeting, you will:

  • Adopt a conflict of interest policy
  • Approve the nonprofit's bylaws
  • Elect the board of directors
  • Appoint the nonprofit's officers
  • Approve resolutions (e.g., to open a bank account)

Step Seven: Get Business Licenses

Colorado may require that your nonprofit have additional business licenses. The need for a business license depends on the type of work your nonprofit does. You may also need a permit for the property that you use. To get more information about whether your nonprofit needs a business license and property permit, visit the Colorado Secretary of State website.

Step Eight: Get an EIN

A business in the United States must have an EIN assigned by the Internal Revenue Service (IRS). This number is only used for identification purposes.

Applying for an EIN is easy and free. You can do it in several ways. You can apply online, by fax, by mail, or over the phone. Be careful when applying online. Some sites may ask you to pay a fee for an EIN, but you shouldn't. Obtaining an EIN through the IRS website is free. Visit the IRS website here.

Step Nine: Apply for 501 (C)(3) Status

The IRS grants nonprofit organizations and donors 501 (c) (3) tax-exempt status. If you wish to apply for 501 (c)(3) status, you can do so on the IRS website here.

Approved nonprofit organizations receive 501 (c)(3) status from the IRS. Among these organizations are:

  • Religious
  • Educational
  • Scientific
  • Literary
  • Testing for public safety
  • Fostering national or international amateur sports competition
  • Preventing cruelty to children or animals

Step Ten: Apply for State Tax Exemptions

In Colorado, once you apply for 501 (c)(3) status and are approved and get your determination letter, your nonprofit will automatically be exempt from state corporate income tax. However, your nonprofit will still have to send a state tax registration application to receive state sales tax exemption. You can apply online on the Colorado Department of Revenue website.

Step Eleven: File Periodic Reports

Each nonprofit that operates in Colorado must file a periodic report every year. In the periodic report, you will update your nonprofit's status. You will state the name and address of your registered agent. You will also say the name and address of your incorporators. Finally, you will say the name and address of your nonprofit. You will state these facts even if they have not changed since you filed the articles of incorporation.

Step Twelve: Charitable Registration

Every Colorado nonprofit must register with the Colorado Secretary of State. Fundraisers cannot be held unless your organization is officially registered. Along with registering in Colorado, you will need to register with each state where the nonprofit has an office and is incorporated.

Need Help Forming a Colorado Nonprofit?

Forming a tax-exempt nonprofit corporation can be a complex process. However, it is made simpler through the use of online business formation services. By answering some simple questions, you can ensure that your organization is set up correctly.

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