How To Start a Nonprofit in Alabama in Nine Steps

First, decide upon a name for your nonprofit. Make sure your name is unique but adequately describes your nonprofit. Additionally, your name should not be confused with another business entity so check your name with the Alabama Secretary of State Business Entity Records.

You should also make sure your name is available for domain registration to get a website and that it is not under trademark protection. You can search on the internet or with the ICANN Domain Names Registration Lookup Tool to see if it is available. To check if a name is registered under a trademark, search the name on the United States Patent and Trademark Office (USPTO) website.

To preserve your name, you can get a Name Registration Certificate from the Alabama Secretary of State and register it as a domain name to use for your website. Also, you may want to trademark your name with the USPTO to prevent others from using it.

Your nonprofit will need a board of directors for corporate governance. The board members serve in a fiduciary capacity to oversee the nonprofit’s finances, strategic plans, and initiatives. They can also be critical in providing leadership and credibility which will help in fundraising for your nonprofit. According to Alabama state law, a nonprofit organization must have at least three directors on its board.

Your board members must be responsible, not engage in self-dealing, and preferably, champion your cause. For example, a charity for foster care may consider asking a social worker to join its board, as they may contribute valuable perspectives. A priest, rabbi, or clergyperson might be a good choice for a religious organization.

To create your nonprofit organization, file articles of incorporation with the Alabama Secretary of State. Complete the Domestic Nonprofit Corporation Certificate of Incorporation and mail two copies with a self-addressed, stamped envelope to the Secretary of State. The mailing address is Alabama Secretary of State, Business Services, P.O. Box 5616, Montgomery, AL 36103. The filing fee is $200.

This state filing should include the nonprofit’s name, the registered agent’s name and address, the incorporators’ names and addresses and the organization’s purpose.

You also have the option to file your articles of incorporation online by creating an account with the Secretary of State’s Online Services.

You must have bylaws and a conflict-of-interest policy for IRS tax-exempt status. Bylaws are your rules for running the nonprofit, defining its structure, and outlining decision-making processes. Bylaws provide a framework for your nonprofit.

In your first organizational meeting with the board, you should elect officers to your organization, adopt the bylaws, and organize other matters. Keep the minutes of the meeting as a corporate record.

You will need an Employer Identification Number (EIN) from the Internal Revenue Service (IRS) for your nonprofit. You can complete Form SS-4 on the IRS website to get an EIN. You use this number to identify your organization and to open your nonprofit’s bank account.

You may also need the EIN to apply for business licenses and permits. Check the requirements in your town and county and with Alabama state.

The nonprofit must then apply for tax-exempt status with the IRS. Under the Internal Revenue Code, there are different forms for different nonprofit entities:

• File Form 1023 or Form 1023-EZ for 501(c)(3) charitable, religious, and educational nonprofit organizations. If you can file the 1023-EZ, you must use the Pay.gov site.

• File Form 1024-A for 501(c)(4) social welfare organizations.

• File Form 1024 for other tax-exempt or nonprofit organizations such as 501(a).

The IRS will then send a determination letter to confirm your new nonprofit’s tax-exempt status.

After receiving your federal tax-exempt status, apply to the Alabama Department of Revenue for state sales tax exemption. Complete the Application for Sales Tax Certificate of Exemption. You can mail this to the Taxpayer Service Centers listed on the form.

If you want your nonprofit to engage in charitable solicitations, you must register with the Alabama Attorney General’s Office. Check their website for the specific registration and annual filing requirements. Charitable organization registrations can be done online, and the registration fee is $25 for initial registration and $25 for subsequent annual reports.

You may also want to check with your city or county clerk's office to determine if you need any business licenses or permits to operate your nonprofit, hold events, or fundraise.