How To Start a Nonprofit in Arizona

Starting a nonprofit in Arizona requires thorough business planning (just like any other small business) as well as some unique legal considerations. Arizona state statutes and rules governing nonprofits are complex, requiring patience and attention to detail. To form an Arizona nonprofit, you'll need to know the various legal steps — including forming a board, securing tax-exempt status, writing bylaws, and more.

Sometimes, business owners find they need professional legal advice and guidance throughout their nonprofit formation. Visit FindLaw's Nonprofit Organizations section for additional information and resources.

The overview below will guide you through the steps to form a legally sound and successful nonprofit organization in Arizona.

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Types of Arizona Nonprofit Corporations

There are no specific limitations to the types of nonprofit corporations you can open in Arizona. If your nonprofit will seek tax-exempt status, it has to be eligible for Internal Revenue Service (IRS) nonprofit taxation status. This status is generally limited to:

• Charitable organizations
• Churches and religious organizations
• Private foundations
• Certain political organizations
• Educational organizations
• Social welfare organizations
• Some social clubs, civic leagues, labor organizations, and business leagues

An Arizona nonprofit corporation may either be a tax-paying or a tax-exempt organization. If your nonprofit will apply for tax exemption, follow the directions below.

Arizona nonprofits may or may not have members. If there are no members, the board of directors governs the organization. If there are members, the members elect the board. An example of this is when your local Elks Lodge members vote on the board of directors for the organization.

Arizona does not require a nonprofit to register with the state to solicit contributions. It is only one of 11 states to allow this.

Costs To Start a Nonprofit Corporation

Startup costs will vary depending on your type of nonprofit and where it operates. In general, expect to pay at least a few dollars to start your Arizona nonprofit.

There are various state filing fees noted in the appropriate sections below. In addition, unless you have a volunteer lawyer, you may have legal fees. If opening a physical location, you may deal with business licenses and zoning requirements.

1. Create and Name Your Nonprofit Business

Creating and protecting your nonprofit's business name should be one of your first actions. This process can be complex and time-consuming, but completing all the steps is necessary to ensure you avoid infringement and operate legally in Arizona.

First, choose a distinctive name. Arizona law requires that your nonprofit's name be unique and different from another company's name, whether nonprofit or for-profit.

Search the Arizona Corporation Commission (ACC) business entity database to ensure your chosen name is not in use by any other Arizona company.

Just because you don't find your selected name in the ACC database doesn't necessarily mean you can use that name. You still have to go through the nonprofit incorporation process for the state to determine that your chosen name is acceptable.

2. Legally Protect Your Name

Next, ensure no one else can use your nonprofit's name in business or online. Check to see if the internet domain name is available. You can use ICANN and InterNIC to determine the availability of a domain name. Reserve it immediately if it is available — this typically costs $10 to $20.

If you plan to operate nationally or across multiple states, you should trademark your nonprofit's name with the United States Patent and Trademark Office (USPTO). You can apply for your federal trademark online through their Trademark Electronic Application System (TEAS). This will cost you $250 to $350.

Your nonprofit's name is protected as a common law trademark while your application is pending.

Once you receive your federal trademark, register it with the Arizona secretary of state as a Trade Name. You may also trademark your name with just the state, without a federal trademark.

Now that your nonprofit name is officially yours and conforms to Arizona law, you can enforce trademark rights and prevent others from using it.

3. Establish a Board of Directors

Every Arizona nonprofit must have a board of directors. However, there are no particular legal qualifications for serving on the board, and the board legally has to have only one board member.

Consider the skills and value they bring to your organization, including:

• Fundraising experience
• Expertise in your nonprofit's field
• Organization and strategic thinking
• Networking and community connections
• Commitment to your nonprofit's mission

Choose your board members carefully.

4. Create Bylaws

Arizona law requires all corporations' boards of directors to create bylaws. Bylaws are the internal rules of the corporation. The board must officially adopt the bylaws before your nonprofit corporation can legally function.

Your bylaws should address certain aspects of your organization. While you can add more details to your bylaws, be sure to include the following:

• The business name you registered or reserved with the Arizona secretary of state
• Your nonprofit's business address and street address
• Your organization's purpose
• Names of board officers and their positions
• Your nonprofit's removal policy for officers and a statement of how your organization agrees to add new officers
• Rules about quorum (the minimum number of members required at a meeting to conduct official business)
• Date of the board of directors annual meeting
• A dissolution clause, or the process for ending your nonprofit's operations
• How to make amendments to the bylaws

You should also draft a conflict-of-interest policy. If applying for 501(c)(3) status, the IRS will require you to present a conflict-of-interest policy in addition to your bylaws.

A conflict of interest policy is a written agreement detailing a process to follow if a member's personal interests or relationships interfere with their ability to make impartial decisions in the nonprofit's best interest.

5. Appoint a Corporate Statutory Agent for Service of Process

Incorporation papers must include a statutory agent for service of process. An Arizona agent for service of process must be at least one of the following:

• An individual who resides in Arizona
• A domestic business, nonprofit corporation, or limited liability corporation formed under Arizona law
• A foreign business, nonprofit corporation, or limited liability corporation authorized to transact business under Arizona law

The Statutory Agent Acceptance Form must accompany the articles of incorporation.

You must also appoint corporate officers, with the procedures for appointing them included in your bylaws. The corporation can have any type of organizational structure.

In addition to corporate officers, you must also appoint incorporators. An incorporator signs the articles of incorporation. Arizona law only requires one incorporator.

6. Hold the First Board Meeting

Once you create your board, it should conduct its first meeting as soon as possible. This meeting should accomplish several critical pieces of business, including:

• Establishing the board's role
• Adopting bylaws
• Appointing a registered agent for service of process
• Appointing corporate officers
• Beginning the incorporation process
• Creating statements of organizational purpose

If not already accomplished, you must appoint an incorporator at this initial organizational meeting.

Arizona law then requires annual board meetings.

7. Incorporation

Formally incorporating your nonprofit provides several benefits:

• Liability protection for its founders and members
• More credibility for grants, donors, and volunteers
• A formalized legal structure

Incorporating your nonprofit means it becomes a separate legal entity from yourself. This limits your personal liability if a party sues your nonprofit.

The incorporation process involves several steps but can contribute to your nonprofit's long-term stability and success.

Incorporating Your Non-Charitable Nonprofit

If your nonprofit is not a charity, you can use the Nonprofit Articles of Incorporation forms on the Arizona secretary of state website. Use these instructions. You must print, complete, and physically file them. The state does not currently have online form capabilities.

You can find all forms and filing options on eCorp through the Arizona Corporation Commission (ACC).

Incorporating Your Charitable Organization

You cannot use the forms on the secretary of state website if you are starting a charitable organization.

The Arizona Corporation Commission (ACC) states that charitable organizations' articles of incorporation must include the specific charitable organization language contained in IRS regulations. It does not provide forms to do so.

The ACC recommends hiring an attorney to prepare these papers.

Required Information for Your Articles of Incorporation

The articles of incorporation must contain the following:

• The name of the corporation
• A brief statement of the "character of the affairs" that the corporation will conduct
• The name and address of each member of the founding board of directors
• The name, address, and signature of the statutory agent
• The street address of the known place of business for the corporation, unless it is the same as the address of the statutory agent
• The name, address, and signature of each incorporator
• Whether or not the corporation will have members
• Director attachment for additional directors' names that do not fit in the articles of incorporation
• Statutory Agent Acceptance Form (see above)
• Certificate of Disclosure (use these instructions)

See detailed directions for what to include here.

Filing Fees

The fee for filing nonprofit incorporation forms with the ACC is $40. Expedited services are available for additional fees.

File Articles of Incorporation to the ACC

You must mail or hand-deliver your articles of incorporation. The ACC does not have online filing.

In addition to your articles of incorporation, you must also include a cover sheet and a nonprofit certificate of disclosure.

When you are ready, submit the documents above and payment in person or by mail to:

Arizona Corporation Commission Corporations Division - Examination Section 1300 West Washington St. Phoenix, AZ 85007

You will receive an approval letter if the ACC approves your articles of incorporation. If rejected, they will instead send a letter with directions on resubmitting your paperwork.

8. Publish the Articles of Incorporation

If your known place of business is not in Maricopa County or Pima County, you must publish your articles of incorporation within 60 days of filing them with the ACC. They must be published in a newspaper of general circulation in your county.

9. File for Your Federal and State Employer Identification Numbers

You must file for a federal Employer Identification Number (EIN) on the Internal Revenue Service (IRS) website. An EIN is like a Social Security number but for your business. The IRS uses your EIN for identification and tax purposes.

There is no fee to get an EIN through the IRS. Beware of commercial sites that charge a fee for an EIN — some of them look similar to the official IRS website.

You can then file for your Arizona Department of Revenue ID Number and Transaction Privilege Tax License. You can do this by filing an Arizona Joint Tax Application with the Arizona Department of Revenue (DOR).

The DOR will grant your state tax ID number once they process your Joint Tax Application.

10. Register Your Nonprofit with the IRS and Apply for Federal Tax-Exempt Status

Before you file for your tax-exempt 501(c)(3) status, you must file IRS Form 1023. This registers your organization with the federal government as a nonprofit. Smaller organizations (under $250,000 in total assets) may use Form 1023 EZ.

The filing fee for Form 1023 is $600. The filing fee for Form 1023-EZ is $275.

Form 1023 is highly detailed, with questions about your nonprofit's organization, history, policies, finances, and more. Take the necessary time to answer these questions completely and truthfully.

If granted 501(c)(3) federal tax exemption status, you will receive a determination letter from the IRS. Processing times vary. Use the IRS website to learn how to check the status of your application.

11. Apply for Arizona State Tax Exemption

After you receive your IRS determination letter, you automatically receive corporate tax exemption from the state of Arizona. To get this, send your IRS Letter of Determination to:

The Arizona Department of Revenue, Corporate Income Tax Audit 1600 West Monroe St Phoenix, AZ 85007-2650

Even if your nonprofit is not taxed on business income, it is still responsible for employment and most sales taxes. Make sure you complete all required federal and state tax forms.

12. Secure Necessary Insurance for Your Employees

If you are going to hire employees, you may have other state obligations. Under Arizona law, you may have to file for workers' compensation insurance.

You may also have to pay unemployment insurance.

Manage Renewals and Ongoing Obligations

You must stay on top of several renewals to keep your nonprofit in good standing and remain tax-exempt. Some of these renewals require small fees.

• Submit an annual Form 990 to the IRS to maintain your federal tax-exempt status
• Renew your nonprofit business status with the Arizona Corporations Commission (ACC) each year
• File an annual report with the ACC
• File annual tax returns (this is still true for tax-exempt organizations)
• Hold annual board of directors meeting — take minutes and document any important changes

Need Help With Your Nonprofit Formation? Get Legal Advice

Any new small business venture, including a nonprofit, may need legal help. Starting a nonprofit can be hard, with a long incorporation process and complicated tax rules. Consider talking to an Arizona business lawyer for help with your nonprofit formation.

An experienced attorney can handle the legal aspects of your business planning, leaving you more energy and time to focus on your nonprofit's mission.